One of the clearest and most concise explanations of the sub-prime mortgage meltdown that I’ve found is a special report that This American Life produced back in May called “The Giant Pool of Money.”
You can download a podcast of that report from the show’s online radio archive. If you’re unclear as to what exactly happened and how and why, or if you just want a wryly engaging refresher on the subject, I recommend that you give it a listen. It’s an hour well-spent.
The same team — producer Alex Blumberg and NPR reporter Adam Davidson — have now produced a similar report on the current financial crisis. You can read/listen to a nine-minute teaser version of this report now at NPR.org (“The Week America’s Economy Almost Died“), or you can catch the full report on the radio this week or download the podcast from TAL’s radio archive once they get it posted (should be some time this week).
If, like me, you’re a little rusty on the inner-workings of things like commercial paper and how that relates to money market funds, then I really recommend checking this out.
I also urgently recommend both of these special reports to the short-straw staffer on the McCain campaign whose job it is to get vice presidential nominee Gov. Sarah Palin up to speed on this financial crisis. Go buy her an iPod with one of those velcro straps for runners, load it up with the two reports from Blumberg and Davidson, and don’t let her go jogging without it.
Sadly, I don’t really think these would help Palin to understand this financial crisis. These reports are excellent and richly informative, but after watching Palin’s interview with Katie Couric, I realized that Palin’s problem is not primarily a lack of information or a lack of knowledge of the facts of the matter. Yes, she is appallingly ill-informed, but I think that’s more a symptom than the actual disease.
We’ve seen this disease before. We’ve been watching it for eight years now. This is ignorance born of incuriosity. And that incuriosity arises from a lack of empathy. Like President Bush, Gov. Palin doesn’t know because she doesn’t care.
COURIC: Would you support a moratorium on foreclosures to help average Americans keep their homes?
PALIN: That’s something that John McCain and I have both been discussing — whether that … is part of the solution or not. You know, it’s going to be a multi-faceted solution that has to be found here.
COURIC: So you haven’t decided whether you’ll support it or not?
PALIN: I have not.
COURIC: What are the pros and cons of it do you think?
PALIN: Oh, well, some decisions that have been made poorly should not be rewarded, of course.
COURIC: By consumers, you’re saying?
PALIN: Consumers — and those who were predator lenders also. That’s, you know, that has to be considered also. But again, it’s got to be a comprehensive, long-term solution found … for this problem that America is facing today. As I say, we are getting into crisis mode here.
The question was to name some “pros and cons” of “a moratorium on foreclosures to help average Americans keep their homes.” This is a bit like the old routine about “What was the color of George Washington’s white horse?” — part of the answer is contained in the question itself. The “pro” side of helping average Americans keep their homes is that you’re helping average Americans keep their homes.
And yet Gov. Palin wasn’t able to come up with even that. She doesn’t seem to comprehend or be capable of imagining the downside of mass foreclosures. In 2007, 1,650 families in Alaska lost their homes, but their governor is unable to say for sure whether that’s a Good Thing or a Bad Thing.
Palin’s problem, in other words, isn’t that she’s been inadequately briefed about the housing crisis or the consequences of foreclosures, or that she lacks a grasp of the policy options for addressing these problems. Her problem in this interview is that she can’t be bothered to imagine what this means for real families who are really losing their homes. Not a lack of information, but a lack of empathy.
That’s troubling, because a lack of information can be fixed. Someone who doesn’t yet know enough can set out to learn more. But someone who doesn’t care about other people because they are other people, well, I don’t know how to fix that. I’m not sure it can be fixed.