Nuance in Action

It’s another Obama rally on Wall Street! Of course, in Obamese, “rally” is the word we use when we want to say “freefall.” Right now we’re down 150 points, and there is little HOPE that the trend will CHANGE.

Thank God, the left has rewritten the rules of logic. That will save us; when you’re a socialist, wishing will make it so.

These days, a person who borrows money he can’t repay is “a victim.” A person who is ejected from a home he can’t pay for and ends up renting again is “homeless.” Failure is something you reward. Success is something you punish. And amazingly, when you punish success and reward failure, people get more and more productive, and life just improves without measure! After that, we all grow wings and sell our cars because we can fly everywhere we want to go. Be careful up there! Don’t collide with a pig!

Back in the old days, before logic was repealed, overhauled, and replaced, a company that was mismanaged would go out of business, smarter people would buy the assets and hire the employees, and the new company would do better than the old one. A person who got a house loan he could not afford would sell at a loss and go bankrupt and start over, or the bank would foreclose, and a solvent person would buy the house. Then the buyer who lost the house would rent an apartment. We called this “capitalism,” and it led to the greatest combination of stability and wealth any nation has ever known.

These days, when you accept a bad loan with everything disclosed in advance and your eyes wide open, the government takes money away from your responsible neighbor and gives it to you so you can keep your home. Then the government has the gall to tell your neighbor this was done to help HIM.

Your neighbor has less money to take care of himself and his family. He has less incentive to work and save and invest and help create jobs, because the Mommy Dearest State will let him blow his money on beer and lotto tickets and then catch him when he falls. He will adjust his behavior accordingly, unless the Messiah restructures human nature. Of course, that’s the socialist’s worst fantasy. The one that makes their system so pathetic.

The lenders that gave these loans need to go out of business. They knew exactly what was going on, unless they were on psychedelic drugs. I knew what was going on, and I’m just a lawyer.

Earlier in the decade, I represented a couple of car salesmen. They had worked at a number of dealerships in the Miami area. Guess what they told me? They told me how car loans work. Let’s say you’re a crackhead, but you want an Escalade. You go to a car dealer, and you point at the car you want, and they give you a loan form. And you say, “but I am a crackhead and I have no income.” They say, “We did not ask you to declare your income. Just sign the form.” And you sign it, and they fill it out, and if needed, they dig up a forged 1040 and attach it. This is literally true. Then they send it to GMAC or whoever the lender is, and the loan gets approved. This happens every day, all over this city. Well, it DID. Back when people were able to sell cars.

Maybe “crackhead” is an exaggeration, but the rest of it is absolutely true. Car dealers routinely forge documents in order to get lenders to cough up. Surely the lenders know it; how could they not? And if car dealers do it, surely the same thing happens in the housing industry. Get a lender to pay, take your piece of the action, and move on. Then the lender sells the loan and moves on. Somewhere down the line, someone in China eats it, but you got your little piece of cheese, so it’s okay. I can’t believe the lenders don’t know what’s happening. They would have to live in lead-lined booths. Surely they must be making these bad loans with the intention of passing them on before they tank.

You have to wonder how this affects lending standards. If the qualifications of buyers are exaggerated on a broad scale–and they are–you have to wonder how much inflation is built into the standards.

I’ll explain. Imagine the lenders think the average home buyer has a $60,000 income and $5000 in debt. But because the people who put mortgage applications together have lied so much, the true figures are more like $40,000 and $10,000. And the average buyer makes his payments. What happens? The lender ends up with unrealistically high standards. The lender thinks you need $60,000 and $5000 to be a good risk, but the reality is, people with the other figures are pretty safe. Wouldn’t that make it harder for honest applicants to get credit?

I also wonder what the Chinese think, when they see the documents. They must go, “Wow! Americans are even richer than we think! This guy’s application says ‘crackhead,’ and his address is ‘dumpster,’ but he earns more yuan in a day than I make in a month!”

I don’t actually know if the Chinese see the original documents when they buy American mortgages. I have no idea how that works. But they do buy our mortgages. Your stuff is Chinese. Your house is Chinese. You might as well go ahead and buy a wok. Which will probably be made in Mexico.

The free market and logic are like gravity. Eventually they are going to win, because they never take a break. They never stop. Redistribution of wealth only works when the free market redistributes it from unproductive people to productive people. Obama is building a house of cards, and we’re in a windstorm. I still can’t believe Bush helped him do this. Remind me again why people thought Bush was conservative.

A rising tide lifts all boats. In the past, anyone could do well, because America was prosperous. It was easy to succeed. That probably won’t be true from now on. My answer is to get my house in order, change my behavior, and try to find my way into God’s good graces.

Oh, boy. Down 180. Think of all the people out there who saved all their lives and just lost their retirement money. This is absolutely terrible.