|Did Greed Cause the Recession|
June 15, 2010 by yunesj
Since I’m a rotation student, I’m new in my lab. I just had my first political conversation with my office mate, and it was about the role greed played in the recession. Here are some of my thoughts on that.
“Greed” is vogue, just as “hope,” “WMD,” and “flip-flop” were. It doesn’t have much meaning.
“Greed” is a scapegoat. Politicians are blaming the economic collapse on “bad people,” without bothering to be more specific. These greedy people already had enough, but they wanted more, just so you couldn’t have it. (But don’t worry, the government can protect you from “greed.”)
How does greed manifest itself in a company? As people working harder, longer, and smarter than what is expected of them. Working harder makes their product better, their customers happier, and their company profit more, and it is therefore greed. Bankers were making a killing for their company, the government was incentivizing them to do it (by aggressively buying up the subprime securities), and they were increasing home ownership for Americans. Sounds like a win-win-win.
Well, is there a better explanation for the recession? How about the central bank’s policy, the laws that demanded banks “meet the needs of borrowers in all segments of their communities (ref: wiki),” and Fannie Mae and Freddie Mac?