The protests that began several week ago have spread from NYC to several cities across the nation. I was thinking about why people are protesting now, but not before the market crashed in 2008. As I puzzled over it, a friend answered my questions simply: “Fear. They’re afraid now.”
We are driven by confidence
For at least the last 10 years, people bought homes and invested in housing loans, because they had confidence that home values would go up. In fact, there was so much confidence, that three things happened:
- There were loans that shouldn’t have been taken or given
- A lot of investments were bets (derivatives) that home values would increase. Investment banks bet so much, in fact, that they went into debt!
- And lastly, but maybe most importantly, investment banks started cheating. They combined the risky derivatives, called subprime, with the more stable derivatives, called AAA, and called them all AAA.
Fear is useful
Everyone bet on house loans because there was no fear, because there were no negative consequences to our actions. The banks didn’t care when someone couldn’t pay their home loan, because the value of homes was always going up. If someone walked away from the loan, the bank took over an investment that was increasing in value. Still, bank debt continued to grow, and fear set in that banks didn’t have enough money to pay their account holders. Fear is useful to balance out the belief that we cannot fail. In fact, failure is good.
Failure is a learning opportunity, not a time for retribution
Occupy Wall Street has an opportunity to recognize the failure of the US: Of our government in promoting irresponsible housing loans. Of the banks that chose to go into debt so they could continue giving out housing loans, good loans or bad. Of the people who accepted loans but couldn’t really pay them. Of the people who allowed their banker to bet their money in the housing market without knowing how they were going into debt?
Occupy Wall Street is not a time for class warfare
Occupy Wall Street needs to show us that our failure is a chance for hope. Hope that we can hold people accountable: The people in government, the people in the corporations, and people like you and me. The protest is a call to take responsibility. To realize that we have the power. The power to do the right thing. When the government or corporation has become too big for us to control, it’s time for us to reign them back to represent our interests. Not the interests of money, but the interests of people.
How do you think the Occupy Wall Street protests can bring about this change?