DadTalk

Main Street Struggles While Wall Street Seems Oblivious

Hey everybody, did you know America’s economic problems are all over? That’s right, kiddies, after a week of stories revealing a continually worsening housing market, continued job loss, soaring prices and plunging consumer confidence, Wall Street is indicating the worst is over.

Just watch CNBC for a few minutes as pundits take turns pummeling any analyst who says, “But what about those folks struggling on Main Street?”

You see moms and dads, the economy isn’t really about you and me. It’s about oil and commodities and credit. Think I’m kidding? Check out this New York Times story:

Many on Wall Street, the epicenter of the credit mess, seem to think that the worst is over. For the first time in months, analysts and executives sound upbeat again. Many of them see a broad, sustained recovery in both the economy and the financial markets coming in the second half of this year, a prediction some market strategists call hopeful at best.

Why the constant drumbeat of happy news when most of us are trying to find affordable housing or considering whether to give up bread or cheese? Because in America, telling people that they are happy is a proven formula for success. Most of the time, anyway.

And certainly, the bigwigs in government and business don’t want you thinking too much about the monumental problems we face everyday. Problems such as these:

Are You an Economic Optimist or Realist?

Why are some humans optimists and others pessimists? I was discussing this question with an acquaintance on my bus to work last week.

My theory: optimists often don’t see or simply ignore the downside to trying out a new restaurant, athletic fete or business.  A pessimist – though I substitute the word realist – viscerally sees the downside to new and old ideas.

Without optimists, we’d still be riding horse and buggies (or walking), the moon might never have been explored and supercolliders never built. Without realists, planes would fall from the sky and even worse politicians would be elected to office.

No place is the tug of war between optimists and realists more evident than the economy and the housing market. Here’s the historical smack down:

Effort to Stop Housing, Credit Bailout Plans Is an Uphill Battle

A battle for the hearts and minds of Americans has begun. No, I’m not taking about American Idol.

This battle is filled with arcane terminology, numerous moving parts and seemingly no clear “right” answer.

I’m speaking of course, about bailouts being proposed for homeowners and financial institutions. But before we talk about bailouts, we should ask ourselves these questions:

• Should we keep homeowners, who are stretched beyond their means, in houses they can’t afford?
• Should we let borrowers lose their homes and see what happens in the marketplace?
• Should we treat subprime borrowers differently than prime?
• Should we allow large financial firms to fail?
• Are we damaging capitalism, and thereby the economy by bailing out either group?
• Will our children shoulder a bigger tax and inflationary burden if we bail everyone out?
• Or will the situation be worse if we don’t?

What Kind of Bricks Is World Financial System Made From?

Each morning, I get off the bus early and walk down a mile or so of fabled LaSalle Street, home to Chicago’s banks, trading firms and other financial institutions.

At the beginning of the walk, I pass under the rusting elevated trains that mark the northern end of the Loop. Right after the bluish glass of the James R. Thompson building (state government) comes the imposing City Hall.

Or rather, the building would be imposing, except for all the larger financial buildings that surround it. Although most of Chicago’s largest buildings do not line LaSalle, the imposing Chicago Board of Trade at the end of the street got me to thinking about the relationship between cultural institutions and buildings.

Is the Fed Reserve Using Homes as Collateral Twice?

Warning! This post is confusing. Very confusing. Which is the whole point of it.

I find money and credit confusing. Take home loans: The bank gives the homebuyer money to buy a house. That money goes to the seller, who then pays off his bank.

That part is easy. The part I find confusing is “Where did the bank get the money to lend to the new homeowner?”

I used to think that money came from bank depositors. That is, Mike puts his savings into Stately Bank, which then loans that money to homebuyer Nick. Stately Bank and Mike share in the interest that Nick is paying on the mortgage.

‘Green Crack’ Is Drying Up Despite Fed’s Best Efforts

The addict rifles through the mail piling up on his kitchen counter.

Late electric bill.

Late gas bill.

A warning from his mortgage company.

“Crud. It’s gotta be here somewhere.”

Half of the pile falls, scattering on the floor.

“Sh---”

John bends over to pick up the pile. There, just under the cable bill – that one is always paid on time – is what John is looking for.

“Pay off all your bills!”

“Low your interest rates!”

“Consolidate debt!”

John shakes as he opens up the envelope. A rush of warm liquid power courses through his body. “You are approved for up to $8,000!”

“I swear, this is the last time I’ll ever borrow money,” John says quietly to the cat.

Meanwhile, deep in the recesses of America’s financial power, the Federal Reserve Board considers its next move to keep Green Crack flowing out to businesses and consumers.

The Credit Czar considers his recent efforts:

“Lower interest rates. Check.

“Make it easier for financial institutions to borrow. Check.”

“Let banks use worthless holdings as collateral to borrow money. Check.”

“Print more money. Check.”

Bailouts Benefit Who?

I have been having a hard time posting lately. Part of the problem is career distraction, but an equally large part of it is digesting what is happening to the economy in general and the housing market in particular.

What’s most disturbing are the efforts to “fix” our economic problems. Each solution has been designed to stick it to the taxpayers by shifting bad mortgage debt from financial institutions to government-backed entities.

The latest humdinger came from Ben Bernanke on Tuesday when he suggested that the Federal Housing Administration should “expand its insurance program to let more people switch from expensive subprime mortgages to federally-insured loans,” writes The New York Times. Bernanke also wants Fannie Mae and Freddie Mac to raise additional capital to buy mortgages off the hands of struggling financial firms.

But here comes the lie: “In theory, the change should not cost taxpayers,” writes the Times. “But because the companies are chartered by Congress, investors have assumed that Congress would bail them out if needed.”

Read the Fine Print Foundthe Latest Bailout Schemes

Yet another plan to bail out homeowners – which invariably benefits financial institutions more than the average joe – is making the rounds.

The latest plan being pushed by banks proposes that the government “rescue hundreds of thousands of homeowners whose mortgages are higher than the value of their houses,” reports The New York Times. The concern is that 8.8 million Americans – 10.3 percent of all homes – already owe more on their house than they are worth.

The number of homes nationwide expected to have negative values is expected to nearly double this year, writes the Times. In the West, 30 percent of the homes are expected to be underwater by mid-2009.

If you are a taxpayer getting nervous about bailouts, you should be. Banks want a “federal mortgage guarantee for troubled borrowers,” writes the Times. Basically, federal money would buy delinquent mortgages and then convert them to fixed rates.

I Feel for You, the Suffering Wealthy Parents of America

To the couple that had to have 300 holes drilled in their “flat-front lacquered maple cabinets in the kitchen,” I really feel for you.

Same goes for the family that had to put “their 18th-century mahogany dining table and chair set in storage.”

These and other housing décor horror stories in The New York Times really moved me. I know how tough it can be to order a billion-dollar table from France only to have the children carve initials in it.

And I know exactly what it feels like to buy priceless Barcelona chairs, only to have to stick them in storage because the “corners are basically razor blades.”

Yes, my experiences are very similar to the other rich and famous. I feel for all parents in the world that had to sacrifice world-class design just to make their homes child-safe.

The suffering of mankind is endless.

EcoMoms Is a Small, Positive Step Toward Saving Earth

February in Chicago is all about blah. Extreme cold, the flu, rain and snow, and cabin fever all conspire to banish happy feelings. Even the news media tends to be more surly.

So it’s nice to see a positive story for a change. This one brings to light ‘EcoMoms,’ parents who get together to discuss living in environmentally-friendly ways. Writes The New YorkTimes:

The women gathered in the airy living room, wine poured and pleasantries exchanged. In no time, the conversation turned lively – not about the literary merits of Geraldine Brooks or Cormac McCarthy but the pitfalls of antibacterial hand sanitizers and how to retool the laundry using only cold water and biodegradable detergent during non-prime-time energy hours (after 7 p.m.).

Move over, Tupperware. The EcoMom party has arrived, with its ever-expanding “to do” list that includes preparing waste-free school lunches; lobbying for green building codes; transforming oneself into a “locovore,” eating locally grown food; and remembering not to idle the car when picking up children from school (if one must drive). Here, the small talk is about the volatile compounds emitted by dry-erase markers at school.

Yeah, I realize a lot of folk will make fun of these wealthy moms – I can hear the Left Coast jokes already – but I for one find hope in the idea that there are other people out there who worry about toxic gases coming from Calico Rose (red)-painted walls.

The EcoMom Alliance already has 9,000 members nationwide and is creating its own niche in the blogosphere. Here are some key sites:

• EcoMom
• A Shade of Green
• Eco-Chick

If you expect gruff men will make fun of these woman, who apparently suffer from what has been coined “ecoanxiety,” you probably would be correct. That’s because women generally express higher levels of environmental concern than men, according to Riley Dunlap, a professor of sociology at Oklahoma State University.

But I’m with the women on this on. Maybe I can persuade them to rename their group the EcoParents Alliance?