Livinglies's Weblog

A Few Tears and the Polls Were All Wrong

Maybe she was being tactical and maybe it was real. Maybe it was both. It doesn’t really matter. The results in New Hampshire underscore a serious flaw in the delivery of information to the American public and an even more serious flaw in the way we make decisions. Clinton’s narrow win over Obama proved one thing beyond all doubt: that people matter more than pundits. And the clear error of all the polls proves another thing without any doubt: that pollsters are measuring the wrong things. And the news organizations that spent so much airtime and print space reporting the polls proved one more thing: that they are giving out information which is false and misleading. 

Tactics and strategy are not nearly as important as character and judgment. Electability is not nearly so much a question of polls and analysis as it is the belief in the character and judgment of a candidate. Experience matters when people get information on that experience, not when buzz words are passed from pundit to pundit. What did the candidate do and how well did he or she do when they did it? 

This is completely congruent with the postings here on the mortgage meltdown and credit crisis. The asset bubble has burst (again), the losses are mounting, the sea of money has swamped our society and our economy creating vast changes in the demographics and standard of living for ordinary Americans. 

We are now left with our largest financial institutions on the ropes and the smallest ones — Community Banks and Credit Unions looking pretty good. The small financial institutions got locked out of the great credit scam, and thus lost nothing to stupid loans, sales of CDOs, and liability for potentially criminal behavior — all that was saved for the big institutions that grabbed market share with smoke and mirrors. 

Your deposits are probably safer in the small institution than they are in the large ones which will probably collapse.  In other countries where similar things have happened ALL the banks failed. Here because of the death grip that big business has on government and the “free” marketplace, they kept the goodies for themselves, and now face responsibility for the worst financial disaster in American History. Fortunately, they left out most of the small players. But the decline in asset values, devaluation of currency and hyperinflation building to a crescendo will have its effect on all financial institutions and all Americans.

How is a political contest related to the mortgage meltdown? For one thing, it would be nice if someone started introducing proposals that would help the people who are already getting the second or third reset on their mortgage payments, where their payments have skyrocketed from $1500 to $4,000 per month. More importantly, as we look beyond the “correction” (read that “crash”) of 2008, it should remind us that if we use data we should do so skeptically and cynically and as a second tier of making decisions. The first tier should be the character of the people we are dealing with. 

We measure FICO scores that reward people for going into debt and punish them for savings, we use the SAT and ACT that predict nothing of a student’s future performance, polls for figuring out who to follow in the political races, and government statistics which first report politically expedient data, second change the components in order to come out with the politically expedient result and third are adjusted later (after the desired effect has been obtained) to make our investment decisions. Do you see something wrong here?

Let’s rerun this using a different approach. Numbered or indexed scores are used so extensively now that both authority and accountability are removed from a person’s life who is a “decision-maker.” Let’s put authority and accountability back into the equation.

When we pick a depository institution to hold our money, do we interview them to find out where they loan money and to whom? Do we decide on whether that fits with our world view? When they make loans, is the loan officer prohibited from making a loan to someone of great character who has a wonderful history of payments — because of a low FICO score (let’s say caused by the fact that he paid off all his debts, cancelled his credit cards, and had several hits by companies looking for his credit score)? Is the loan officer coerced into making a loan to someone with a high FICO score because they have just the right history and numbers that move the score up, but just the wrong circumstances and character to pay off THIS loan?

Do you really want your life and the society we live in to be governed by indexes, data and numbers that are fixed to mislead us into making decisions that are catastrophic for us but great for the people in suits who look you square in the eye and tell you how great this deal is? If so, welcome to the biggest Ponzi scheme in history — the great Mortgage Meltdown.