It's as predictable as water boiling at 212 degrees. Banks will put their quest for profits above any other concern - even the ability of their debt-holders to keep up with interest payments. Does it sound too moronic for any self respecting MBA? Not if your government will bail you out rather than risk a national economic meltdown.
In 1982, I was an intern on the PBS business series, "Enterprise," produced at WGBH-Boston. I did research and wrote narration for a particular episode about bank loans to Brazil. The producer interviewed very uncomfortable bankers from the likes of Citicorp and Citibank (before their merger) who had collectively made loans totaling many billions of dollars to Brazil (and other countries like Mexico) for enormous mining and hydroelectric projects that couldn't keep up with high interest payments. The banks preferred a few gigantic loans rather than numerous smaller loans that could benefit regions and small scaled local industries. They knew that countries like Brazil were falling way behind on payments, but seemed to be confident that between the Brazilian government and the US government, there would be bailouts when necessary (on the backs of the Brazilian population).
Now we have this latest scheme of banks (since the mid-90's) lending subprime mortgages to people unlikely to be able to keep up with ballooning payments. Apparently many of the banks sold the loans to more risk-taking financial institutions, without any concern about the inevitable foreclosures coming down the pike.
In between we had the massive Savings and Loan meltdown of the late 80's that came about when office construction was really hot and loans were given out to every guy with a hammer and a vertical sketch drawing.
In both of those debacles that federal money system came to the rescue of our economic system (though many S&L's went down).
I was taught in school that socialist systems are fundamentally flawed due to a lack of individual incentive as time goes on. I don't remember hearing that the capitalist system will inevitably lead to economic meltdowns due to reckless profiteering, unless the government saves the day (in a pretty socialist-style move). I guess you'd have to go to school in a place like Cuba to hear that lesson.
Sunday, August 26, 2007
Sunday, August 05, 2007
The six of us came together from far flung places for an exquisite vacation on Cape Cod. For three of us it was as if we were weaving additional design onto a warp of yarn that was strung before we were born. Our mothers were best friends and we grew up in each other's houses where the Moms' incessant chatter and laughter nurtured our own sense of well being. On one kitchen table or another, coffee cups were imprinted with lipstick that read like ancient hieroglyphics - declaring boldly that friendship trumps personal struggle; comaraderie stitches ragged fabric pieces into a magnificent, warm, patchwork quilt. Two of our mothers died years ago - a car crash; cancer - and the third lives in a memory free world upstairs from her looms and yarns where she used to weave art pieces that hung in museums. We honored each of the moms with a purposeful visit each night to the local ice cream parlor. We followed the yarns back to their original crossings and savored the design in which we recognize our own inextricable shapes and colors.
Carmi's grandfather and his three brothers came to Southern Illinois from a Polish village, Torchin, that we could no longer find on a map or on Google. They started a family furniture and bedding business over which Carmi presides, eighty years later, holding together a colorful cast of cousins and uncles and trying to stay competitive in a business world where big chains operated by MBA's eat smaller companies for lunch. He's got an octogenarian uncle on the payroll who once ran a factory but currently just walks among the machines reading psalms to keep them running well.
Sari's grandfather came from the same village and settled in New York City. Sari and I remember our summer vacation in '62 at her grandparents' Far Rockaway bungalow, drinking in the magic of the boardwalk at a time when kids were free to roam during the day. We were flush with enough money in our pockets for a delicious slice of pizza and a couple of games of Keno. When Sari's mother and father were first married, they used their Torchin connections to get Shooky (Sari's Dad) work in Illinois at one of the furniture stores.
My parents met Carmi's parents as teen-agers, before either couple was married. In 1946, they were at a New Jersey training camp for people who wanted to live on kibbutzim and build what would become the State of Israel.
By 1950 or '51, all three couples were married and living in Peoria, Illinois. In 1953, Sari, Carmi, and myself were born.
Somebody left their finger on the "fast forward" button and we are suddenly 54 years old with nine, 20-something kids between us (counting my partner, Sally's two daughters). In between is a blur of images reflecting intermingled childhoods and family vacations. There are the casualties, including Carmi's brother who lost his life to drugs and then cancer, and Carmi's first wife and my mother who died in the same car crash, hit by a drunk driver. There are the sketchy stories like the barely-spoken-about car trip to Oaxaca, Mexico that my mother and Carmi's mother took in 1961, that included a heavy peyote trip.
On Cape Cod with our wonderful partners our biggest decision was whether to swim in the ocean or the pond and what to cook for our nightly feasts. But whether at the pond, the ocean beach, or the dinner table, the six of us sat in a circle of highly charged conversation, with a million questions for each other. We dissected ourselves psychologically, reviewed our respective family systems, and the events that led us into six very different trajectories.
For many around the world, it sounds pretty pedestrian for three friends to share three or four generations of interconnection. I suspect it is a rarity for many urban Americans. In any case, for the six of us, those circles had a sacred quality - woven with history and ghosts, dreams realized and dreams deferred,loyalty and love, wrinkles and spider veins, and the delicious substance that radiates from enduring friendship.