Financial Instant Gratification

George U.U. Bush made a comment today that when people make mistakes they should bear the consequences and it’s unfortunate that isn’t happening.

He was talking about the CEOs getting rich while the working stiff gets clobbered in the financial crisis. But just for a second, I harbored the hope that his next line would be “Therefore, Dick Cheney, Donald Rumsfeld and I will spend the next year driving around Iraq in an unarmored HumVee eating MREs. Should we be injured we will be treated only at VA hospitals.”

I get an average of fifteen offers of new credit cards every week, and at least a third of those have blank checks in them. “Just fill it in and get the cash you need. The cash you deserve!”

Somewhere in these things there is always a summary of what it’s going to cost in the long run. It’s actually fairly clearly stated. To me at least, but then I have an engineering degree from MIT. How well do you think your average high school drop-out can figure out what the “Cash they deserve!” is going to cost them? That group is about 34 million Americans, by the way, and we’re adding about 400 thousand a year.

Not that finishing high school, or MIT for that matter, is any insurance against making bad decisions. Especially under stress. Stress like missing a couple of payments, or your spouse needing medical treatment, or a tree falling on your house and the insurance company telling you that for a “named storm” your deductible is $18,000. The temptation to sign that check is overwhelming. Even if you know what it’s going to cost in the long run. That’s the long run; this is now.

The Congressional contribution to all this, of course has been to make it harder to declare bankruptcy. The equivalent of giving candy to children and jacking up the price of toothpaste. A few years later when they say their teeth hurt, call them “whiners.”

I know several people who are in the financial business. Some are bankers, some are financial advisers. They would all like to get rich, and some of them have. What they have in common is their belief that wealth for them comes from doing a good job of building wealth for others. Successful for them was to get some clients and do the best they could for them over a period of years. They got a little share of everybody’s good fortune, and it added it up to a lot. They want their clients to do well.

The financial crisis is built on instant gratification. The financial Masters of the Universe started better-dealing the idea of getting wealthy over time by helping others get wealthy. They wanted to get rich now, and if that destroyed somebody else’s chance of creating wealth, they didn’t care.