We are being told that we are in the biggest economic crisis since the Great Depression. The argument from the left is that Republicans destroyed laws that would have allowed oversight. The argument from the riight is that Democrats forced banks to make loans to "poor" people who could not afford to pay those loans back and that is one of the "main" causes for the current crisis.
Wow. I guess I've been hoodwinked. I thought the rich ruled the world. It turns out its the poor who had the power to bring us to our knees!!!
Well I have a simpler view of things. I live in an upscale neighborhood and most of my friends are considered rich or wealthy. I don't have any charts or other sources to quote to make myself look like a guru of any type, but I have practical experiences and observations I would like to share.
I personally have 4 friends, that over the past 7 years, have collectively bought real estate with no money down or little money down. They collectively own(ed) 130 properties between them. Two of my friends were mortgage brokers ( owned their own mortgage companies) back when that was a "prestigious" profession. They and another neighbor of mine are now unemployed. I would to go to "boys night out " on Thursdays and listen to them laugh and make statements about how "I can get them in a house but its not my problem if they can't stay in it!" Or "I made 6 points on that loan and had another 1800.00 in junk fees."
Now they aren't laughing anymore because some of them may not be able to stay in their own homes in the coming months. To add insult to injury, guess what ALL of them are doing with all the properties that are not giving them a positive cashflow? Thats right. They are walking away from the properties. Here is another thing. Most of the properties they own are in lower income areas. Why? Simple. Do the math. Buy a fixer upper for about 40k. Get an appraisal that shows the "potential" value as if it were in good shape. Lets say the appraisal comes back at 90 k. Get a bank or a hard money lender who has a large line of credit to front you the money on that appraisal, put 5 to 10k in it to fix it up then take the excess cash out and pocket it. Rent it out or flip it and hit the repeat button.
Well thats one part of the game. Another part is played by people who bought condos and such in places like Miami, Vegas, L.A. in short, everywhere else that real estate has collapsed. Trust me, not one of these people are "poor " either. But they used the same tools. Build a great credit score and get a line of credit. Buy condos in a new development and sell them for a profit before the complex is even complete. This drives up prices big time!! In fact the problem got so bad that some builders had clauses in thier condo docs that tried to prevent people from "flipping" the condo because often the builder had to compete with these flippers and would lose money. But the smart ones found ways around that by settting up LLC's or other enitites that could circumvent whatever the builders tried to do to stop them.
To add insult to injury, some of these same people would buy or build an upscale home, live in it for two years, refinance it and do a cash out, live on that money for another two years, then refi again. Is it a wonder we are broke?
We aren't producing muc of anything anymore. We outsource that hard work to the Japanese, Chinese, Indians, and Koreans. We just want to be able to buy it cheap, we don't want to have to actually "work " for it!!!
The "American lifestyle" was wonderful until the credit markets crash. The party is over and the caterer is waiting to get paid and we all have hangovers and no money!!!! Now again. I don't have any scientific data to prove anything but I'm sure that all the forclosure data showing defaults are "higher" in poorer neighborhoods, does not take into account the defaults of "investors" so the data is skewed in such a way that anyone looking at it can "blame the poor."
Now the truth is this. We all have to pay taxes. I don't know why Republicans think that somehow Democrats and Independents have "tax parties" because they love to pay taxes so much!!! What the Republicans have been very successful at doing was to make American's believe in a free lunch. They have run the most successful con game in history!!!
Heres the deal. "We the people" hate taxes. ALL of us HATE taxes!!! Yet we the people want safe drinking water, we want good schools, we want safe streets, we want a strong military ( and we want that military to have proper body armor) and most of all we want to be able to sue the hell out of someone if we are wronged!!! All these goods and services cost money! What is a politician to do? Raise taxes? Oh no, that suicide!!! Cut taxes? Can't do that without cutting services!!! So here is what they do. They cut our taxes and still provide services by borrowing that tax money from China, Russia, The United Arab Emirates, Saudi Arabia ( from whom came 14 of the 9/11 terrorists), Japan, etc. The problem is now we owe the taxes we refused to pay PLUS INTEREST!!!!! Where do you think the 11.3 trillion dollar debt came from? ( the real debt is more like 56.3 trillion if you throw in the 46 trillion dollars in mortgages we all owe!!! But thats another article for another day)
Of course we want to buy homes with little or no money down and we want 1% interest rates on those homes so we can go get that new BMW or Shelby Mustang. We want to take lavish vacations and pay for it later. We want to have huge weddings and invite everyone we ever met in life all the way back from kindergarten on and of course we want monthly payments on all that stuff.
Now check this out. We also want our 401(k) to grow by 10% a year ( tax free or tax deferred) and if the CEO isn't getting those types of returns we want him or her fired!!! Most of us who own some type of retirement account also own some type of energy company. Lets say we have Exxon in our 401(k). We want our 401(k) to increase every single quarter, yet we curse when we see 4.00/gallon when we go to fill up!!!! Then we get mad because these CEO's know how to play the game better than we do and we want them locked up!!! Oh lock him up but leave my 401(k) money please!!! Never mind the fact that we want to see gains every single quarter and we expect these CEO's to work miracles with our money. Some of us are so greedy we would have had an attitude with Christ Himself when he multiplied the fish and loaves. I can hear some of us now.
What? He only made enough for 5,000 people? What if we wanted to take a plate home??!!!
In short we have been sold a lie. The lie is we can have our cake and eat it too.
The truth is we have elected leaders that play to our selfish desires. Want to know the real reason we are still in Iraq? Simple. We still want to drive our Hummers and Suburbans, Benzes and Beemers. If they didn't have oil we would have never gone in there. If we finally grow up and start investing money to develop new energy sources instead of "spending" money on new Coach Bags and DirectV the entire world would change. Russia, Venezuela, and China would go back to being poor nations until they bought our technology to transform their societies too.
The answer is simple America. We need to grow the hell up!!!! We can still have the greatest standard of living in the history of the world, but we are going to have to learn from our parents and grandparents. We have to save, invest, invent, build, rebuild, and think of the future not just the next quarter!!!! We have acted like children for the last 40 years and now we are having our a**** handed to us in the form of an 850 billion dollar bail out package. Anyone who thinks taxes aren't going up is a pure fool. It will hurt for a while, but pain is the greatest teacher in the universe.
Its time we grow up and we elect leaders who are more grown than we are!!!!