Putting the week in perspective

Friday, September 19, 2008

Host Tess Vigeland asks John Bogle, founder of the Vanguard Group, for his take on all the week's dramatic financial news.

John C. Bogle, founder of The Vanguard Group (vanderbilt.edu)

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By John .

From NM, 10/10/2008

This isn't a "mortgage crisis."

Ignorant people blame it on people who buy bigger houses than they can afford.
The GOP is happy to blame those home-buyers, rather than taking responsibility for the problem.

As well, GOP's preying on racism: look at who lives in those Stockton CA and Las Vegas NV communities that are being impacted the worst: Chinese and Hispanic yuppies.

McCain's pandering to ignorance on that point, and the appropriate solution to that is already underway.

This is a "securitization" and leverage crisis that's happened due to zero regulation of the so-called "toxic" instruments (CDOs etc).

McCain demonstrated profound ignorance when he blamed the crisis on SEC Chairman Cox.

Cox pleaded repeatedly in 2007 with Congress to be authorized to regulate these bad instruments and the GOP shut him down.

By Harry Bar

From ME, 09/22/2008

"don't peek"? john bogle calls that advice? mr. bogle says he's a "stay the course" kind of fellow. but you need to ask him about ALL his wealth, then, not just stocks and bonds. it's easy for him to say, as he's said repeatedly, that he never looks at his (presumably) vanguard accounts. do you suppose he has other assets and a tidy income? i do. and probably alot of it. i find it disingenuous and not helpful for those of us who are at retirement age with relatively modest savings to have to continually hear this kind of arid message. it's faintly condescending, noblesse oblige. that said, i am a vanguard investor as was my father and as is my brother and son. it’s just that mr. bogle seems constantly to be pitching his total index idea at every opportunity. it's an idea but it's not science and it's inappropriate and annoying at times. it's true that the market goes up and the market goes down. and yes, mainly it goes up and so, yes, why not, if that’s the case, own the whole market? that's been true in the recent past fortunately for mr. bogle and vanguard and it's served him well in the years since vanguard got going (fortunately for vanguard after a very slack ten years plus from 1966 or so during which the market did not go up and anyone who invested in it then who had only a ten year window lost. alot. so i think mr. bogle needs a shot of humility or to come cleaner or both. (i believe managers at vanguard have a higher total stake themselves in the managed vanguard funds than in vanguard index funds. ask him if that is true.) there is a complacency in mr. bogle's words and it's complacency that has lead to this crisis. mr. bogle would do well to go back and read david hume. constant conjunction, remember?: just because you believe the market will go up doesn't make it so.

By Chris Purvis

From Orange County, CA, 09/21/2008

The Eight Criminals of the Financial Collapse of 2008 who set aside good American values ...

1. Sub-prime loan brokers and their firms who placed people into loans they knew people would have trouble repaying unless home prices continued to rise
2. Consumers who had no business buying homes given their life situation and inability to handle money
3. Consumers who bought larger homes knowing full well they couldn’t handle the associated loan, but wanted to bet on rising home prices and planned to leave the house to the bank if things didn’t work out
4. Consumers who used home equity lines of credit to buy fancy cars, big screen TVs, vacations, and other non-essential goods
5. High finance managers who knew the risk to which they were exposing their firms and the economy, but loved the bonuses
6. High finance managers and analysts who didn’t understand the risk they were absorbing into their firms. Amazing. Baffling.
7. Regulators who knew securitized instruments and derivatives needed serious regulation (e.g. daily valuation and reporting) and ignored the problem. Gutless.
8. Politicians who wanted everyone to own homes (Clinton) and wanted to use consumer-spending and asset price rises to prop up the economy following the capital-spending led recession of 2001 in order to stay in office (Bush). Well, they’re politicians after all.
Shame.

By Leslie Lischka

From OR, 09/20/2008

The seeds of this week's events were planted over the past few generations and nobody is addressing the root cause. Our educational system, no matter what test scores show, is not producing people who can think about and handle the mathematics of daily living. Our "one country, under God" seems to ignore the prime directive of most religions- compassion for other beings. As a result we have people urged to sell mortgages to people who cannot possibly pay- by convincing them that they WILL be able to pay, and sellers who manage to have compassion only for money, not for people, community and country. Let's get back to BASICS!!!
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