I was once asked "If you could name only one person or group responsible for the recent real estate housing bust, who would you blame?" Of course it was the perfect storm of many parties rationalizing that brought us to where we are, but but if I could only name one person... it would be Carrie Bradshaw. Ever since she became an iconic American symbol back in 1998 the real estate market took off. It ran up unsustainable growth which concerned some frugal Americans but simply excited others to aspire to be just like her. Though Carrie herself was not a homeowner, she spent 94 episodes of television attempting to convince the American public of two myths that distinctly brought about the meltdown. These myths are 1) “the key to happiness is acquisition”, and 2) “one does not have to incur consequences for irresponsible actions”.
First, through all aspects of her life, Carrie attempted to convince us that the key to happiness is acquisition. This is shown through her over $40,000 collection of shoes, her tendency to max out credit cards, and her famous conclusion in A Woman’s Right to Shoes which is that since single women do not have their life choices celebrated ("Hallmark don't make a 'congratulations-you-didn't-marry-the-wrong-guy card'!") it is therefore okay to spend that much on oneself, specifically one's shoes, to make the single girl's walk through life a little more fun. This pervasive sentiment allowed the average boring American who wanted to lead a more glamorous life like Carrie Bradshaw’s to spend considerable amount of time and effort contemplating ways in which to acquire more. Since the 1930’s the American people have been taught that they have “made it” when they become property owners. Because of this definition, coupled with the constant weekly reminder from Carrie that the average person doesn’t own enough and is therefore not good enough, people ran in droves to seek out mortgage lenders who would get them into a house regardless of income, assets, or employment. If people did not heed the siren song of “possessions and wealth will make you happy” sung so beautifully by the past decade of media led by Carrie Bradshaw, they would not have felt the urge so strongly to enter into risky deals that they frankly could not afford.
Second, Carrie spent just as much energy attempting to convince the average American that one does not have to incur the consequences for irresponsible actions. This was seen explicitly in almost every episode but most keenly in her continual smoking habit, her admission of having an abortion (along with Samantha’s four), and her response to her boyfriend’s mother when she caught her smoking marijuana “Yes, the pot is mine and I’m taking it with me!” Throughout all of this Carrie has held next to no regard for consequences and consistently taught us that if one can run from the results of irresponsibility, by all means, run! To equate this back to the turmoil in the real estate market, banks would willingly lend to the poor Americans discussed above because they could immediately foist consequences upon others by
selling the loans through securitization. These mortgage lenders therefore were able to create a situation where they could act without any concern for repercussions, just like Carrie did in her discourses on the merits of birth control. After buying these subprime loans, large investment banks (such as Goldman Sachs and Morgan Stanley) would turn them into CMOs and then sell them to investors. They blatantly told investors that they were essentially riskless because the odds of the American public all defaulting on their loans at the same time were infinitely small. In the beginning, this was true but as the demand for CMO’s continued to outpace the supply of mortgages in the booming real estate sector the investment banks soon created CDOs which were simply collateralized debt options which included synthetics which were bets on loans that had been previously securitized. This led to a situation where a previous CMO would be cut up according to credit ratings and then a portion of that CMO (often the BBB portion) would get re-cut to a CDO with a whole new set of credit ratings. As this became more prevalent, the chances of mass defaults grew with the threat of a market downturn. Once the market did have a correction, coupled with the rising interest rates, the perfect storm was created. And since all players had systematically shirked responsibility in the past, everyone (including those who deigned not to play) had to pay.
In order to fix this difficult economic scenario and insulate America from repeats of this episode in the future, one major initiative must be in place. The first is a general retrenchment away from Carrie Bradshaw and towards Donna Reed. It helps that Carrie is no longer on the air, though her reruns still haunt us in edited form on less popular channels. Unfortunately, the same cannot be said about Donna Reed, who can only be viewed on the internet now. Carrie embodied pride. Donna Reed embodied humility. Until we as an American culture place regard for humility more than pride again then these cycles of greed and dishonesty will continue. The American government will try
to impose further regulations and limits on both the American bankers and borrowers but in reality our fundamental outlook on acquisition must change. This return to humility must occur in the investment banking, mortgage loan, and consumer spheres. In order to measure this, one could use the CPI. If the consumer price index (less food and energy) continues to rise, then one can assume that Americans are continuing to try to gain more than they need. If, after the media implement new “return to humility” programming highlighting brotherhood and altruism instead of greed and the CPI stabilizes within three years, we can assume that America has retrenched and sustainable growth is in the future.
