The Third Finger

The Opinion article in Newsday Point two fingers of recessionary blame] points fingers at banks and public employee unions for the current economy but left out the largest offenders. One of the two things these situations have in common is that the banks and unions both acted in their own best interests. The unions can only propose contracts. Politicians and school boards have to agree to them. You propose a contract with salary, benefits and raises that are unsustainable and beyond other industries. Your employer gives it to you. Do you turn it down? Probably not.

The banks made mortgages according to the rules set down by the politicians who ran Fannie Mae and Freddie Mac. The mortgages were guaranteed. The instruments that the banks created were backed by these guaranteed mortgages. Banks made money on both. They didn’t turn the money down either.

There is a pattern here that shows that there is a third finger to point. In both cases, bank and union actions were determined by what politicians did. The other thing that these situations have in common is that in both cases the politicians were spending money they didn’t have. When the reason for what happened is properly defined there will be hope of getting on the right track. Until then, everyone will blame everyone else and those truly responsible will continue to be re-elected