The Twin Towers – Catalyst & Metaphor

A friend on facebook posted an opinion article from the NY Times blaming “the elite” for our current woes in America. I read the article; the author laid the blame on G. Bush’s tax cuts for the wealthy, wars in Iraq & Afghanistan, greedy Wall Streeters, and the aloof elite.

I agreed with the time frame for the problems, and I agreed that the symptoms and reactions to the apparent problems contributed to the economic issues we face. Then something clicked.

Americans have not noticed that the twin towers attack of 9/11 was both catalyst & metaphor for the problems of the past decade. After the planes hit the towers, fires ensued. As the fires expanded, the buildings’ structures weakened. After the fires weakened the structures enough, the weight of the upper stories was too much, bringing down the buildings.

After 9/11, America’s fears were on fire. We were wounded, and scattered. The wars, in part, were attempts to get our strength, and courage back. However, the fires of fear continued to burn. The stock market declined, new businesses could not get funding. We languished for years.

Meanwhile, a trend, set by FNMA and GNMA with US Government encouragement, of lowering lending standards for less-qualified homebuyers went viral. Commercial financial institutions copied the government model: Package a pool of mortgages, get big insurance companies to guarantee them, and sell them to investors.

World investors, hungry for safe investments, created an insatiable demand for these mortgage-backed securities. The huge volume of money that had escaped from the stock market, and other “risky” investments, went looking for a new home. What could be safer than home mortgages, backed by property values, and insured by the US government, or other insurers? Unable to satisfy the demand, mortgage companies made everybody and their brothers mortgage brokers.

The buying frenzy put immense pressure on the homebuilders to keep up with the demand for new homes. Hiring all those construction workers, buying all those materials pumped up the economy, and the demand for everything. Home values rose rapidly. Spending for appliances, carpets, furniture, etc. mushroomed. Suppliers, transporters, retailers took on more staff. Employment was easy. We built a surplus inventory of 5-7 years of new homes at sky-high prices.

Refinancing went crazy. Credit-stretched Americans turned to home equity loans to expand their buying power. When the fallacies of this financial structure finally weakened enough, the weight of the bad loan investments brought down the financial institutions, collapsing the economy.

In other words, we got Osama bin Laden, but he got us first. The best part, from his standpoint, was that we blamed each other; we further weakened our nation by political in fighting, and vicious personal attacks on ourselves. How he must have laughed at us as we divided our house against itself, emulating the twin towers.

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