Random thoughts about my interests which include (in no particular order) poker, finance & investing, politics, football and whatever else I happen to see that piques my interest

Tuesday, April 1, 2008

A Better World Part 2

Continuing with my theme from Monday concerning a better world for my kids, I really want them to be able to have more, especially in the way of opportunities, than I had. Not to say I didn't have opportunities because I did, but I want them to have at least as much chance as I have had. I also don't want them to live in a world of constant fear of terrorism, or to be taxed like mad because of debts my generation has handed down. And I'm really afraid they will get that.

What happened to being responsible for what you did, what you signed for, what you caused? Nowadays, as soon as one thing goes wrong, no matter who is at fault (if anyone), the first words out of someone's mouth is "who do I sue" and the second words are "it wasn't my fault because..." I am totally fed up with it. When I hear people saying how they were never told, never informed, didn't know, etc, I just want to take a hammer to their heads.

That's not to say that if you get something defective and it turns out the maker knew there might be an issue and sold it to you anyway, you shouldn't clean their clock. But more and more it seems that completely random accidents or things that happen where we KNOW the possible consequences, still end up going to court and sometimes even winning. I'll give you a case in point before I go on to the one thing that is really getting me mad. First off, we all remember the McDonald's coffee case. How this 79 year old woman put the hot cup of coffee between her legs as a passenger (not driving as many have stated), spilled it on herself, and sued McDonalds for getting burned because the coffee was too hot. The car wasn't even moving and she managed to do this to herself. Now how do you manage to do this when you aren't driving and the car isn't moving? Because you hold it between your knees and pull the lid off. Everyone knew the coffee was super hot, thats one reason I almost never got McDs coffee myself, but to hold it like that while trying to put cream and sugar in it was inviting disaster. Why not ask for a few ice cubes in your coffee? Why not go inside to get it or wait till you can put the coffee down at a table or something? It's not like the lady was gonna be late for work or something.

McD's knew this was a problem because they had something like 700 claims for coffee burns in the 10 years before this, and thats a big reason why they lost. They could have settled for 20 grand but refused to do it and so they got waxed. But the thing is, the lady knew this coffee was really hot and still did something dangerous with it and ended up burning her genitals. How much was this the responsibility of the person? A hell of a lot more than 20 percent (which is what the jury said). You think I'm gonna put something that hot near my groin??

Now this brings me back to what's really under my skin. During the recent housing boom, too many unqualified people bought houses that many of them knew they could not afford. They finagled the numbers, often times with the help of the mortgage brokers, and took out adjustable mortgages with initially low interest rates that they knew would reset higher, and thought nothing of it. They could barely afford that payment and yet bought their "dream house" and now that rates have adjusted, they are screwed. And what do they want? They want a bailout. They want help. It wasn't their fault, etc.

While you cannot assign them all of the blame as mortgage brokers knew they couldn't afford that house and many banks and mortgage companies didn't even bother to check up on the customer to see if they could afford it or that they showed decent credit. Hell many mortgage brokers would fudge the numbers to make it look like they could afford the home when they knew they couldn't. Ultimately though the responsibility lays with the person buying the home because in the end, they are the ones being foreclosed on. But instead all you hear is how terrible it is that they owe more on their mortgage than the home is worth and that it's the government's fault, the economy's fault, etc.

Now I have no issue with people who lose their job and now cannot afford their house. That's bad and it does happen. But many if not most of the people who are being foreclosed on have the same jobs they had when they bought the house. The problem is THEY BOUGHT TOO MUCH HOUSE AND PAID TOO MUCH FOR IT!!! We all get sucked in from time to time, we see something and we gotta have it no matter how much it costs. But you're talking about something you're gonna have to pay on for the NEXT 30 YEARS. And the kicker is, if some scum sucking unethical mortgage broker fudged the figures enough and stuck him with an ARM or even worse, an option ARM mortgage, as soon as the rates adjust he's now in a house he can't afford anymore. So he loses his house and his credit is fucked. Does the real estate agent or mortgage broker care? Hell no, they go their money. The bank or mortgage company probably doesn't care either. That loan has been sold to someone else so they got their money too. And then it's packaged as a bond and bought by some guy nearing retirement as a safe place to put his money and get a decent interest return, except it's not safe anymore. Moody's says it's AAA rated but it's actually built on junk, on mortgages without much documentation given to high risk home buyers who are walking away from their houses and now this guy isn't getting paid and can't sell the bond for anything near what he paid for it, if at all. So 2 ordinary people (the homebuyer and the bondholder) are taking it up the wazoo and everyone else who sells this shit is making a killing on the deal. Which is why I am not worked up at all about the Bear Stearns fiasco. They made their bed and reaped HUGE monetary rewards from it. Let them take it up the wazoo for a change, especially all the high execs with their now worthless stock options. I say fuck you all. The only ones I feel sorry for in the mess there are the guys like me, coming in everyday and doing their jobs. At least half of them probably won't lose their jobs. But BSC was one of the big dogs in this mortgage mess. Let them roll around in the shit for awhile.

Anyway, the long winded point I am trying to make in this disaster of a blog is, when does someone point the finger at themselves and take personal responsibility for this mess. At least their own little portion of it. Of course the homeowner is gonna have to take some he works like a slave in 2 jobs to pay for a house he doesn't get to stay home and enjoy or his credit gets crapped on when he loses said house to foreclosure. To make matters worse, check out this site: http://www.youwalkaway.com/ of some ass holes catering to people walking away from their mortgages and even counselling them on how they can live in that house for another 8 months while not paying for it. Again, let me restate for the record, people who lose their jobs, get sick, etc, and cannot pay for their house is entirely different than what I am talking to here. I am talking to the majority of the buyers who spent themselves into a gigantic financial abyss and now are staring into the black hole hoping against hope it won't swallow them up. Ultimately they are the ones who are taking a financial bath, along with the unfortunate investors who purchased investments based on mortgages like this and also did not understand there really was risk in this "riskless" investment. These are the people who have to look in the mirror and say to themselves, "well I really screwed the pooch that time" and who want a bailout by your tax dollars to save themselves from the hole they dug. And they ain't getting it from me if I can help it.

So if you are one of the people so named in this story, I better not find you pulling this You Walk Away bullshit in my neighborhood. You better be working 2 jobs to pay for your McMansion and your wife better work too, not to mention how much I want to see your kids cutting grass instead of playing their WII. If you bought into these investments, you better be planning on how to cut back (if you're already retired) or delaying your retirement until your finances improve. Because only by taking some responsibility for the part you played in all the hype, hoopla, and fiasco of this housing bubble is this all going to unwind without my government trying to shove a huge debt onto my kids backs. I'm gonna do my damnedest to prevent that from happening and I hope enough others are too.