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Here’s the truth. It couldn’t have been a very good political fundraiser: None of us can now recall who was speaking. Most likely, it was a Conservative — because we were exiled to the furthest corner in the room, with some of the other Liberals in attendance.
While the speaker wasn’t at all memorable, the pleasant woman at our table was. She was employed by a mortgage broker association.
Asked what was new in her field of work, she said: “Subprime mortgages. We’re quite worried about them. If things unfold the way we think they might, it could be very, very bad.” How bad? she was asked. “They could cause a new recession, we think,” she said.
Subprime mortgages, she explained, were home loans designed to help people who were high risk. Smaller banks in the southern U.S. loved them.
The subprime mortgages had a higher rate, and were being given to people who didn’t have jobs or even the ability to make a down payment.
That was bad enough, the mortgage association lady said. But what made the subprime situation worse was, one, the housing bubble was bursting in the U.S., and many of the people who were given subprime mortgages were walking away.
And, two, the subprime mortgage debt had been picked up by bigger financial institutions and “bundled” with safer, more-traditional mortgages.
“It’s like a virus,” she said, picking at a salad. “If it spreads, we’re all going to get really sick.”
That was 2006.
Two years or so later, the virus had indeed spread, leaving foreclosures, defaults, bankruptcies, layoffs and wrecked lives in its ferocious wake.
Six years later, much of the civilized world is still grappling with the after-effects of the recession that was hastened, if not caused, by the subprime mortgage crisis.
Full recovery, if it is to come at all, remains many years away.
It’s tempting to blame the subprime mortgage mess for all of our current economic woes.
But ordinary folks, in their wisdom, know the identity of the real culprit. It wasn’t just a highrisk lending practice in some poorly regulated regional U.S. banks. It was greed.
Something called the “Edelman Trust Barometer,” you see, measures our confidence
in financial institutions.
For more than a decade, the Edelman folks have measured opinions about business and governments; this year, more than 25,000 people in 25 countries were surveyed.
Their conclusion? Trust in banks and financial institutions has never been lower — and trust in government has gone into an “unprecedented” decline.
“Throughout the world, people blamed their governments for the financial and political crises they endured in 2011,” said the report.
“(Politicians’) credibility has taken such a beating that they are now the least-trusted spokespeople in the world.”
Meanwhile, for the fifth year in a row, “NGOs are the most trusted institution in the world.”
For the rest of this column, please go to the Sudbury Star website: http://www.thesudburystar.com/ArticleDisplay.aspx?e=3461433