By Asher Miller
There’s a lot to digest in Michael Lewis’ The Big Short: Inside the Doomsday Machine but I was particularly struck by a passage at the very end of the book, which I think aptly describes one of the major obstacles to properly understanding the costs and consequences of our globalized, industrial way of life — distance.
“The monster was exploding. Yet on the streets of Manhattan there was no sign anything important had just happened. The force that would affect all of their lives was hidden from their view. That was the problem with money. What people did with it had consequences but they were so remote from the original action that the mind never connected the one with the other. The teaser rate loans you make to people who will never be able to repay them will go bad not immediately but in two years when their interest rates rise. The various bonds you make from those loans will go bad not as the loans go bad but months later, after a lot of tedious foreclosures and bankruptcies and forced sales. The various CDOs you make from the bonds will go bad not right then but after some trustee sorts out whether there will ever be enough cash to pay them off, whereupon the end owner of the CDO receives a little note: “Dear Sir, We regret to inform you that your bond no longer exists.” But the biggest lag of all was right here, on the streets. How long would it take before the people walking back and forth in front of St. Patrick’s Cathedral figured out what had just happened to them.”
This veil of time and distance is not just true for the consequences of the subprime mortgage scam, of course. It’s true for many of the outcomes of our consumer-driven, globalized, and industrial way of life (those of us in North America, in particular). The obvious ones are climate change and the food system.
Read full post at Postcarbon.org