Who is to Blame for the Recession?

Is it the government, Wall Street, or the public? Let’s start with the premise that the cause of recession is the burst of the real-estate bubble. Clearly Congress was responsible for the housing boom because it pressured or influenced Fannie Mae and Freddie Mac to purchase low-quality loans as an attempt to promote home ownership for everyone including the poor. Congress continued to pour hundreds of billions of taxpayer dollars into housing subsidies even in the midst of a housing boom.
The Federal Reserve, controlled by the federal government, fueled the boom further by excessive money supply to the financial institutions that originated hundreds of billions of dollars in bad loans and invented Credit Default Swaps (CDS) designed to shift the risk of default to a third-party, as this shifted risk did not count against their regulatory capital requirements. Nevertheless, credit default swaps did not directly cause this problem but may have exasperated it as CDS allowed banks to lend more because of lower capital requirements . The Federal Reserve then significantly contracted the money supply to bring about the financial crisis that has widely dispersed throughout the economy. The collapse in the financial institutions was exacerbated by government interference with the aid of people like Henry Paulson and others who think they are smarter than their predecessors to rescue the financial crisis.
Should we trust the government who caused this mess to fix the problem? Clearly, they should. However, the fiscal stimulus proposed by the Obama Administration in the form of tax cuts or infrastructure spending is highly questionable as people may spend their money on paying down debts or buying imports while the economic impact of infrastructure spending may take years.
So, who is to blame? I say we are all to blame. The government is the blame for its monetary policy. Wall street is the blame for its risky lending practices and questionable financial derivatives (such as credit swaps). We are to blame for electing the politicians who caused this mess.

The True Meaning of Success

During times of economic downturn, the mantra is job survival instead of career success. In fear of financial hardship, we strive hard to keep our jobs and may experience burnouts from working extra hours. However, a job loss is not the end of the world. It may open up opportunities for a job or another career that you really want. Step back and assess your skills, interests and wants. Have a clear vision for your ideal work and support it with a plan. Take time to "smell the roses", relax, meditate, and participate in activities of enjoyment or fun. Identify the true meaning of success, whether it is financial independence, great health, first-class relationships, academic achievements, and career advancements. Why are they important to us? What is the worst outcome if we do not achieve great success? What makes us happy? Can we simplify our lives by letting go of life’s complications, cravings and learning to appreciate what is in front of us at any particular moment? The greatest suffering of life, according to Buddhism, is attachment and comparison to others. Attachment is of many forms: material possessions, praise or approval, status, fame, reputation, pleasures. We work hard to accumulate and protect our possessions or fame but must leave them behind at the time of death. Therefore, why are we spending endless efforts striving for material success? Why don’t we spend time on things that are of importance, enjoyment, and meaning?

Our Visit to California During the 2008 Xmas Holidays

As usual, our annual visit to the San Francisco Bay Area and Los Angles is always filled with excitements, joy and frustrations. We used to stay at my sister's house in Alameda for a week and another at my older brother in LA. However, we switched to staying at Four Point Sheraton hotel at Pleasanton, about 20 miles from my mom's condo in Oakland, for the last couple of years to have more freedom. This year we decided to stay in a hotel in proximity to Oakland. Located in Alameda, the Coral Reef hotel in which we stayed for 7 nights was large in space but the sofa bed was damaged and the kitchen was completely emptied (no plates, cups or dishes, kitchenware). In other words, the kitchen was almost useless and the uncomfortable sofa bed was the leading cause of my backache in the morning. Nevertheless, the hotel was adequate and situated in a very nice area - proximity to the beach, the shopping mall, a bowling alley, restaurants and relatives. The weather was unusually cold with temperatures in the 40 °F during the day. It rained almost all week. The wetness, along with the chill, was tough to bear albeit we live in Minnesota in which the temperature normally hovers in the teens during the winter months. We did not let the weather to stop us (or dampen our spirit) from walking on the beach, shopping at the malls (both in Alameda and downtown San Francisco), visiting friends and family members. We ate mostly at Chinese restaurants for dim sum, won-ton noodle, and garment food at our nephew's birthday reception. We spent an afternoon and evening at my younger brother's house that they had moved in recently. Despite the recent economic downturn and the housing crisis, the value of his house did not decline partly of the continued demand for housing in Alameda because of its proximity to San Francisco and the Silicon Valley. We liked the house - it had a lagoon in the back and the kitchen was big and modern.

After a week in the Bay Area, we drove down to LA to visit more friends and family members. We stopped at the Redwood park in Oakland and then looked at an expensive, new home in Oakland Hills. The house was large (over 4,600 square feet of living space) and had 4 levels or stories, each of which had a magnificent view of the bay, but was beyond affordability. The property tax itself was $20,000 a year. We also looked at a few model homes in a golf-course community at Fairfield previously. They were more affordable (in the $400K range) but the traffic was horrible. It took almost 1.5 hours to travel 30 miles from/to Oakland. We finally arrived at LA at night after a few stops for restrooms, food and cold medicine.

We met our dear friends, Daryl and Debbie who moved from Minnesota to Orange County over 10 years ago. They were excited to see our kids since they had not seen them for almost 4 years. Daryl was still in pain because of a recent back surgery. He quit his job as director of marketing of an aerospace company in LA. The reason for quitting was not disclosed. I guess he was tired of working and needed a break from stress and corporate politics. He assured us that he was not worried about getting another job since they were financially independent and had health coverage. Debbie was cheerful as usual. We talked about life and plan for retirement if ever possible in light of the recent economic downturn. Apparently, the job market in Southern California was just as dire as that in Minnesota. Many people had lost their jobs.

We (I, my wife, my brother and his wife) went to a Chinese music concert at a casino near Palm Desert. The drive from Glendale took much longer than had expected due to traffic congestion especially in one section of highway heading to a factory outlet. Luckily the show started one hour late because the entertainers were stuck in traffic also. The songs (oldies targeted for the older baby boomers) were great. We liked our seats since they were no more than 20 feet from the center of the stage. The seating accommodation would have been better if they had provided stage seating. I had a hard time of seeing over a guy (with a large and tall body) in front of me. The drive home was much quicker due to relatively lighter traffic at night.

The next couple of days we visited the Descanso Gardens, the Los Angeles County Arboretum and Botanic Gardens. Many plants were still blooming while some trees were bursting with vivid fall color (see pictures) in the middle of winter - a sharp contrast to the scenery in Minnesota in which the snow covered the ground. One noticeable about the LA County Arboretum was that Peacocks were wandering freely all over the park. We also shopped in Little Tokyo (also known as Japan Town) and Chinatown as usual. Shopping is my wife's passion.




We (my kids and wife included) really enjoyed this trip even though we were plagued with a cold and stomach flu. It was a rough plane ride back home. My stomach started to bloat at the airport and persisted during the flight. The chewable pepdobismo tablet did not help. I had to visit the toilet a few times in the plane. Right after the plane landed, we stopped by a drug store to purchase pepdobismo in liquid form which provided much better relief.