I work in the mortgage industry. Last June, I left my position as the head of sales and marketing for a grouping of default-related divisions at one of the largest Title insurance companies in America, and started a company to help mortgage lenders and servicers work through their growing inventories of foreclosed properties. I have a front row seat to what I feel is one of the defining moments in the history of the United States.
To borrow from Abraham Lincoln's Gettysburg address, "...our fathers brought forth on this continent, a new nation, conceived in Liberty, and dedicated to the proposition that all men are created equal. Now we are engaged in a great civil war, testing whether that nation, or any nation so conceived and so dedicated, can long endure." I believe that we are now engaged in another "civil" war.
That civil war that Lincoln referenced in June of 1865 was both an ideological conflict, as well as a horribly deadly affair - a moment in history that forever shaped our young nation. With no less sweeping influence, the current "economic downturn" brings to bear a similarly urgent ideological conflict, with the potential for similar casualties.
I do not speak of the death and carnage of human flesh that men and boys experienced at places like Antietam, Fredericksburg, and Manassas. That great conflict produced almost 213,000 combat casualties and approximately 625,000 total loss of life. I speak of an avalanche of homes lost, businesses ruined, and lives that will be forever changed.
It was announced recently that 10.3% of all mortgages in the US were delinquent in November of 2008. Those delinquencies translate to over $1 TRILLION in mortgage debt that is now past-due. In this age of spin-doctored headlines and politicized prognostications, it’s easy to become numb to these staggering numbers. Let me help you put into perspective exactly how much $1 TRILLION really is.
Picture a stack of 100 one-dollar bills – the kind that are banded and stored in a bank teller’s cash register. Each stack of bills is approximately ½ inch thick and has a value of $100, of course. How much is $1 MILLION dollars? Picture a stack of $1 bills 417 feet high. That’s taller than a 40-story building. That’s how much $1 MILLION is.
OK, so how much is $1 BILLION? Imagine a picture of the earth from approximately 79 miles high - a picture like many we've seen transmitted from orbiting spacecraft. Imagine a stack of $1 bills extending so high that the one-millionth bill on the stack is right outside the spacecraft’s window. That’s how much $1 BILLION is.
OK, so how much is $1 TRILLION? Imagine (if it is even possible) a stack of $1 bills extending upward 79,000 miles from the surface of the earth. The one-trillionth bill on the stack would be about 1/3 of the way to the moon. That’s how much $1 TRILLION is.
(Note: At the time of my writing this, our national debt stands at $10.6 trillion dollars. Our stack of $1 bills to equal the amount of our national debt would extend from earth to the moon, back to the earth, back to the moon , and halfway back toward the earth.)
Some Pollyanna pundits point to the recent slowing of foreclosures filings as the beginning of a recovery. They laud the effectiveness of the strategy of modifying loan terms for troubled borrowers as a way to avoid foreclosure and reverse the economic decline. What they fail to focus on is the fact that foreclosure moratoriums are now in-place in many states. This will only delay the inevitable. They also don't point to the fact that approximately 50% of loans that were modifed out of foreclosure in the first half of 2008 are now again delinquent just 6 months later.
American homeowners will collectively lose more than $2 trillion in home value by the end of 2008, according to a report released today. 11.7 million Americans now owe more on their mortgage balances than their homes are worth. At the April 2008 meeting of an industry association focused on foreclosed real estate, a guest economist pointed out that we have built 4.1 million new residential structures since 2006, but created only 2.2 million new households.
The dirty little secret that nobody wants to address head-on is that there are two constants at play today, just as they have been forever -- 1) the cold hard law of supply and demand is still in effect; and 2) lenders will always want to be re-paid, WITH INTEREST. Those immutable laws seem to have been forgotten by, or worse yet never taught to our current generation.
In a head-long rush toward prosperity since emerging from The Great Depression, we Americans have put aside the basic value of honest pay for an honest day's work. Fueled by greed, we set forth each day to get more stuff. We have ignored the needs of the needy around us. In fact, their very presence has only served to fuel our drive to never find ourselves in such a state of poverty and want. We take pride in our great accomplishments, evidenced by the trappings of success. We have strayed from our recognition an Eternal Supreme Being, from whom all we have is derived. The result has been a widening gap between the "haves" and the "have-nots" in America today.
History is a master teacher. As we look backwards, we have the opportunity to learn from those who came before and make necessary course corections in our lives and in our society. Over and over, through eons of time, great civilizations have succombed to the Pride Cycle and crumbled to dust. Each one of those peoples were supremely confident in their abilities, knowledge, power, and wealth. They started out humble and hard-working, recognizing their puny power in the face of nature, and bound to a strong belief in a Diety. Their characteristics of hard work, honesty, mercy, charity, and duty to their God translated into prosperity and wealth. However, with prosperity came greed and envy, with a resulting separation between the rich and the poor. Ultimately, the great civilizations collapsed in corruption and conflict as the "house of cards" came tumbling down.
I do not presume to argue that American society will crumble to dust. I am more hopeful than that. I do, however, believe that a humbling of America is coming. With arrogance and greed, we have wielded our global financial, military, and governmental powers for decades, with the goal of prosperity at all cost. We have strayed from our belief in a Supreme Being, from striving to produce an honest day's pay for an honest day's work, and from our duties to take care of the needy around us.
The fundamental ideological conflict that we - that I must confront in the current economic downturn is this: how much is enough? How many cars do I really need? How many flat screen TVs do I really need? How many square feet in my home do I really need? I must reflect on and challenge my motivations for my labors.
To guide my quest, I do not look to the media or elected officials for wisdom and direction. I find myself all too often cynically evaluating the hidden agendas of those talking heads. Rather, I find myself taking more time for introspection, reading, and personal religious discipline. In the process, I have found that opportunities for service to others abound.
In the current raging economic battle, with growing cries of anguish and pain all around us, I suspect that we may all find a source of solace in taking opportunities to focus our attention away from our personal fortunes, finding opportunities to reduce and simplify our lives, and giving service to those in greater need. If we would all take a moment to seriously refect on how much we truly NEED, distinguishing that from what we WANT, we would find a wealth of resources that could be directed at those who are TRULY in need.
More information about text formats