I have followed the real estate speculation of recent years with some concern and frustration. Now called the “sub-prime” crisis in an act of misleading reductionism, this debacle has great potential to harm us. There are several aspects of the current morass that strike me as relevant.
First, otherwise good people actively, even gleefully, participated in a process of driving up home prices in the interest of their own enrichment. This process directly contributed to the impossibility of home ownership for a startling number of working families. Many LDS participated in such speculation, an activity with many different names. Even those of us who abstained directly may have invested in mutual funds heavily influenced by REITs, whatever our broader claims to moral superiority by abstaining from real estate speculation (I am guilty here of not thinking through the repercussions of simplistic investment advice).
Second, the seers of the market religion, the financial companies, banks, hedge funds, and the like played a loanshark game with unjustifiable gambles (euphemized as incorrect “risk management”), engaging in behavior that we have historically associated with cocaine-addicted day traders. The wisdom of Wall Street, the market force in which many of us place great faith and trust, somehow appears to have believed the same absurd possibility that cash-poor and appetite-enriched Americans would be able to ride the wave of absurd real estate speculation with fluid, tenuous, and unsupportable mortgages. The fact that this system managed to repackage this misbehavior into nearly unidentifiable “instruments” is an index of the fragility of endless “innovation” in pursuit of pure greed.
Third, we in the LDS tradition could have read the Kirtland financial collapse and real estate speculation history and realized where this was headed by historical analogy. Similar behavior almost destroyed us in the late 1830s, when Kirtland was awash in real estate speculation, unsustainable mortgages, and personal consumption based in credit. When reality struck, the system collapsed, and the church barely survived intact.
I wonder what we have lost as individuals and as a community from our participation in real estate speculation, whether we could have resisted better, struggled harder to shirk Mammon. Owing to our greed, our fear of regulation of financial markets, our soul-dissipating love of wealth and its trappings, we have participated in a system that has bankrupted many of our financially and socially fragile siblings, enriching (transiently, in retrospect) wealthy speculators at the expense of the economically marginal among us. Were we powerless to resist the behaviors of Babylon? Would it have made a difference for Latter-day Saints to abstain from “turning” houses or participating in construction companies bent on over-production? What if we had refused to invest in REITs or demanded that brokers not invest our money in repackaged loanshark mortgages?
I am most interested not in economic indicators or the health of the US (and global) economy, but in our moral and spiritual health.