There & Back Again

Through the Looking Glass, down the Rabbit Hole, and deep into the Belly of the Beast.

Or some such.

Around here, this will be remembered as the Summer of Ash, as the Zaca Fire continues to burn – 100,000 acres and counting. Total containment still weeks away. Smoke and ash turn the sun red, the light pink, and make the air hazardous to breathe. It’s a glimpse of what the end of the world might look like.

Do or Die time for my Yankees. They took three of four from the slumping Tigers over the weekend, at home, but now pack their bags and head west, for three games with Anaheim, a team that has always given them fits; then it’s on to Detroit for four; then home for a series with the hated Red Sox. Against sub-.500 teams with mediocre pitching the Yanks gorge; against elite teams with strong pitching staffs, they nibble. They’re up against the elite of the American League now. The Yanks win a lot of blow-out games and lose many close games for a simple reason: they don’t have the pitching to hold other teams down. Quality starts by Mussina and Wang and Pettitte are undone by the likes of Luis Vizcaino and Kyle Farnsworth, big, hard-throwing guys who frequently lose the strike zone.

Looks like real people are beginning to worry about the mortgage industry meltdown, the lead edge of what might become a widespread freak-out. Countrywide’s stock is in the toilet and the company had to borrow billions to make sure it can meet its obligations. The Asian stock market is still jittery. In the US, the Federal Reserve lowered the discount rate and effectively pumped money into the system, quelling fears, at least temporarily, that the mortgage collapse might spread to the greater economy.

Let’s see if we can sort this mess out, even in the most rudimentary way. Real estate took off but the wages for most workers remained flat. As home prices soared upwards, seemingly without end in some parts of the country, qualified applicants for traditional mortgages with large down payment requirements and fixed interest rates became too scarce to keep the boom rocking and rolling. Finance industry wizards put on their thinking caps and came up with sub-prime mortgages -- no money down, no income verification, interest-only teasers, adjustable rates…It was mortgage nirvana, profitable as all get out. Suddenly, millions of folks who were priced out of the boom had a way to get in on the fun.

The lust for gain makes people do weird things. Otherwise intelligent people honestly believed that real estate would continue to appreciate every year by double-digit rates, particularly in desirable areas like Santa Barbara. While this community may not be affected nearly as much as some California cities and counties, I have to believe there will be some fall-out. At the height of the price run-up, when owners and real estate agents were delirious and cocky, I never understood how people could afford million dollar tract houses. Where did the dough come from, what kind of jobs did these lucky folks hold, how did they crack the nut month after month? It was alien to me, another universe into which my annual salary allowed not even a glimpse.

The next President of the United States, whoever he or she may be, from either party, is going to inherit a helluva mess – the Iraq entanglement, an economy with serious structural flaws, a health care system that excludes millions, a crushing dependency on foreign oil. The outlook is so dismal that it’s a wonder any sane person wants the damn job. That a number of people do is testament to the power of political ambition. The United States is an empire in decline, holding, for the time being, its position among nations due to the strength of its military, rather than any ethical, economic, humanitarian or moral hegemony.