FISCALAMITY:Dire financial or economic distress created by fiscal mismanagement.

Fiscalamity is one of those new words I speak about occasionally. It comes from Word Spy, one of my favorite blogs where there is no cover charge for new words. They are welcome and greeted with hospitality by the blogger, Paul McFedries. If you haven't checked it out, this is a good time.

I chose to use fiscalamity today because it represents the dilemma in which I find myself when trying to sort out the fiscal mess we in the USA are experiencing. The word expresses well my situation: I don't have a clue what is going on in the financial crisis. I expressed to you earlier, in another post, that I don't have credible math skills. But this goes beyond.

I consider myself someone who pays pretty good attention to what's happening in the news. I read the NY Times faithfully on a daily basis. I watch credible reporting on cable news. I read voraciously, and it's not all fiction. But I have to admit that this fiscal crisis escapes me. I hear all the words, and I understand most of them. But it's not about the words...it's about the drama of investment and its mistakes that confuse me.

That doesn't even begin to tap the confusion I feel about the proposed solutions. The government's solution of dropping all this money into a struggling banking system seemed like a good idea to me, kind of like priming the old hand pump that stood on the counter next to the sink in my grandmother's kitchen. Occasionally, the pump was "dry" and unable to pull water from the well. By priming it with a pitcher of water, the pump began to function.

I thought I had it. But someplace along the line the process of "priming the pump" fell apart. That's where my understanding began to fall apart, also. If I get the simple explanation, the banks took the money from the government with the understanding that they would begin to act like banks again. But they didn't. Instead, they seem to have gone back to their previously flawed practices, including paying huge salaries and bonuses to their executives. Clearly, that was not the intent of the priming.

So what's happening? Is there any activity to begin offering low-cost loans? Have the big banks begun to distribute money to smaller banks in middle America? We tried to reduce our mortgage payments and were told that it wasn't going to be possible. Why not? I thought that was part of the plan.

My dilemma in this matter qualifies for fiscalamity. It's partly a calamity because of the problems leading up to the crisis. But it seems like it's a calamity because the solution presented is flawed. Has the money from the government been lost? Is it stolen? Can it be found and used?

Am I the only one who is confused, or is there a true fiscalamity in understanding as well as a fiscalamity in finance?


Photo by Mary Altaffer/Associated Press
Definition: http://wordspy.com/words/fiscalamity.asp

AFFLUENZA: extreme materialism which is the impetus for accumulating wealth and for overconsumption of goods (Dictionary.com)

Let's do a little current events review to begin:

$ Tiger Woods finds that being the first billionaire athlete isn't everything it was supposed to be.

$ Sarah Palin resigns as Governor of Alaska to go on a highly-compensated lecture tour.

$ Jason Bay rejects a Red Sox offer for $15M per year.

$ Banks pay back the US government the billions they were loaned so they can go back to paying their executives billions of dollars in bonuses.

That which these four news items have in common is affluenza, the pursuit of massive wealth. The word is a merger of two familiar words: affluence, meaning wealth; and influenza, a persistent and potentially dangerous disease. It may seem like a strange pair of words to combine, but when you get there...it works.

Affluenza is not restricted to the four news items with which I began. It is rampant in varying forms, even in our struggling economy. That is what makes it all strange. Here we are in the midst of an economy that almost tanked, in which at least 10% of our employable population is unemployed, and when people become homeless because their homes are taken away because they can't pay the mortgage. There may not be a fiscal depression in our country, but a huge number of the people of the United States are emotionally depressed.

And, in the midst of this, newsworthy people are amassing huge windfalls. That fact is not being ignored by the populace. Sports heroes are falling from grace, not only by their indiscretions, but by their images. Political wannabees are being looked at with a second look. And CEO's and bank Trustees are portrayed in the media as villains. Affluenza (many times at the expense of the general public) is the source of public anger:

$ Charities lose millions by Tiger Woods taking a sabbatical to try to repair his crumbling marriage.
$ The Republican Party shifts further and further to the right, leaving moderate Republicans behind.
$ Try to purchase a ticket to a Red Sox game. In order to pay out huge salaries, the cost of a ticket to America's Favorite Pastime is increasingly inaccessible to the average baseball fan.
$ Try to get a loan for a small business, or try to get your mortgage rate reduced.

The demonstration of affluenza is directly tied to public stress, and this is not a good time for that stress. The result is cynicism, which is not a good emotion when it is important to be about the process of rebuilding our economy.

Throughout this fiscal mess we have been experiencing, I have found myself increasingly angry with the Wall Street firms and the banks. The government has gone way, way, way out on a limb to secure them, potentially endangering the political future of the President and those in Congress. But the response of the financial industry has been tepid at the most. Clever schemes to protect its disposable wealth at a time when the nation's economy is crumbling have been nauseating. Over and over I hear commentators use the phrase "Wall Street just doesn't get it!" That's not a simplistic statement...I think it is a profound statement of reality.

At a time when the banks and Wall Street could be heroes, they have chosen instead to be scoundrels. Is it any wonder that people question the viability of capitalism? I'm not ready to give up on capitalism, but those responsible for maintaining a capitalistic equilibrium must join the effort. Their economic narcissism is offensive and potentially disastrous.

Photo Credit: newsweek.com