It is always interesting how conversations turn in topic, taking you places where you didn’t expect to go.
Last night I was sitting in my kitchen with my wife, and as I was opening a bottle of wine, she asked me to explain the bailout to her. She said that she has been hearing so much from so many people, almost all of it in panic, and wanted my explanation of what the hell is happening.
"And keep it short, I don’t want one of your two-hour explanations!" she said, smiling.
Two hours later, we had finished a completely different conversation.
I did my best to compress the massive complexities, which I struggle with myself, into something short and easy to understand. Basically that the huge banks on Wall Street had been giving mortgages to everyone, good and bad, for years now, and those mortgages were getting worse and worse, with more risk each time. Some of these were to poor people, some were to house flippers, some to middle calls folks, some to big real estate developers. And it used to be that each bank took on it’s own risk, if a mortgage failed, the bank got hurt. But that was it. But now, with little regulation to stop it, every bank was tied to every other, they all cross-invested and cross-deposited their money. then, to protect those investments, they took out insurance on those investments and mortgages, then, to make more money, they took insurance on each others mortgages, and so on. And this was all fine in a rising market. Once the market stopped rising, the whole thing collapsed. Banks pulled their money back, but no one had any cash directly, so everyone tried to pull out their cash at once, homes were falling in value, so the mortgages they held were less and less in value, and so on. This was leading to a credit freeze, where all the banks are afraid to lend to each other, which hurts everyone.
I was doing my best to make it simple, but it isn’t a simple problem. She kept listening as I explained more, and had a slightly better understanding when I was done. But she wanted to then know what the bailout was supposed to do. That I couldn’t really answer. I likened it to cutting your arm badly, and the bailout was a paper towel you held on the bleeding cut while you ran around looking for the first aid kit. It was no solution to the problem, but it was better than nothing for a start.
But she had concerns other than this direct question, and was getting around to asking it.
"Isn’t this about the Government buying up the banks?"
Well, kinda, i said. I explained that one of these ideas is where the Government buys a part of the bank, and the bank uses the cash to stabilize, while the government make sure that the bank cleans up its act.
"isn’t that what happened in the Soviet Union?" she asked. Now I could see her concern. My wife is Russian, she grew up in the Soviet Union, and lived through the whole turmoil as the government collapsed. I met her in Moscow, married, and we moved together back to the United States. So this whole experience is very familiar, and unsettling to her.
"Not really," I said. For each of these the government want’s it’s money back, with interest. That might not happen, but it’s the goal. I explained how the Chrysler bailout worked, and that the company paid everything back once they were stable, and hopefully that is what should happen now.
At this point she started talking about her growing up in the Soviet Union, and how everything they had was taken away, multiple times. We had talked about this before, and it made her concern for what is happening now really make more sense. Her father’s family was wealthy pre-revolution, owning a huge beekeeping business, and having a large house outside of Moscow. When the Communists came the threw her family into the street, smashed the beehouses, and took the family home for the state. It is still there in the town outside Moscow, not far from my in-laws apartment. My mother in law was from Estonia, and had relatives in France. When they died, she inherited a jewelry factory in France. This was taken by the Soviet Government. Growing up, my wife lived in what was almost a farmhouse, not too far away from her family’s original house, it was old, but big, warm, with a huge orchard and animals. One day someone from the government showed up and told them they had to move. The house was confiscated, and they were given a one-room apartment in downtown. It took several years before they moved to a larger apartment closer to their old place, where the in-laws still live today.
So I could understand her nervousness. That’s a hell of a lot to have taken away, but you have to compare it to the transition from Soviet Union to Russia as well. When the government collapsed, it collapsed. Pensions vanished. Food was unaffordable or impossible to find. Jobs were impossible and low paying. Housing shortages were everywhere, and no private capital to build more. Police were nowhere and the mafia ruled the streets. Hyperinflation was crazy, and life savings turned into pocket change.
People in America wonder why Russians are OK with Putin. It’s because he’s stable. That counts for a lot when you have just gone through several governmental collapses.
So which were we heading for? Total collapse of total control? Was it possible to stay in the stable middle?
I didn’t know.
Halfway through our bottle of wine she told me about living in Turkey. My wife is an olympic level gymnast (we own a Gymnastics school here) and she traveled to many countries in Europe for coaching work in her late teens/early twenties. Just before we met, she had been living in Turkey for a few years. When she first got there, she was scraping by on $100/month in a coaching job. But what made is so hard, was that at that time in Turkey, all Russian women were viewed as prostitutes. It didn’t matter that she was a soviet-trained coach and Pan-European Tumbling Champion two years in a row. She was Blond, Russian, and Christian, so she was a prostitute. She got used to being treated like dirt. She then told me, that at one point, she met an American who worked at the nearby consulate. This was the first American that she had ever met. He was particularly memorable, because he was nice. He tried a few pickup lines, but that failed, and he settled for conversation and coffee. What was shocking to her was that he was actually interested in talking to her, and was listening. After talking a while, he invited her to the Ballet, which she could never afford on her own. She asked "In trade for what?" expecting another pickup. But the answer was nothing. He just wanted someone who could actually appreciate the ballet along. She said no, smiled, and that was that. But she walked away with a different impression of Americans than what had been ingrained before. This older, wealthy man treated her with respect, and kindness, in a way that she didn’t get anywhere else.
She told me that that was the same thing she saw when she met me. We met when I was working in Moscow in the early Nineties, and at the time Russians were feeling very bad about themselves and their country. Almost everyone looked down on them. But I loved Russia, and I loved Moscow. When I met her I took her around to little places in the city that she had never even heard of. I told her everything i had learned about the city history, and how i found it fascinating. She saw that as an American I wasn’t looking down, but seeing what we had in common. And celebrating it.
When we married and moved to the US, she got a job at a local, small gymnastics club teaching kids gymnastics. Within the week, two local newspapers interviewed her, fascinated to meet the "new coach from Russia". She told me how she literally felt how this was the land of opportunity.
All this has made it hard for her to watch America in decline. When we left Russia, Americans were LOVED. Now they look on us with the same confusion as the rest of the world, as if to say, "what happened?" This peaceful country engaged in war, this prosperous country collapsing into debt. She couldn’t understand how it happened.
Neither did I.
But I told her that that was why I take politics so seriously now. That is why I write on my blog. That is why I donate money to candidates, and that is why I make calls for Obama. That is why I fight. I can’t change everything, I can’t even change anything on my own, but when I am working with groups like this, we all make a change. And while I didn’t know how this current crisis would turn out, I had faith that we wouldn’t fall too far one direction or another. America has always been a self-righting ship, even in the roughest seas.
When I used to walk down the streets of Moscow, just going to work daily in another country, I was an emissary of America. Today, sitting at my desk, calling names on a list, I am too. Then, I tried to represent the best things to others, today, I am trying to make things great again. I have my wife’s high expectations to meet.
That is why I fight.
[ed. note: this was rescued on DailyKos today!]