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No, Erin Burnett, We Are Not "All Responsible" for this Mess

10/26/2008 05:12 am ET | Updated May 25, 2011

CNBC's Erin Burnett has spent most of the day interviewing the players in Congress and the financial markets, feeding them the gibberish that we are "all responsible" for this economic meltdown.

No, Erin, we are not.

The reason we are not is not that the new, "marginal homeowners" (to coin a term) are too unsophisticated to understand what obligations they were undertaking, although they are as a group certainly far less sophisticated that the mortgage lenders earning their commissions, who in turn are far less sophisticated than those who aggregated and then sold the mortgage-related assets (MRAs).

The reason we are not all responsible is the same reason teenagers are not responsible for becoming addicted to cigarettes. They were attacked by the tobacco industry with scenes of success and/or serenity, and it did not take many months of smoking before the addictive power of nicotine set in. Marlboro Country. You've Come a Long Way Baby. Take a Puff and It's Springtime.

Similarly, the American people have been literally bombarded for decades on the benefits of home ownership. Anyone reading this who has not had a friend or relative suggest that they are"wasting money" renting, not building equity? Brokers have been advising prospective buyers that stretching themselves now to meet monthly payments is good financial planning -- the interest is tax-deductible, the house will rise in value, and with a little increase in salary over time, the payments will seem less and less burdensome. And, this does not even include the unscrupulous who acted shamefully.

That is not only how a middle-class family was to build a nest-egg for retirement and a source of loans for college tuition, but they were living in it and thus experiencing practical value at the same time.

And, then, of course home ownership was the paradigm, the symbol, of the American dream. So, if one did not stretch to grab a home, one was not only stupid, but un-American.

Finally, one's friends had done precisely this 5 years ago. While you were wasting money renting, friends had seen value appreciation of 40, 50, 60%. While the renters struggled, the homeowners could take out second mortgages for pre-school, and some great vacations.

None of this is to suggest these people, any more than teenagers who start smoking, bear no responsibility. But, it is not as if they awakened one morning, with no prior urgings, no prior visions pounded into them, and decided on their own to stretch their finances to own a home.

By sheer, utter, and complete contrast, the "sellers" in all of this -- the mortgage companies, the banks, the mortgage-related asset concocters, the investment banks that bought and sold those instruments, the lobbyists who successfully removed oversight, the Republican Congress that overturned Glass-Steagall -- all of them awakened on various mornings and contemplated what schemes they could employ to enhance their revenues.

Moreover, unlike the marginal homeowner whose purchase decision was binary, either they bought a home or rented, the sellers were all making money, it was a continuum, just a question of how much. Thus, they did not face the same type of decision as the marginal homeowner.

The sellers, of course, were lobbying and supported by the Republican Congress, the Bush Administration and John McCain. The marginal homeowners did not have a lobby.

Greed is very different from need, even if need turns out to be a bit of stretch.

So no, Erin, we are not all equally responsible.