Tuesday, October 7, 2008

Bailout Blog

I’m writing this because I am so angry about the economic meltdown, and I’m not even sure who to be angry with. In fact, I’m on the low end of the economic scale, so I have much less to lose than many others. Yet I find myself irritated that “those in charge” (who?) allowed the situation to deteriorate to this point.

Let me be the first to tell you that I have very little understanding of high finance. I’ve never had much money, so I’ve had little need to learn such things. But even I knew something was wrong. A year or so ago, a friend who works in real estate was telling me that I should buy a house. This woman knows my financial condition. I told her she was crazy. “Oh no, no,’ she said, “You can get a house. All you need is a few thousand dollars for the down payment.” She was serious. I shrugged it off. Common sense told me that was ludicrous. Common sense told me that I can’t afford a house. Common sense told me that I can’t get something for nothing.

Apparently, though, common sense is not much valued in high finance. Apparently, banks were kiting home loans left and right for just about anybody, regardless of whether or not they could afford the loans. Apparently, the American Dream is made of smoke and mirrors and financial gobbeldy-gook.

So why am I so ticked off? I don’t rightly know . . . I’m not going to lose a home or a job or any money in investments. I’ll probably survive this much better than some others. I have years of experience in living on nothing.

I guess it’s the sense of betrayal, once again, by those charged with leading our country. The sense that no matter how hard an individual tries to do the right thing in life, it will always be overwhelmed by the corruption and greed of the powerful. Money and power mean everything, everything, to these people. To be honest, I don’t even consider them people. The only thing that separates humans from animals is our sense of compassion. If you don’t have that, then you’re an animal, no matter how many pretty lies pass your lips.

When I boot up the computer now, I no longer log on to the local news first. I go directly to the national sites to see if we still exist as a functioning nation. And while there, I scan the links that show the presidential election campaigns are now just name calling, a tactic I first perfected in grade school. Those two yahoos might as well be on the Journal Times site, slinging crap at each other. This is who will lead us out of the current crisis? This is who will lead us into the future? This is who we are supposed to look up to?

For the first time in my adult life, I am considering not voting in a national election. I really think it doesn’t matter. Politicians are all pigs, only in it for themselves and their friends. They will lie and lie and lie and lie and lie and lie and lie and lie and lie, and then lie some more. I’m tired of my vote ratifying their lies. I am tired of electing monsters who screw over every working person in order to line the overstuffed pockets of their cronies. I am tired of watching this country swirl ever closer to the bottom of the toilet while connected predators get richer and richer. The thin veneer of civilization has been ripped off by the economic crisis, exposing the rotted timbers underneath and the greedy termites gnawing away at everything we work for.

And the solution is to put more termites in charge? Yeah, right . . . .

17 comments:

Anonymous said...

so... how many tax paying citizens are there in the US? 400 million? Why not send us each 500,000 and watch the economy boom... better than giving our money to bail out wall street. 700 billion sheesh

hale-bopp said...

Um, how about because 400 million times $500,000 is $200 trillion! For reference, the 2006 US GDP was a hair over $13 trillion. Giving out over 15 times your annaul GDP...Well, I say "Bad Idea".

Orbs, the one thing I can certainly say about the mess is that it can't be summed up in a sound bite saying "He did it!". If you honestly believe a single cause is attributable to a person or party, well, then I have a bridge in Alaska to sell you!

Anonymous said...

With the good intention of getting everyone into a home they could call their own, we turned away from the cold hard fact that not everyone, for reasons in and beyond their control, had the ways or means to do it. When Congress made the mistake of forcing responsible lenders and banks into making high risk loans, (which by the lenders own judgment they would have not made in the first place), Congress also made the mistake by not keeping in check the sub prime preditory lenders that acted much as the post civil war carpetbaggers. And I include credit card companies and their "pre-approved" offers sent to those that had no business getting them. Now that bad debt and loans has blown a hole in the economy so bad that the short term loans to make payroll and keep businesses going will be hard to obtain. This will effect both large corporations and small sole proprietorship businesses. The result is obvious. The government is now running around like chickens with their heads cut off trying to get more lifeboats out to the Titanic There is a lot of blame to go around, but there is one body that has a hard time pointing the finger at themselves, and unfortunately, we put them there. The Chinese were right: "Give a man a fish and feed him for a day. Teach a man to fish and feed him for life."

OrbsCorbs said...

Yeah, logjam, "checkbook compassion." A handout makes the giver feel all warm and fuzzy inside, but it usually cripples the recipient. That is enabling behavior - it enables the recipient to remain a victim forever, just like when you try to "help" an alcoholic by covering for him/her.

Anonymous said...

Remember the statement "Power corrupts. Absolute Power corrupts absolutely".

Huck Finn said...

Time to buy gold, and you are running out of time. I even cashed in my change I've saved since 1993. All in a safe deposite box. All ready for the crash. Don't be swayed that your deposits are safe with the Fed deposit insurance. When we hit double digit inflation, paper won't go far. During three years of the oil embargo, gold went from $85 an ounce all the way to $840 an ounce. Sure it settled back down, but it is once again possible that we are going to see a 10X boost in gold prices. get in on the ground floor, the elevator is starting to move. Evenif it don't go 10X, I guarantee you it will see 3Xin two years. Stocks, land and other markets won't come close.

kkdither said...

I used to look at the mansions that were erupting everywhere, wondering where these people worked. How could they afford this? How could they afford the boats--no the yachts, the vacations, the cars, the coach purses....

Now it is evident, many were living way beyond their means. I can understand some of the people being duped into believing they could afford more in mortgages, but you had to be pretty stupid if you were so duped that you didn't look at the big picture and know about the possibilities of ballooning interest mortgages.

The old saying, when it sounds too good to be true.... I don't believe in buying anything you can't afford right now.

OrbsCorbs said...

Yeah, kk, I wondered the same thing whenever I headed out west of the city. Much of the nearby farmlands are now housing. A lot of it looks expensive. Given the conditions of the local job market, I figured most of those people were working elsewhere and commuting. I assumed gasoline prices were killing them. Now this comes along.

Huck Finn said...

Those McMansions are 350-450k and more. My sister lives in one. Thing is, she and her husband are smart, worked hard, saved, and lived in a cracker box for twenty years. They owe less than 80k on theirs and are paying off more than 15k a year. He has a good steady income. Too many of her neigbors however don't. If you drive around the new McMansion subdivisions, look at the for sale, foreclosed signs. Not a pretty picture.

While I think many of their (gone)neighbors are idiots, I don't begrudge my sis and her hubby. They've worked hard, smart and been frugal. They deserve what they have now.

kkdither said...

Yes huck, but your sister does not deserve to be the loser in this and she unfortunately will be.

When there is an overabundance of houses on the market, the value of them all drops.

Your sister may be close to paying off this huge debt, but the money she invested through her hard work was devalued by the current worth of the property.

People are currently paying very high taxes on homes that are no longer worth their original assessed value.

AvengingAngel said...

Here is the bad circle: Government, lenders, investment firms,Government.

First, government decides to take a campaign slogan and make it policy: "Everyone should be able to own a home" turned into policy, even to the point that government rated banks based on the number of loans made to "less qualified" applicants.

Lenders, backed by the insured Fannie Mae/Freddie Mac institutions, handed out "Ninja" loans: No income, No Job, No assets, No problem.

Investment firms: If you get a 15 year mortgage for $80K, on paper, it is worth $200K. Thats what you would pay back over the course of the loan. The lenders sell the mortgage to the investment firm for, lets say, $100K. The lender makes an immediate $20K, and the investment firm has $100K worth of equity they can leverage. And they do. They borrow against the $100K and this looks like profit on the books.

Re-enter the government. Without oversite and despite thye warning signs, Lehman brothers, Fannie, Freddie, continue to leverage all of this paper, insured by the governemnt and big firms like AIG.

Then, the housing bubble breaks, much like the .com bubble in the nineties.

Now, the foreclosures begin. The paper that was worth $100K is now worth ZERO. Times this by hundreds of thousands of loans and we see the meltdown that is now occurring.

Here's what I think should happen:

Those charged with oversite (Barney Frank, Chris Dodd, Christopher Cox) should go directly to jail, do not pass go, do not collect their bonuses or bribes.

Likewise for each CEO and CFO of Lehman, AIG, Fannie, Freddie, and any other company we have to bail out.

Finally, the entire Congress of the United States should apologize to the American people for creating this mess.

OrbsCorbs said...

Thank you, AA. I have a better understanding now.

kk, you're right about the home value. And the investments of so many people have taken a hit. I know that my sister and her husband have met with their finacial adviser. And they had nothing to do with this. Both career professionals who raised a family and are now retired.

Anonymous said...

A few questions need to be answered:

1. How many loans were made to first time homeowners.

2. How many loans were for refinancing an existing mortgage.

3. How many were home equity loans.

Now for each one of the questions we also need to know

1. Who originated the loan
2. The loan amount
3. The type of loan
4. The down payment
5. The location of the house
6. The value of the house used for the loan
7. The year the loan was originated
8. Is the loan in default
9. Is the house in foreclosure

Huck Finn said...

Very good questions Anon. I used to read the foreclosures in the JT. Was sort of a hobby before the heart attack ended my summer for me. What I found was that most of the loans being foreclosed on were home equity loans for about half the worth of the house.

Always found it sad that the house ws listed for low to mid 100k and the loan was for less than 50k. What the foreclosure notices didn't say was if the loan being foreclosed was a first or second loan. I think most times there were two loans and one was jumping ahead of the other to grab the property.

Anonymous said...

Well I think I finally figured out the cause of this whole mess.

Where is the Large Hadron Collider?

What are the Swiss known for, besides watches and chocolate?

We have been duped.

The collider was really used to suck all the money out of the world economy, convert it into gold, and deposit it into a large vault in a Swiss bank.

Thanks to all the bloggers on this site for helping me piece this together.

Anonymous said...

Revised version:

What large device was recently turned on?

Where is it located?

Besides watches and chocolate, what is this country known for?

We have been duped.

The Large Hadron Collider was really used to suck all the money out of the world economy, convert it into gold, and deposit it into a large vault in a Swiss bank. The key to this was the Higgs boson, which made alchemy possible.


Thanks to all the bloggers on this site for helping me piece this together.

hale-bopp said...

Interesting theory, anonymous, but the LHC broke down the next day and won't be turned on again until spring.

No collisions were done, no Higgs Boson, and no black holes :(

Of course, we can always blame it on HAARP (conspiracy nuts blame everything on HAARP so let's add this!)