By:Nathan Walz
In class I have been reading Parable of the Sower by Octavia Butler. As I’ve been reading, I have noticed that there are parts of the book that connect really well with our study of the 2008 housing/financial crisis. Along with this there are parts of the book that relate to what we did in class throughout the semester.
The first thing that I noticed was the events that took place. In Parable of the Sower, I observed a doomsday-like event where basically everything was in ruins. There is tons of crime and there is a big housing crisis because there are so many people without homes. “I heard on the news today that more water peddlers are being killed” (17) Water peddlers are people who sell water to the ultra-poor and homeless. In the book water is now far more expensive than gasoline. This shows just how bad things are that people are people getting killed while selling water which is now a luxury item. Lauren in this case would say that the change that caused this violence is God. Earthseed; Lauren’s newfound religion is based around the notion that God is change. This relates heavily to what happened as the 2008 crisis unfolded. What was previously standard at the time; having a home was now a lot more rare and luxurious because of the horrible sub- prime mortgages and the actions taken in bad faith by the mortgage lenders and rating agencies. A lot of this can be seen in The Big Short. This stood out to me personally because there was change. When I see change, I immediately default to thinking about how and why it took place. There were huge changes in both the fictional world of Parable of the Sower and in 2008 when the housing/financial crash happened. The changes do relate but they are seen in a different light. One was portrayed as God, and one was portrayed as something done by giant/evil companies.
The next thing that I noticed was the sharing taking place both in the book and during the 2008 housing crisis. In the book Lauren has a disease called hyperempathy. When Lauren is close to someone, she feels the physical feeling they have. So, if they are being hurt by something she will feel their pain and same thing if someone is feeling some other kind of physical stimulus. “The sharing isn’t real after all. It isn’t some magic or ESP that allows me to share the pain or pleasure with other people” (11) This ultimately makes her vulnerable in case she needs to defend herself. When she hurts someone, she feels exactly what the other person feels. “Then I was lost, no more good for anything. I died with someone” (297) When Lauren’s group got into a shootout someone got shot and died. Lauren was close enough that when they were dying so was she. She ended up passing out due to her hyperempathy. There is also the other side of Lauren’s hyperempathy. “I got caught up in their lovemaking, and had all I could do to lie still and keep quiet. I couldn’t escape their sensation.” (200) This highlights the other side of Lauren’s hyperempathy. When people are feeling pleasure, she also feels it. Lauren’s sharing goes both ways. This relates to the big banks that ended up failing during the 2008 housing crisis.
Before the housing crisis the banks had brought up a bunch of CDO’s. These are collateralized debt obligations. In this case the debt is people’s mortgages. A CDO contains tons of people’s mortgages, it’s like bundling up a bunch of mortgages into one big package. The banks were buying these mortgages because they looked like really good investments. There were even rating agencies that would give each CDO a rating based on how likely the people paying the mortgages were to actually pay. This all sounds really great however the rating agencies lied about how good these mortgages were. Some of this had to do with what kind of mortgages were in the CDOs. There are fixed rate mortgages and there are variable rate mortgages. At the time the housing market was booming so a lot of people wanted to buy homes because of how good an investment it was. This includes people that couldn’t afford homes and people with horrible credit ratings. As said in The Big Short “Mortgage borrowers typically repaid their loans when interest rates fell, and they could finance more cheaply” (7) However with this new type of adjustable-rate mortgage it was made super difficult to pay the mortgage after the first few years. These were called subprime mortgages. There would be a super low interest rate (a teaser rate) for the first few years then the interest rate would skyrocket, and it would become super expensive to pay for the mortgage. The subprime mortgage was made available to just about everybody even if they had a really bad credit score and or couldn’t afford the house without the teaser interest rate. The mortgage lenders that supplied these super risky subprime mortgages would take a few low-risk mortgages and group them into a CDO with tons of risky subprime mortgages. The lenders would then pay to have them rated and the rating agencies gave these CDOs super high ratings even when the real rating should have been trash. These false ratings made it so that banks wanted to and did buy these horrible CDOs. After a few years when the interest rates skyrocketed, and the mortgages failed the big banks struggled and some of them even failed as a whole. This made people lose their jobs, lose their savings and lose some of their investments. In other words, the banks were sharing their financial pain with everybody. However, before this when the banks were doing well, they didn’t share any of their profits with regular people. They kept it all to themselves and gave their executives enormous bonuses. Even when the government came to bail out some of the banks, they still kept it to themselves and gave their executives more money. So, there was really only one side to this sharing. It would be like if Lauren (regular people) only felt others'(banks) pains instead of feeling both pleasure and pain. This really stood out to me because there was sharing in both worlds but one of them only shared one side of what they felt.
The last thing I noticed was the foresight into what happened in both 2008 and in the book. In the book Lauren is constantly preparing for an event that would leave her with no protection from the wall. “I’ve finally assembled a small survival pack for myself–a grab-and- run pack” (80) Lauren can clearly feel that something is going to happen that causes her to need what is in the survival pack. Lauren feels this but nobody else around her does. None of her family/neighbors are getting survival packs ready. They have confidence in the wall. Lauren proved to be right to prepare because it wasn’t too much longer before she was forced to leave her home and have no protection from the wall. There was a similar situation before the 2008 housing crisis. In The Big Short Dr Michael Burry sees that there is a housing bubble and that it’s going to pop. He also sees how bad the CDOs are. So, he finds a way to bet against the success of the CDOs/subprime mortgages. ““If I bought a credit default swap, my downside was defined and certain, and the upside was many multiples of it”” Credit default swaps are basically insurance policies on, in this case CDOs. If the banks were to lose money on the CDOs/subprime mortgages Burry would make however much they lost even if he only bought a fraction of that in credit default swaps. When the crisis happened, Burry made tons of money because he basically bet that the subprime mortgages/CDOs would fail. In both the book and in the housing crisis someone had foresight into what was going to happen. Because of this both Burry and Lauren prepared to be successful when the event they predicted happened. The only difference is that Lauren prepared for something that would be bad for her whereas Burry prepared for something that would make him and his fund a lot of money.
These things that I noticed portray my journey through the semester. At first, I really struggled with the concepts and major points of the course. The first thing that I did to improve that was noticing that change needed to happen so that I could be successful. Noticing this really helped me start thinking about what needed to change and what needed to be done. One thing that I noticed needed to be changed was my preparation for class. I wanted to ensure that I could understand and interpret what was happening when discussing books and other topics. The next part of my journey through the semester was sharing. By this I mean sharing my ideas and thoughts with my peers. Toward the beginning of the semester, I wasn’t really participating in the discussions that happened in class. However, after I noticed that I should be sharing I started to participate more. This led to a lot more success based not only on what I contributed but what my peers contributed when taking what I shared into account. An example of this was sharing my thoughts in our small groups and people sharing their thoughts based on what I had already shared. This happened especially a lot when we were reading The Big Short. The last part of my journey through the semester was gaining foresight into what was expected so I could be the most prepared. I noticed some repetitiveness when writing our group essays (mini collaborations). After the first two I knew exactly what needed to be done to be successful in writing these essays. Throughout my semester-long journey I have improved immensely by looking for things to do better. And in doing that I have not only grown as a student but also as a person.