Tuesday, September 30, 2008

You know, When I saw that the House had rejected the compromise bailout bill, and that the stock market had tanked, I found myself laughing. Maybe I shouldn't find this so amusing, but I do.

I think Michael Moore agrees with me.

When I read some of the comments from the floor of the stock exchange, I laughed even more. Talk about a nation of whiners!

I know that the stock market crashing kind of makes the world suck, I guess. I don't know. I'm the kind of guy that is a skilled worker that can make enough salary to afford to buy a modest house. I'm also the kind of guy mortgage lenders were tripping over themselves trying to lend $400,000 to. I'm also the guy that's been getting credit card offers for the last 20 years, offering unsecured credit lines up to $20,000.

I didn't do most of that, though I have built up quite a bit of credit card debt trying to take care of my family.

But a lot of people said yes to those offers, and bought a new $25,000 car on top of that. All those bad mortgages created a real estate frenzy that probably inflated the price of my house by a factor of two - and I live in Texas. It's a lot worse in California.

Basically, we have an economy that has been running at this high, artificial level because it's based on people buying things they can't afford. The Wall Street guys have been playing this game and making money off of it... hoping that someone else is left holding the debt when its true nature is revealed.

I think I'm laughing because they got caught with the bad debt. They tried to transfer it onto the taxpayers - and failed.

I think we are overdue for a correction. And it's not bad for everyone.

There are wealthy people with so much old money that they are largely immune to recessions and depressions, except to the extent that they are so obsessed with money they get really upset about losing out on $20.

There are these sort of upper middle class folks that have gotten pretty wealthy with high level managment jobs in the banking, finance, and corporate sector, through high salaries and investments. These people will be hurt the most. They have been upper middle class/borderline rich for a long time now, but they will become middle class in a hurry.

These people are the people that can actually afford houses in the 300K - Several million dollar range.

See, I'm not one of those people, but I was unable to buy a house in the neighborhood I wanted to live in because there were so many of these people. These are also the people that are freaking out on Wall Street. I think that's why I'm laughing.

There are middle class people that will lose their retirement funds, and may lose their jobs, and may end up with less income. They also may lose their houses, but in a depressed market, I think they will find housing again. I also think the Government will eventually come through with mortgage relief for these people in line with the new, deflated value of their homes. These people will hurt, and will go through change, but I think they will be OK.

For the working poor, that don't make high wages and that don't own property, I don't think this really hurts them all that much. In fact, some things get better for them because they won't be pushed around and squeezed out by all these upper-middle-classers.

And the good thing is that we will all break our dependency on cheap, easy money and will be forced to really work together to make our lives better. That starts with paying attention and learning about what's really going on in our community and in the country and in the world, and making real, intelligent, informed choices when we decide where to get our news from, and when we go to the voting booth. And that will revitalize our democracy.

We will all be poorer, but we will all be happier. That is my prediction.


Blogger Andy said...

I read an article from the WSJ today by Russel Roberts talking about how the government had pressured Fannie and Freddie to target people in need of "special affordable" loans, people whose income was below the median in their areaz. The percentages grew from 1992 to this crisis. The measures were promoted by a lot of democrats as a way of increasing home ownership for people of lower means, which they saw as a good thing, as if they were trying to help people. Of course republicans supported is as well while some warned back in 2003 about the instability this would cause, including Greenspan. In the end it was a lose-lose scenario by a bi-partisan effort in which our economy suffers, and the people who joined in the glory of home ownership lost those homes, because they couldn't afford them in the first place. If we want to help people why don't we give them something they need - like affordable day care, so they can go out and work to pay their "rent." (what's so bad about living in an apartment anyway?)

Like you say, everyone got hurt because we all had to start paying more for houses that now aren't worth as much.

So it wasn't just stupid companies that should fail, it was also the government tempting people and companies into stupid decisions. I'm fed up. I'm fed up with seeing stupid people.

9:47 AM  

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