The phantom menace

The black-suited, horned monster of the dark side stood perched by his master, taking in the cold dull air. "At last we will reveal ourselves to the Jedi," the demonic disciple said. "At last we will have revenge." "You have been well trained, my young apprentice," the master assured. "They will be no match for you." And so began the epic battle that would result in the death of countless Jedi, good destroyed at the hands of pure evil, until a glimmer of hope burst into a cataclysmic blast leaving good triumphing over evil.

Today, it seems that a real-world phantom menace has hatched his dastardly plot. For almost half a decade, maybe more, we have been living in a false reality, a fake realm in which almost nothing was what it seemed. It started with mind tricks of the dark side: weaponized mortgages. The American Dream purports to send us into a nice suburban home with a large grass yard and a two car garage. And so the devilish foe tempted us with the most desirable material good we could think of-a home.

Many of the loan agents were paid fees just for getting a potential homeowner to sign on the dotted line, and as soon as the agreement was made, the agent would sell the mortgages off to another company, leaving them with no personal stake in the future of the mortgage. Liar loans, NINJA loans and a number of other options for homebuyers may have been acceptable in the Neverland of perpetual prosperity, but the last time humans were promised eternal paradise, we ended up on the wrong side of Eden. Millions of Americans believed what was too good to be true and lived in homes that today may as well have been made out of cardboard. And those homebuyers who shouldn't have received the loans they were given have ended up bringing down their neighbors with them.

Of course, the phantom knows that it takes two to tango, and what better dancing partner than a bunch of Wall Street bankers who are always looking for the next big break? The financial geniuses of yesterday are the criminals and fugitives of today. Bernard Madoff, R. Allen Stanford and other former heroes of wealth have been exposed as frauds.

As part of the Duke in New York program, I have had the opportunity to listen to a number of members of the financial community, and I can assure you that not everyone is bad. But the phantom lurked around many corners on Wall Street. One of the high ranking financial managers who visited our class showed us just what went wrong. She said banks used money they didn't actually have on hand to buy mortgage backed securities. These securities were often given a AAA rating, even if they were really composed of soon-to-be defaulted loans. To put this in perspective, she said Duke University issued bonds only a short time ago that were rated AA+, which is a lower rating than many of the mortgage backed securities. Her firm expects that even after the government helps homeowners restructure their mortgages, 40 percent of mortgages will default. The phantom strikes again!

The financial titans couldn't keep their hands off the forbidden fruit as the horned apprentice whispered sweet words into their ears. A major banking collapse led to less lending which led to other company failures. and around and around we go. Duke is not invulnerable-according to a Feb. 3 report in The Chronicle, "Donations down 20% in FY 2009," giving to the University has decreased in value significantly. According to last year's financial statement, Duke's investment returns dropped from $1.26 billion in 2007 to $59.8 million in 2008.

And why not put a cherry on top of our doomsday cake? Enter Alex Rodriguez. Like Fed Chairman Ben Bernanke, I love baseball too. I'm from St. Louis, so we've dealt with our own steroid tragedy (if you haven't heard anything about the Rick Ankiel story, I warn you to grab a box of tissues before looking him up). When the Emperor assured Darth Maul that the Jedi would be no match for him, I guess he knew that even the skilled Rodriguez, poised to be the greatest of the great, would be unable to defend himself with just a glove and a bat.

So what do we do now as the phantom rears his head and Jedis are dying all around us? We can take a look back, like former President Bill Clinton did in a Feb. 17 interview on Larry King Live. He said that the United States has been down before, but everyone who has bet against America has lost their bet. We can't continue to live in the shadow world where industries only seem to work, where we make fake money, where the foundation of our economy is riddled with lies, deceit and cheating.