The whole system is collapsing and the wolves are at the door. Why? Poor people of course. Those ignorant people who took out loans to buy houses that they could barely afford and now that the interest rate is up and the economy is down their bad choices have ruined the country.Just something to think about.
In the papers, in comments, and on the TV I hear over and over that it all started with bad loans to people who could not afford it. They’re right and damnably wrong in the same breath. How amazing is that?
You don’t know poor unless you grew up with no doctor. Poor is getting your shots at the local health clinic after taking two buses there and waiting an hour, the repeating it in reverse to get home while being dragged behind your mom.
Poor is living several years in the projects of Kentucky and remembering the boxes. The boxes of food from your mom’s church that comes extra big during the holidays, and normal during the rest of the time. Boxes of clothing donated by someone who’s kid just grew too big for them…”but it might fit your kids”.
I never understood why mom got so mad when I was young and absent mindedly lost my jackets. It’s just a jacket to a kid, but an extra expense to a lone mom. I know that now and wish I knew that then. Kids normally never really think they’re poor if there is food.
Poor is when you hope and dream of owning your own house and one day you hear about the programs, those HUD (housing and urban development) programs to get low income people to purchase housing.
Poor is buying a house and living the dream because the government might have helped you and that means it must be alright…right?
Then a rate is changed by the Federal Reserve, or the economy turns and that house that was a dream become another stone around your neck. You see the cost go up and up, and you hear the people screaming about those damned evil poor people who purchased houses they could not afford destroying the economy and you wonder how your dream could go away so fast.
Then the clock starts, you get the paperwork telling you that you need to move and those old feelings come back. Where do I live, where do I move, and why did it go bad so fast?
You never knew you were so powerful, a member of a movement so strong as to bring down a whole market and ruin the economy of the worlds greatest super power. Maybe that poor person even laughed at their “power” as they shoved their kid’s toys into the empty cardboard box they picked up from behind the liquor store…the one not in Smyrna thank God.
I’m rather tired of people sitting down and laying the blame of the world on the ones who bought into a dream they could not afford. Unless you’ve lived at the bottom and found the only place to look is up, then don’t you dare look down in judgment on them. Maybe many did over reach when trying to grab the dream…but to give them the power to pull down a whole economy is foolish in the extreme.
Our mission is to be a useful resource for the city of Smyrna, TN and surrounding areas.
Tuesday, October 7, 2008
Filler
I write a lot of stuff that I never submit to the Smyrna AM, and never even show others, but in this time of economic turmoil I wrote this weekend a small piece I want to share with you.
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7 comments:
Well written Gunner. Most describes my own childhood. I have to say though, a lot of poor decision making on my parents part that put us there.
However, when I think of a lot of these people that have contributed to 'bringing us down', it's buying the home they couldn't afford in the first place. I then think of people like my family today. I do not consider us poor or wealthy. We get by. We are like most American families that had the opportunity, after working and saving our money, to buy a home.
When we were told the range in which we could afford and we went shopping for that home, instead of going at the top of the price range and getting that two story with the two car garage, we instead went with the one level, one car garage. We knew we would probably still want to afford eating out, (or eating at all)maybe even a movie every now and then. A family vacation once in a while, not to mention those surprise visits to the auto repair man, and oh yea, the kids will probably want to go to college someday.
We tried living within our means by buying the house that would allow us to budget those things that we knew we would want to allow ourselves.
There are many families out there, that instead of thinking like that, went with the house at the top of their price range. They couldn't see themselves living in that last house they were just shown at the bottom of their price range, after seeing the one at the top. Not thinking about having to cut back on some of their spending to do that, but just kept on eating at Logan's, putting it on the credit card, driving the nice car that still has a payment to make, along side of the steep house payment.
I know there are a lot of people also in the situation because of health or job loss. It could happen to any of us. That's why we need our government to back us up when we are in those situations. Not separate and label us, just give us a chance to get back on our feet.
But it's also true that a lot of people keep living like Rock stars, when they really can't afford it, and then want to be bailed out when they get in over their head. Too many of them living far beyond their means then saying they don't have money to pay their bills, yet they still make it to play golf, go on vacation with their pedicure, and have a hair appointment to get to.
My family does have a home right now. God forbid, something happen to our jobs or health, we be in a crisis. Kid in college on scholarships worked very hard for, and we have cars that we chose to buy used instead of going into debt for new ones. I've never had a pedicure and make on average one hair appointment a year. That's my choice. I know there are also families that don't have those luxeries too.
We are losing our 401k everyday, and don't know what will be left if anything for retirement. We could be sitting in the same boat with a lot of people that made bad choices when we were only trying to make the right ones for our future.
You have to admit that there are a lot of people helping to put us all in this predicament, by their selfish choices.
This predicament does not lie at the doorstep of the "poor." After all, you put it well that the government came along and told them they shoudl live the American Dream of owning a house and they bought it.
No, the problem lies with Bill Clinton, Barney Frank, San Fran Nan and the rest of the liberals in congress who when shown the future if something wasn't done to fix Fannie and Freddie, they decided it wasn't worth the risk of looking racist because minorities tend to be more poor. They didn't look at the fact that skin color was irrelevent. Bad loans were being made simply for the sake of getting people into homes. who cares if they can repay the loan?
HUD's mission statement is to increase home ownership, apparently at any cost. And they did that through the lending practices of Fannie and Freddie.
Anonymous, you do not need to worry about your 401K unless you are retiring tomorrow. Fact is, the stock market has had bigger percentage losses in the past, and it has rebounded and grown an average of 11% over the course of the NYSE. You'll be fine in the long run, don't panic.
I agree that it lies with the liberals - but it also lies with the damnable economic destruction caused by Bush, McCain, and other Republican shills that serve the banking cartel rather than the American people. Not to mention the spinelessness of the Supreme Court and its refusal to end the paper game and bring us back to real money as it was outlined in the Constitution.
Both parties are to blame. Neither will face the fact that our money is unconstitutional paper rather than a store of wealth - i.e., gold and silver.
Inflation is how the government pays for its evil empire both here via welfare programs and abroad via military adventures.
Look at the destruction of purchasing power since the inception of the Federal Reserve and you'll see what oppression looks like. The poor never knew what hit them. And soon much of the the middle class will join their ranks as their retirements, homes, pensions and savings bite the dust.
Such is the endgame for every paper currency. The wealth has been sucked upwards into the hands of the few.
The poor saps that bought their homes with loans they couldn't afford are only the first casualties.
Watch your backs.
I believe that there is plenty of blame to go around. Both Republicans and Democrats caused this "credit" lifestyle that we as Americans have come to expect. What we as a society consider "poor" today is not really that poor. Most poor people that I know have cell phones, cars, tv, cable, and eat out all the time. I wish that our government would truly encourage and reward fiscal restraint but they seem to encourage bad behavior. I know my approach seems pretty 2 dimension but I do not live my life around credit and it makes my life far less stressful. There is nothing out there that is worth me losing sleep at night about. Most times people who complain about not having anything do not want to sacrafice and pay for insurance as an example. There is usually not one thing that threw a family or individual over the edge but it is one bad financial decision after another over many years. I'll get off my high horse now but the reason I'm up here is I do believe that later on the government will start looking to tax people who have been responsible with there money.
I'm going to see your poor people and raise you an investment banker, an insurance company, a rating agency, a hedge fund manager, and an SEC Chairman. There is no way that a 4% mortgage default rate created this crisis alone.
What happened was greedy investment bankers repackaging those risky mortgages and trying to sell them off as pure gold, or a CDO. To get investors to buy the CDOs, they sold these same investors insurance against default, except they didn't call it insurance. They called it a "swap," turning it into a security derived from the cashflow of the underlying mortgages. That excused insurers from holding the cash reserves required by law to back up insurance.
Now, in my world, if I was caught selling a joint (which I never would be), calling it something other than a joint would be no defense. A joint is a joint. Insurance is insurance, no matter what you call it. Until the laws of Wall Street start to resemble the laws on Main Street, investing will remain a risky venture.
What's magnified the problem was that some clever people figured out that they could buy a credit default swap without ever even purchasing the underlying instrument (mortgages). It basically became a side bet between two parties who had no stake in the underlying real property. That's one of the reasons so much wealth has been wiped out so fast. It turned the whole situation nuclear.
Clever hedge funds figured out that they could cash in, too. Now, traditionally, a short - seller, someone who is taking a position that a stock is overpriced, has a healthy role to play in the market. They borrow stock from someone who owns it, sell it, then repurchase identical shares to return to the original owner. They get to pocket the difference between the inflated price of the shares and the actual value of the shares when the price corrects.
Lately, however, there has been an army of "naked short-sellers" manipulating the prices of stock. Naked short selling is illegal. They are taking advantage of the weakness in investment banks and insurance companies overinvested in derivatives. Instead of actually borrowing the stock in question, they have simply "located" stock that they could reasonably borrow and sold phantom stock. Because of a rule that allows short sellers to sell stock they do not have, but have simply located, the SEC has looked the other way. This practice is technically illegal, yet the SEC has failed to enforce. When considering how many shares have failed to be delivered in recent months, it becomes apparent that "locating" shares has become a joke among short-sellers and hedgefund managers. If they have "located" the shares, they located them in their dreams. With a wink and a nod, the transaction is completed, but no real shares are ever exchanged.
http://www.sec.gov/foia/docs/failsdata-archive.htm
Now, in my world, if I sold something that I didn't own, but had merely "located" it, I would be prosecuted. Yet naked short-sellers have operated with impunity. Meantime, they are driving down the price of the stock, which arguably is overpriced because the values are imaginary. That doesn't excuse them, however, from the havoc they are wreaking on innocent Americans with devastated 401Ks, or the damage they are inflicting on the overall economy.
Oh, I left out the rating agencies. The rating agencies that told us (investors) that stock in various financial institutions was AAA, were paid by the financial istitutions they rated. Conflict of interest much? If a financial institution was unhappy with their rating, or a rumor that their rating was going to be lowered, they simply had a hissy fit and fired the rating agency. Now, if Equifax says something about me that I don't like, can I fire them? No. Again, what happens on Wall Street bears little resemblance to what happens on Main Street.
Oh, there's one more thing I should mention. SEC Chairman Chris Cox did away with the uptick rule in July, 2007. The uptick rule had been in place since 1939 to prevent short-sellers from placing overwhelming downward pressure on stock prices. Basically, the rule only allows short selling when the price of a stock is higher than the price at which it last sold. That way short sellers can not gang up on a stock and kill it as it goes down.
It was instituted due to lessons learned from the Great Depression. It's almost as if Cox was asking for this to happen. McCain, not that I am his biggest fan, was so right to call for his firing. The only way that doesn't make sense is if the lobbyists have gotten to you.
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