"Rethinking Home Ownership," Credit Card Update Challenge, Illuminate Us

Two items I read this week have made our current economy more clear to me, and it points out our collective culpability for the situation.
In trying to figure out which is the chicken and which is the egg, let me begin with the cover story of the September 6 issue of TIME magazine, titled "Rethinking Homeownership," by Barbara Kiviat. Kiviat has covered business and economics for TIME for about eight years. She has long been an outspoken critic of the tax credits for home owners, and she's taken particular aim at the credits initiated by the Obama administration in November 2009.
Here is a link to the article. I encourage you to read it in its entirety. I hit some high points below, but no synopsis can do it justice.

1. While we take for granted that homeownership is an integral part of America, the U.S. government did not start instituting policies that supported homeowners until the 20th century. That was when Secretary of Commerce Herbert Hoover stated that "maintaining a high percentage of individual homeowners is one of the searching tests that now challenge the people of the United States."
2. In 1986, the tax code was rewritten to eliminate the deduction of interest from consumer loans, such as credit card debt. However, an exception was made for the interest paid on a mortgage, and this allowance has cost the government about $80 billion in lost revenue.
3. It was the failure of Fannie Mae and Freddie Mac, the agencies help keep mortgage rates low, that needed a $150 billion bailout. Additionally, it is our blind allegiance to the benefits of homeownership that, in part, led 11 million current owners to now owe more on their mortgages than their houses are worth.
4. In this economy, mortgages can actually be a burden. When homeowners lose their jobs, their mobility to a new position can be limited, as they are tied to the financial capital that is tied up in their houses. This is especially pertinent when the homeowners' mortgage are under water.
5. The economic advantages to a community or nation of home ownership are greatly exaggerated. There are many vibrant economies in communities that have lower homeownership. It is the same story internationally. In Switzerland, one of the world's richest nations (GDP per capita: $73,798), two-thirds of the citizens rent. In Spain, with per capita GDP of less than $35,000, homeownership is near 90 percent. Where is the quid pro quo?
6. Homeownership enabled access to cheap credit, which masked fundamental foundational changes in the U.S. Kiviat writes, "For decades, income inequality has been growing, and middle-class wages have been stagnant. In the eyes of at least some academic observers, cheap credit, especially when used to buy ever-larger houses, has been a way to get people to feel O.K. with their lot....Pumped up on credit-card debt and home-equity loans, we kept spending away and felt richer than we actually were.

Switch now to a report from the Associated Press that credit card debt has fallen to their lowest level in eight years. Card holders continue to pay off balances in this uncertain economy. The average combined debt for bank-issued credit cards fell to $4,951 in the three months ended June 30, down more than 13 percent from $5,719 in the same period a year earlier, according to credit-reporting agency TransUnion LLC.
What all this tells us is that we Americans had a party for many years, and today we are paying the bill. Money that could be used to pay for goods, such as autos, home furnishings, and electronics, are instead paying down down. At least in part, this contributes to the stalling of our economy, for until there is more demand for goods, there is less need for the people who make them, sell them, service them, or insure them. To blame one presidential administration or another -- either "the one who spent our money on a stimulus program" or "the one who looked the other way while financial leaders were running amok" -- is purely political and overlooks the fundamentals problems in our economy.
Hubert Humphrey once said "We believe that to err is human. To blame it on someone else is politics." Many of us need to look into the mirror for our current state. Or in the words of that great philosopher, Pogo the Possum, "We have met the enemy, and he is us."

I Told You So -- "Critics say Obama's message becoming 'incoherent'"

CNN recently published an editorial in which many observe that President Obama's message is getting muddled. As a professional communicator and speechwriter, I wholeheartedly agree. In fact, I saw this coming at his inauguration, way back in January 2009.
Read the editorial and then my observations from the President's first day in office. I welcome your thoughts on his fading communication skills.

What Numbers Don't Tell -- Campanella In Perspective

The Philadelphia Inquirer published a fine article by Rich Westcott on baseball great Roy Campanella. Campy was an exemplary catcher for the Brooklyn Dodgers in the of the early 1950s, and the article brought back a vivid memory to me. However, it was not a memory of Campy's career, as I never saw him play. Instead, the article reminded me of a conversation I had with an old Italian man in 1969 when Campanella was voted into the Baseball Hall of Fame with 80 percent of the vote.
"What did he do to deserve the Hall of Fame," he asked me. I certainly didn't know, because I was not a baseball fan as a kid. MOre significant, of course, it was a rhetorical question. In fact, it wasn't even a question; it was an indictment. The statement dripped with the insinuation that Campanella didn't deserve to get in, that he got in simply because...
are you ready?...
because he was black. Because, of course, in the eyes of this old man, all African Americans earned nothing. They were given things.
Even though I was not a baseball fan, I was an accumulater of facts and trivia, as I am today. (Hey, that's why I speak, write and blog.)
"I know that he was MVP (Most Valuable Player) of the National League twice, so I guess that he was a good player in his time." (Actually, I was wrong. Campanella won THREE MVP awards, in 1951, 1953 and 1955.)
The old man literally snarled at my response. "Is that what it takes to get into the Hall of Fame? Win a couple of MVP awards?"
I quit the argument immediately. If Campanella had batted 1.000 and had beaten Lou Gehrig's record for consecutive games played, it would not be enough. I didn't have any more evidence, and obviously I could not never have enough. But I always wondered: Just how good WAS Campanella?
According to Westcott's article, apparently he was well beyond good. He was spectacular.While his lifetime batting average of .276 was respectable, he hit 242 homers and 856 RBIs in just 1,215 games. In his best season of 1953, he led the National League with 142 RBIs, hit 42 home runs, reach a .312 batting average.
But as I said, that was only part of the story. Before he hit the big leagues, Campanella played in the Negro Leagues. (Campanella was biracial, born of an Italian father and an African American mother. In that American era, he qualified as a black man.) In 1941, when he was only 19, he was the MVP of that league's all-star game. A year later, he and other African American players were offered a tryout with the Pittsburgh Pirates, but that offer was suddenly, inexplicably withdrawn. Want to guess why?
Branch Rickey, general manager of the Dodgers, signed Campanella and four other black players. Campanella played minor league ball in New England (achieving MVP status in his league) and finally made it to the bigs in 1948. He had arrived, finally.
Tragically, Campanella's stunning career ended abruptly in 1958 when he was involved in an auto accident, which paralyzed him from the neck down.

As a physician friend likes to say when he is pressed for a diagnosis based on prior cases, "Statistics are just numbers." In other words, they don't tell us of the people who beat certain illnesses or succumb to them earlier. My friend is right; many of us lean lazily on mere facts without looking deeper.
In the case of that old man, he not only didn't accept the figures before him, he could not see the backstory or epilogue to Campanella's achievements. Campy suffered somewhat for the color of his skin. If he had been allow to play baseball at age 19, as other white players could, he was likely to have passed many more milestones. For example, if he had hit an average of just 30 home runs in each of those seven lost years, the additional 210 would have brought him tantalizingly close to the magic number of 500, which would have ensured him entry to the Hall of Fame. We also don't know how much more he would have achieved had his career not ended prematurely at age 36.

We Americans are all too often slaves to stats and purveyors of prejudice. How much more charitable would our national conversations be if more of us looked at what people had overcome in addition to what they achieved, more at a person's character rather than their degrees, and placed less emphasis on their age but more on their wisdom.

I wish I could talk to that old man today and present him with these facts. Well, maybe not. As I noted earlier, they probably would not matter, as they would merely be an inconvenience to his conclusion. How many of us don't look deeply enough and choose to rely only on the information that lies before us?