That's Five Rs, If You're Counting

I am late coming to this, but it is too good to pass up comment on. An editorial in the WSJ actually tries to link the "War on Christmas" to the collapse of the stock market.

What really went missing through the subprime mortgage years were the three Rs: responsibility, restraint and remorse. They are the ballast that stabilizes two better-known Rs from the world of free markets: risk and reward.

Responsibility and restraint are moral sentiments. Remorse is a product of conscience. None of these grow on trees. Each must be learned, taught, passed down. And so we come back to the disappearance of "Merry Christmas."

This, in and of itself, is pretty freaking hilarious, but I actually found the opening much better. Despite a persistent belief in the wonders of the free market, Daniel Herringer argues that many Americans have lost 50% of their wealth through no fault of their own! It seems that poor people, people who have not the morality required for home ownership committed fraud on their loan applications on such an epic scale as to bankrupt innocent investors who were merely trying to make a moral buck on those loans.

How the financial markets fell so far so fast will occupy economic seers for years. The path to 50% wealth reductions and the death of Wall Street was paved with good intentions, notably the notion that all should own a house, even if that required giving away the house to untutored borrowers with low-to-no-interest loans.

This good intention set off history's largest chain of moral hazard. The great unraveling began sometime between 2005 and 2007, when borrowers, lenders and securitizer shamans all found themselves operating in a zero-gravity environment, aloft on moral hazard.

Perhaps it requires the perspective of someone who has lost absolutely nothing (knock, knock) in this great market collapse to say this, but if you lost half of your wealth because of the collapse of an immoral system, doesn't that mean that approximately 50% of your wealth was built on that very immoral system? Weren't you trying to cash in on the crazy morality-free frenzy that the entire capitalist system immoral system was built on?

Let's not even get started with personal responsibility and restraint, as those have nothing to do with the investor, only the investee. Once the paperwork on the 401(k) is signed, all personal responsibility and restraint is at an end.

Even though I haven't lost anything (knock, knock), I have friends who have, so if it helps them get some money back, I wish you all a Merry Christmas. Especially you non-Christians, you need it most of all.