Credit Crunch is just a Lack of Faith

Phil Ochs sings an old song of social indifference in the background. The sprinkler spins the water on the lawn. I use the old lawn hose and connection on odd days to hit the spots my main lines miss. These weeks are the last ones when the grass fills full of vigor over the front and back lawn areas. By late June the heat and low humidity will rob the grass and ground of nutrients and thickness. I use a lot of coffee grounds to keep the nitrogen up but my efforts over the years always come up with a yard that never threatens the Better Homes and Gardens look of luxury. I have faith though that one day the lawn will shimmer all summer long.

Faith is what gets most of us through each day. A faith that a situation will improve. A faith that an individual matters, even in the face of overwhelming evidence to the contrary. A faith that wrongs will be righted, that justice prevails in a world of cold and brutal acts. And most importantly, that the money loaned to a distant in-law or business acquaintance will be repaid with a little interest added on. This small subconscious ongoing act makes life livable.

Trouble happens in a big way when faith gets blown away. When people no longer trust, and refuse to listen to the person right in front of them, something bad brews in the brains. As I watch the rising foreclosures, and see my own neighborhood dotted with abandoned houses sitting among weeds, debris and graffiti I wonder what purpose has been served by taking so much faith out of commerce, or why I'm bothering about my lawn.

Credit is the ultimate in faith in a civilized world, even though that extension of faith can be filled with multiple hazards for both sides of the transaction. The art of the delicate balance needs to permeate the proceedings. Although it might be wonderful if we were all self reliant, our world is a vast network of dependency on one another. When the balance is lost, and the pendulum swings wildly from one extreme to the other, major injuries occur to all caught within the arc of lost faith.

When I see the vacancies in both commercial and residential properties today it boggles my mind. And I realize the market has not hit bottom, and vacant properties are the little buoys bobbing on a sinking sea, trying to float a false value in the face of having the drain plug pulled. Just when you think the fallout from the waves of foreclosures has hit the bottom, curls of spray from new loan defaults find an even lower depth with this crisis. In an April 22, 2009 article, Data Quick reported a record number of mortgage defaults for the first three months of this year within California. The continuing ebb from this news throughout the state means anyone with a home lost some equity and saw their borrowing power diminish. No one has any faith we are at bottom, and credit does not get extended because no one knows what the value of your collateral or job really amounts to.

For many years most of us lived under a delusion that we had a good idea what the value of property, goods and services were. Some were smarter about the relative values of products than others, but given the circumstance of today our real crisis is not knowing what anything or anyone is worth. We live now in a time of true relative pricing and value. Nobody has a clue what we should pay for a movie ticket, a collection of songs, a book, a plane ticket, a hotel room, a meal, a house, a business location, an x-ray, an MRI, a tooth cleaning, financial advice and so on. When no one knows the value of anything it becomes impossible to place a value on currency and work. Everything flows in the flux of the moment, and results in an endless spin cycle of what any person might be willing to spend, or receive, at any random point in time.

I've watched my house double in value from its original price, and then plummet to approximately 20% below what I paid for it. This has all happened in six years. I've seen my sizable collection of movies and music go from a substantially appraised sum to nearly worthless in the same time frame. The frames around my various pieces of art are worth far more than the signed and matted pieces residing inside the decorative wood. I'm no Einstein, but financial relativity sucks a chancre-wanker on projected worth estimates.

When Russia's economy collapsed in the mid-1990s barter became the standard for the masses trying to survive the devastation of valueless currency. The only thing that righted the Russian economy a decade later was the rise in oil and gas prices, which finally stabilized the Ruble. I'm not saying we're headed to that point, but we've got all the signs, and none of the energy supplies our old adversary controls.

Barter may be coming back in a big way to our shores, because the credit ship and all that faith that was stored inside has pulled out of the harbor. Hope is the pier we look out on, with family and friends to sustain ourselves.

12,000 years or so of civilization with little faith to sustain us, and we are stuck on the basics. Here's hoping everyone has more than a "small circle of friends" to keep them well.