Emerson’s essay extols the virtues of self-reliance.  Indeed, the virtues proposed in this essay on self-reliance made this country what it is today.   But, self-reliance is more complex them simply fending for your livelihood.  It requires a degree of trust so that you have the opportunity to rely on your self.  By that I simply mean we are not living in the forest.  Every day we perform myriad actions that necessitate we trust others—from getting on a plane, to working on a computer, to taking our children to the doctor.

 How does this impact the current housing market?

 Obviously, people who make $50000 a year cannot afford a $500000 house—at least without other means coming in.  That’s a given, and certainly some burden of responsibility should rest with homebuyers.  Self-reliance certainly turned blind eye to many of these transactions.

 However, for our economy to work at full strength we need to trust many around us to ethically perform their roles—we simply cannot be self-reliant in everything.  When a family goes looking for a home and the standard operating procedure involves using an ARM, then they use that ARM.   The fact that an entire financial system allowed that option to even exist is a large part of the problem. 

As Joe Plumber works hard every day so that he can be as self-reliant as is possible in our society, those in the financial industry had an ethical responsibility to give Joe the best product possible.  They didn’t.  They were simply looking out for a buck.  Well, that buck has ground the entire system to a halt. 

In the end, homebuyers were purchasing defective products—in this case the defect was the design of the mortgage.  If the design of a product like a car or a child’s toy was as defective as an ARM, the company would be forced to recall it and shoulder all the costs.  Unfortunately for homebuyers, those same principles don’t hold when buying a product from a bank—i.e. a mortgage.

The best way to encourage self-reliance is to build a system on trust.   Somehow the financial system got away with murder, and then waited for the feds to bail them out.  Who’s relying on who now?