Hello, loves.

All aspects of life are impermanent, so perhaps that’s not a good reason to explain to my recent absence, but I have really had some big changes come my way since my last post. I now live in a new time zone. Yay! Rejoice. I am voting — not in an endorsement for a candidate, but in condemnation of the deterioration of a state in our fair union. And I have voted with my feet, similar to so many other former Michiganders. But enough of that — if you want more, apparently there’s a whole blog about it.

So, to jump back into the deep end of things: there is talk in some circles about the decline of personal responsibility, and in some cases, more specifically, where the blame lies for the current credit crunch.

Instead of taking a strictly legal stance on this issue, I am going to try to lend a more social / personal view on the matter, as I frequently attempt to do.

Again, I’ll return to that concept of American life that seems to have been popularized in past decades and held up as an ideal. As the reward of your non-descript business related job, steady and moderately well-paying, you’ll have the satidfactino of supporting house, a marriage, a couple of kids, maybe a dog.

What do all aspects of this life have in common? (Okay, well, let’s scratch the dog off the list for now.)

All are things that take a very long time to “complete.” All are long-term obligations. There are varying mortgage products available, but the standard everyone seems to think of is the thirty-year fixed rate. Kids take 18 – 25 years to rear, and in a “normal” family one assumes you never lose contact with them. You hypothetically are never “done” with your spouse (makes the mortgage look like a quick, easy investment, huh?)

Losing any of these things before you’re done by neglect is, we are taught when we are young, a sign of failure. Losing the spouse is pretty common now, but I doubt anyone holds it up as a pride point; losing the kids in a custody battle or through other means, less so. Losing the house seems to be the next thing to become common place.

Ditching these things voluntarily before the term of your contract is up shows a lack of moral character.*

Slow and steady wins the race — and the material goods that go with it. It’s the mantra beat into us from our youngest days, not so much with words anymore, but by the tacit complicity to it in the adults we see around us, and the praise they provide us when we start to adhere to the mantra ourselves.

In the world of business, it seems the standards of success are somewhat changed. The quick dollar, these days, seems to be only one worth earning. There is a trend of increased risk-taking in the business world. Traders of high-risk stocks are rewarded in the industry. Investments of the long-term Warren Buffett variety are not the fashion. The turnover is high and the lifestyle seems crazy but somehow glamorous.

I’ve asked TeemKuntz to help flesh out my theory with specific examples:

TeemKuntz: One example of superfast go-go capitalism can be found in the rise of hedge funds. There has been a huge increase in the amount of hedge funds and the dollars in them. Despite the name, hedge funds don’t really hedge anything anymore. Basically they are highly leveraged bets on various factors in the economy. These bets are usually short term. The returns for successful funds are often in the 25-40% range (compared with 8-12% for equities), but the bigger they are….the harder they fall.

Long Term Capital Management is a well-known example of things going very bad very quickly. LTCM bet against U.S. Treasury Bonds and their equity went from $2.3 billion to $600 million in about 12 weeks.

Other examples include Societe General & Barings Bank both getting knocked out by Rogue Traders. Huge amounts of wealth were destroyed almost overnight because of bad bets on currency and futures contracts.

This is a far cry from Warren Buffett’s “invest for the long term” or Peter Lynch’s principle of “invest in what you know.”

My overarching meta-theory is… these two ideals – long-term personal values and short-term business values – can’t possibly mesh. Logic and emotion rarely do, granted, but I think this situation has special implications, i.e. the housing crisis is the moral battleground where they will fight to the death. Taking an adjustable rate mortgage in the first place is a total compromise of the two (“I’ll save a buck now, and screw the future– except I still have 29 years of this mortgage to go”).

Keeping a house with floundering property values is definitely a bad business move in the short term, and at this point, your “long-term” has to be pretty damn long in order for it to come out right, dollars-wise, in the end.

So, do you walk? Or will your personal values change your mind? And more importantly, should they?

If this seems at all incoherent… you’re probably right. It’s a pet theory of mine and still a work in progress… Any other examples of this in society? Thoughts?

(*Although… Has anyone else noticed that trading within the system — upgrading your house with a nicer house and starting a new mortgage — and changing out your significant other and starting a new “lifelong” contract — is sometimes considered acceptable? The second home one buys, I can somewhat understand — perhaps not in this market, but in general; it does not require the total breakdown of the first in order to acquire it… But the second marriage? That could possibly ever make sense — when considered in what is required to obtain it — how? And moreover, this is somehow more acceptable than staying single?)