Wall Street was the enabler, but Main Street was the addict. Americans stopped saving as long as home prices rose; when home prices started to fall, they started saving again.
That is why the Wall Street protesters are foolish and petulant. American households levered a $6 trillion net inflow of foreign savings during the decade 1998 through 2007 into a bubble that benefited them far more than it did Wall Street. The impact of the bubble on the household balance sheet exceeds the growth in real-estate assets, moreover, because most small business expansion followed the housing bubble.
For fifteen years we rode a tsunami of foreign capital pouring into American markets. We didn’t save a penny. Why should we? Our home equity was our retirement account. Our smartest kids got MBAs and went to Wall Street derivatives desks. Engineering was for dummies. Home prices rose so fast that local governments swam with tax revenues and hired with abandon. Everybody went to the party. Now everybody has a hangover, especially the bankers. We thought we were geniuses because we won the lottery. Now we actually have to produce and export things, and we have to play catch-up. Our kids are competing with Asian kids who go to cram school and practice the violin in the afternoon. This isn’t going to be easy, and the sooner we decide to roll up our sleeves and get back to work instead of looking for bankers to blame, the better our chances of coming back.
In truth, those camped out in Zuccotti Park are running a commune more than a protest. They have established a small communitarian village, which is punctuated by a small cabal of the angry, the insane, and the ignorant. Nothing I have seen is representative of a serious movement, and even less is indicative of any substantive thought. John Maynard Keynes is nowhere to be seen; instead, Occupy Wall Street has become an irresistible magnet for performance artists with generic grievances, and those who consider Stéphane Hessell’s absurd pamphlet, Indignez vous!, to be a serious rallying cry. So prevalent are these types, in fact, that a significant portion of those in attendance might as well be wearing t-shirts announcing, I’m Only Here For The Drum Circle And Organic Arugula.
As he says, they’re not the 99%. They’re not even the one percent.
Guy Benson reports on the president’s latest press conference, so you don’t have to have had to suffer through it:
In summary: Pass this bill. It’s paid for. Republicans have no ideas. Mitch McConnell controls Congress. Independent economists love it. Millionaires and billionaires. Fair share. Not my fault. Japanese Tsunamis. I didn’t know. Bush. Pah-kee-stahn. Pass this bill.
Modern rocket engines are much safer than the historical examples he cites (e.g., XCOR has never had a hard start, let alone an explosion), and it makes no sense that a single accident would end the industry, any more than deaths on Everest stop people from climbing.