The Mortgage Crisis: What Will Come

« November 2007 »

Memo to everyone without a lobbyist: YOU ARE FUCKED.

Yesterday, we discussed the looming mortgage crisis, in which 30 years of non-stop deregulation in the banking and loaning industries has allowed people to engage in more egregious and more irresponsible conduct in the name of making one more half percentage point in profit for the stockholders. Which has led to a bit of a problem.

There are a whole bunch of people out there who can't pay their mortgages. Which means a whole bunch of loans, which were sold and sold again and sold again and bundled and invested in and used as the basis for all kinds of financial transactions that they probably shouldn't have had aren't getting paid. The people who actually do things aren't putting the resources into the system that the system has been pretending they're going to.

I am neither an economist nor a politician. So I can't go into huge specifics about the consequences of this epic clusterfuck. All I can do is rely on a few simple rules of human nature:

Shit always rolls downhill.

The people feeling the impact first, and the people who will feel it the hardest, will be the people at the bottom of the hill. This group is made up mainly of two groups of people - one large, one small. The large group are ordinary people who got suckered into bad mortgages on houses whose values had been inflated by all the bad mortgages that came before it. The small group are the asshole flippers like the people you see on the teevee. They bought these crappy mortgages on purpose, with the idea that they'd pay them off right away when they fixed up the house a bit and sold it for a profit.

Expect to be told that the second group is much larger than the first group, because the first group is sympathetic, and the second group is not.

When it is time to clean up the shit, it will be a lot easier if the cleanup efforts are focused at the top of the hill, where there's a lot less shit.

Various efforts will be made by various people to "solve" the crisis. These efforts will invariably be focused on the financial institutions that may be suffering, and not the individual people losing their homes. Any efforts made toward the people at the bottom will be token efforts that are designed to look like something is being done without actually being helpful. For example, Senator Norm "Wall Of Teeth" Coleman proposed letting people dip into their retirement money without penalty to pay their mortgage. Well, almost without penalty. As long as all the money's back in the retirement account within three years. If not, then you get to pay all the penalties retroactively.

This is, of course, an awful fucking idea, but it accomplishes its goal - making it look like Norm Coleman wants to do something to help the people who are drowning in shit, while preventing Norm Coleman from actually seeing, smelling, or touching any of those people.

If there are fifty people miserable from being fucked over, there's a rich man smiling somewhere.

It's true of health care, and it's true here. Like it or not, a vast portion of the wealth in America right now is created not by hard work, not by personal responsibility, but through exploitation and the misery of other people. So if people are getting fucked over in the mortgage crisis, look around and find out who's getting rich off of it.

And when you find them, the one thing you'll notice is this. None of the consequences will touch them. Because that's the corollary of this rule. Someone else will get punished. Someone else will take the fall. Lower middle class couples are going to be told they have to "take responsibility" for not reading and understanding the potential implications of every line of the dozens or hundreds of pages of fine print on their home loans, but the bastards who snuck all that fine print in there with the express hope that those people would never read them will sleep comfortably at night in their own beds.

Oh, and anyone who dares suggest that maybe things shouldn't be this way, or in fact were better when things WEREN'T this way, will get called a communist by some douchebag cable news financial analyst. So, you know. Good luck with that.