Material Man

If you hang around the wizards of high finance (investment bankers, bond traders, brokers, and the like) you’ll soon hear the word “monetize.”  It’s a synthetic term meaning turning something of value into money.  In it’s most practical sense it’s used to describe how a new company like Google can monetize their search engine technology by selling advertising connected to search results.  Similarly, we can monetize our golden retriever pet by breeding her and selling the puppies.  It’s not a bad thing in and of itself, but when it becomes the only way you look at the world, it transforms you into a scoundrel.  Please excuse my shocking example but young girls are being monetized in countries like the Philippines and Thailand by being sold to pimps as young prostitutes by their own parents.  You see when we lose sight of the inherent, spiritual dignity of human beings and lose respect for the sacred value of nature we begin to see people and our planet as “things” to be monetized.  The reason we need to regulate our financial markets is that the mindset of Wall Street is to turn everything into money.  There is no financial language for human, spiritual, or nature’s inherent value.

So now we have a growing economic crisis.  Economists hope it’s simply a modest tidal wave.  They want it to hit quick and recede so the mess can get cleaned up and they can get back to monetizing things, people, and the planet.  Business as usual.  But their economic problem is likely to be more like global warming submerging our coastline rather than a single wave.  The melting icebergs are the declining values of trillions of dollars of residential real estate.  Sure the sub prime mess might be contained at losses of $200 billion or so.  But now prime borrowers who used their good credit on bizarre loans that encouraged interest only or even minimum payments that added interest to a loan’s principle every month are in deep yogurt.  Eighteen months ago a client of mine was offered a $1.5 million loan to buy an overpriced house in San Diego for $1465 a month!  The true 30-year amortization of the loan was over $10,000 a month but not to worry.  He was assured he could always sell in 6 months for $2 million.  When he asked me what I thought, I told him my mother taught me whenever “my eyes were bigger than my stomach” I would get a bellyache.  Yes he could afford $1465 a month; what he couldn’t afford was a $1.5 million house.  He passed.  Well lots of other people didn’t pass, and they’ve got a looming heartache.  Some estimate there are more than $500 billion of over-bloated prime mortgages that are at risk in the next 4 years.  If prime borrowers start walking from their homes, the impact on the global economy and our children’s well-being could be staggering.

I, of course, don’t know what‘s going to happen.  What I do know is that all this was caused by Wall St. trying to monetize our homes.  Yours and mine.  The idea was simple.  American homeowners on average owned nearly 60% of the equity in their homes in 2002.  They represented trillions of dollars of “locked up” value…money.  Banks began to offer home equity lines in the 1990’s to get at this value by creating secured, interest-earning loans.  But that was chicken feed for Wall St.  They got federal regulators to relax oversight of the mortgage market then they trained an army of retail mortgage brokers to sell homeowners on refinancing their old fashion mortgages with a new variable rate, payment option loan to “monetize” the equity in their homes.  Free up cash for us to pay for granite countertops, Hummers or just blowout vacations.  The financial wizards made billions in fees and we got suckered into thinking there was such a thing as a free lunch.  Now we’re paying for it.  All of us.  Not just those who took out loans, but also our children who are already having a harder time finding jobs in a frightened economy or are paying higher credit card interest for gas they can’t afford.

Could all of this been avoided?  Absolutely.  The hyper-inflated real estate boom made our whole nation Enron 2.  The lack of oversight and regulation of Wall St.’s monetization of our assets is a direct result of a failure of leadership.  Leaders of financial institutions and regulators who are supposed to insure our financial markets have integrity completely failed.  Meanwhile, today oil speculators have driven the price of oil to at least $20 a barrel higher than real demand says it should be.  You see prices of nearly every commodity from wheat and corn to oil is going up faster than demand because financial wizards are now focused on “monetizing” the essentials of our lives.  No, it’s not a conspiracy.  It’s simply the result of only seeing the value of things as money.  When powerful people operate without rules, we all pay more than we should.  It would be great if the world could operate on the honor system.  But it can’t.  We need real leaders who can’t be bought and who aren’t afraid.

And speaking of fear, it doesn’t hurt to look inside.  We also have our own inner “Wall Street Banker.”  An inner voice calling us to monetize our own lives.  To work at jobs we don’t value or to work too long and too hard for money at the expense of our relationships and peace of mind.  We need to take care to regulate ourselves lest we become corrupted by our own fears.  All of us need to stand for the quality of our lives rather than quantity of what we can produce.  We need to own 100% of the equity of our souls.

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