Washington Mutual's shiny new skyscraper dominates the view from my office; to me at least, the echoes of Ozymandias are clearly audible: "Look on my works, ye mighty, and despair."
WaMu, seized by bank regulators before it could go bankrupt, had saddled itself with tens of billions of dollars of bad mortgage loans. But WaMu was, just a few years ago, a proud hero of the financial industry. In 2006, I spent two weeks at Stanford Graduate School of Business, where a professor assigned my class of non-profit leaders to analyze WaMu as a case study of innovative business practices. The professor lauded WaMu's mold-breaking techniques for extending credit to high-risk borrowers. What looked innovative then looks reckless now. Still, whatever its failings, WaMu was a dynamic institution filled with whip-smart northwesterners who mostly excelled at their jobs.
The problem, to employ a church metaphor, wasn't bad preaching, it was bad theology — the theology, in the words of Oregon forester Roy Keene, of "lots now." Like the rest of the financial crisis, the mechanisms and particulars of WaMu's fall are opaque to me. But the fundamental principle is achingly familiar: The financial crisis is a sustainability crisis. Sustainability, at base, means "living within our means." It means, in Keene's words, not lots now but "some forever."
The U.S. financial industry, in tandem with the real-estate industry, has apparently been flouting that principle and encouraging its customers to do the same for a good many years. Mortgage lenders like WaMu lent unsupportable amounts of money to would-be homebuyers. Recently, The New York Times did an insightful case study of how this reckless strategy took hold at once-cautious Fannie Mae.
If we are honest with ourselves, many of us will have to admit that it's not just the mortgage-home-buying bubble of the last five years. In Cascadia, as throughout North America, living beyond our means is commonplace. Some of us, cornered by circumstances, have accumulated debt during a period of unemployment or a spell without medical insurance. Others of us, swept up in the optimism that pervades most bubble economies, have run up personal debt on credit cards or home equity lines and counted on future earnings or the continuation of stock-market gains to pay the tab.
Just so, as a nation, the United States is addicted to living beyond the means of its treasury: For eight years, we've raised federal spending while cutting taxes. The predictable results have been massive federal deficits and a truly colossal national debt.
Finally, we live beyond the means of our natural heritage as well. In fact, we have been spending the natural capital on which all life depends as if our planet were a business in liquidation. This week's heart-rending installment in the ceaseless litany of evidence: a new study suggests one-fourth of mammal species worldwide face extinction unless we humans change our ways.
The moral of the economic-crisis story, like that of the ecological one, could not be clearer: We have to live within our means, personal, national, and planetary. "Lots now" must give way to "some forever."
Fortunately, "some" can still be "enough." It can even be "plenty." The potential for a super-efficient, climate-safe Northwest energy economy is ample. We can have it, plus all the shared prosperity and security it promises, if we act together.
The key is to harness human ingenuity to these tasks. I'm imagining skyscrapers as imposing as WaMu's full of whip-smart northwesterners all hustling not to further stretch the normal principles of mortgage lending but to plan and implement the transition to a healthy, lasting prosperity. We need bold, bright, and committed professionals to operate a regional auctioned cap-and-trade system, to plan and administer innovative conservation loans, to start legions of new clean-tech businesses, to plan and build (or rebuild) scores of compact, walkable communities, to design and construct world-leading transit and energy systems, and to train a new generation of green-collar technicians and tradespeople.
The transition to living within our means will take a lot of work. It's hard to believe this week, when credit markets are coagulating and stock markets are plummeting (the combined value of all U.S. stocks has now dropped $7 trillion). But we in North America, and especially in the Pacific Northwest, are still among the most productive, resourceful, and affluent people in the history of the world. If we believe in ourselves and take action together, we can make such work pay.Editor's Note: This article first appeared as "Living Within Our Means" at Sightline Daily.
Like what you just read? Support high quality local journalism. Become a member of Crosscut today!