Thinking About Money

I was walking to work, thinking about a post about mortgages and debt, and then I got to work, and lo and behold, David Brooks and I were on the same wavelength. Except not quite.

I was thinking about how fiscally conservative I am. Not on the $100 shoe front, but on the house/car/debt front. Basically, I am not very good with money, and I don't like making decisions, and I fear making wrong choices, so I make very safe choices and stick with them. Over the last ten years, I missed a lot of growth in my retirement fund, but I also didn't lose a lot. I would never dream of taking out an adjustable rate mortgage, because I (you could put "we" in every time you see "I," because, luckily, S and I are very much on the same page in this arena) buy houses to live in for the long term (see: not liking to make decisions), and it seems quite clear that a too-low-to-be-true interest rate in an adjustable situation is going to become a too-high-to-believe interest rate as soon as it possibly can (I'm sure some economists and mortgage brokers would argue this and blame the economy, but it seems pretty self-evident to me).

The one time we refinanced, we took a shorter loan along with our reduced interest rate, so we ended up with a higher payment, but more equity--like I said, conservative. Home equity loans? Forget it. We have friends who have basically financed a high-end consumer lifestyle with home equity loans and it boggles my mind (of course the fact that I spent the real estate boom in one of the few places that wasn't booming may have something to do with my mindset--we bought our house in 1998 for cheap and sold it in 2005, at the height of the market, for not much more).

Given this mindset, there is a piece of me that says "you go, boy!" to Phil Gramm (OK, it's a really tiny piece). A lot of people who are drowning in debt and losing their homes to foreclosure made really bad choices. And now they're suffering the consequences. Duh.

But then there's all the news that's coming out about chicanery and malfeasance on the part of mortgage and loan companies. I mean, basically, these companies--and a lot of the people running them and working for them--sucked. They were trying to make as much money as they could for themselves, and they were running bad loans all over the place, with no safeguards or checkpoints.

People making bad choices. Companies doing bad things. A collision waiting to happen, as both Brooks and I acknowledge. And then we diverge, and there you've got our politics.

Brooks thinks, as usual, that we've got a cultural problem going on, and people need to change the way they act. (There is nothing, absolutely nothing, about corporations in the second half of his piece.)

I think (and here's the cynical part of me) that people make bad choices and do stupid things and they're going to keep doing stupid things, and there's nothing we can do about that. However, we can do something about companies doing bad things--regulation, punishment, etc. Yup, once again, I'm thinking we've got a Big Capitalism problem going on, and that's the difference between me and David Brooks.