Published: September 18, 2008 11:59 pm            

Americans often live in excess, not moderation

Today let’s pay homage to the allegorical virtue moderation. Moderation is a good, core value for us to honor every once and again, isn’t it? In fact, isn’t moderation a good virtue to practice everyday in all things?

In Biblical times, St. Clement of Alexandria, wrote temperance (moderation) is “Not abstaining from all things, but using continently such things as one has judged should be used … such things as do not seem beyond right reason.”

“Nothing in excess” — more than one Greek philosopher stressed the vitality of that notion.

In the U.S., we addictively overconsume, overspend and overindulge everything.

Consider super sized portions at fast food restaurants: Those meaty, gargantuan portions are pushed on us by counter workers, and many of us, without thought, accept the invitation. We overspend habitually, as illustrated by our frenetic overuse of credit cards. Any and all activities, we overindulge.

Even the current presidential race. The candidates have been campaigning since President George W. Bush was only about halfway into his current term of office. Both campaigns will spend record tens of millions of dollars on television advertising alone. Overkill.

Moderation is a legitimate virtue to apply to all activities, yet for some reason, in the U.S., we do not apply the virtue to our finances, financial markets nor almost any other area of American life.

Let’s be unvarnished with ourselves: This (most recent) stock market collapse is not a fluke or some sort of strange self-correcting downturn in the ebb-and-flow stream of forward-charging American capitalism. Rather, it’s the inevitable, catastrophic result of unblemished, unrestrained, unchecked American greed.

On Tuesday, the stock market fell over 500 points. The following day, it fell another 450 points. In consequence, our national markets are extremely fragile. But the truth is, our finance markets were fragile even before this week’s stock market crash. The U.S. is over $9.6 trillion in debt. Our spending deficit for the current fiscal year is over $400 billion.

Some Wall Street brokers and many mortgage money lenders around the country have exacerbated a shaky national economy with greedy lending and investment practices. With the goal of lending ever more money, and making ever higher commissions, some mortgage lenders caused the current mortgage lending crisis by extending too many home loans, on inadequate and unrealistic terms to way too many Americans, who overborrowed in order to, yes, buy bigger, fancier homes than they needed or could afford.

Some mortgage lenders, notably the failed Countrywide, made many home loans at loan-to-value – they lent the buyer the entire amount of the home sale with no money down. In some cases, bad mortgage lenders even lent the buyers more than loan-to-value, so the buyer could pay closing and other new home start-up expenses.

It creates a nasty domino effect when large finance houses, like Merrill Lynch, Bear Stearns, AIG and Lehman Brothers, invest heavily in companies like Countrywide and/or purchase their outstanding home loans on the secondary market. When the home loans are defaulted on, the first nasty domino falls.

Why do these huge, historic, formerly stable finance giants invest in such ways? For the same reasons as shaky mortgage lenders, they want more and more fast, easy profit. Enough is never enough in the U.S.

Today’s national financial predicament is similar in several ways to the ghost-financed stock speculation in the 1920s which led to Black Thursday, the Great Crash of 1929, which precipitated The Great Depression, of the 1930s. Back in the 1920s, stock brokers would “lend” many people, including many middle class people, “money” to purchase stocks with very little or no money put down. Often time, the stockbrokers were not putting up any (in some cases, very small amounts) of personal money for the stock purchases. The transactions were financed by banks or on credit by the companies selling the stocks.

When things got a bit shaky financially in 1929, and the banks wanted their money which financed the speculative stock purchases, very few Americans had the money to pay the bank back, and hence the Great Crash of 1929.

Moderations in all things is the key to avoiding such tragedy.

Yes, moderation even in buying and selling.



Dave Kinnamon is a staff writer for the Enid News & Eagle. Contact him at dave.kinnamon@sbcglobal.net.