We have by now all read about bad mortgages, assets both illiquid and toxic, weapons of financial destruction (WFD), credit-default swaps, derivatives, and other gambling schemes devised by lawyers, financial wizards, and industry lobbyists far removed from Happytown, USA.
Washington, DC is belatedly sorting through Wall Street's mess in order to salvage what is left of American capitalism run amuck. The Gilded Age of investment banking is over: there are no investment houses left standing on Wall Street.
After the crisis and its accompanying pain, America will be forced to reexamine some basic assumptions. These assumptions are in their most basic form the foundation of the differences between the two national political parties. These competing views of what the country ought to be like date back to it's founding: for purposes of clarity, Hamiltonian and Jeffersonian.
Alexander Hamilton, the first US Treasury Secretary, favored a strong central national government that favored financial interests over individual citizens.
Thomas Jefferson, the Third US President, favored a central government with limts and checks-and-balances, deference to the states and people respectively, and favored the commoner over the patrician.
Homeownership was the accepted American Dream until reckless risk-taking, greed, gambling, fraud, corruption, and abuse overturned the financial order.
Washington, DC is proposing a Hamiltonian solution to the financial wreck. There are concessions to those concerned that Wall Street financiers will walk away from the mess very wealthy and with impunity. As if money, rather than freedom, was America's central cultural, economic, political, and social value. That is very Hamiltonian.
Others, while still reasonably concerned with economic survival (financial stability seems passé), are equally, if not more, concerned about freedom, justice, and maintaining the American vision of homeownership. That is very Jeffersonian.
While it is easy to succumb to the fears and passions of the moment, our Western heritage has taught us that reason ought control the emotions. That cooler heads might prevail over the rush to judgement by hot feelings.
In 1862, the United States passed the Homestead Act which granted applicants roughly 65 hectares of land outside the boundaries of the original thirteen colonies. Homeownership fueled America's growth, its westward expansion, promoted individual responsibility, and was highly successful.
The federal government effectively ended homesteading only in 1976 with passage of the Federal Land Policy Management Act. That law placed government ownership of public housing above private ownership. The last claim under the Homestead Act (1862) was settled in 1988 in Alaska.
Is it time for the US government to renew its historic commitment to homeownership, individualism, and the American Dream? Should the United States be rescuing the finaciers who delivered the weapons of financial destruction, or the middling yeomanry who built the nation and were the source of all that Wall Street wealth, as well as the target of its WFDs?
