Predatory Lending

Predatory lending is one of two major causes of economic distress in the United States today, the other of course being oil. It is the idea that mortgage companies have in the past decade given out unwise loans, particularly for mortgages, to people believing that they could assume the debt incurred if they client defaults on the mortgage. Simply put, these mortgage brokerages would take the house from their client, and since the value of the housing market had been increasingly seemingly without end, it was obvious that even if they were to temporarily assume a debt, that debt would be erased, with profit, when they next sell the house and possibly pick up another unstable mortgage loan.

They made money off of giving loans to people who could not feasibly pay them off. Many would default on those loans and the lenders would actually make money off the process, off the pain they generated.

The second type of predatory lending I wish to speak of is one in which lenders provide so called "variable rate" mortgages. These are mortgage loans in which the interest rate is not fixed at a certain percentage. Generally, they are given at a lower starting rate, thus enticing people who wouldn't normally qualify into the process. Then at some point in the foreseeable future, the interest rate will rise nationally and thereby the interest rate, not fixed, will rise on the mortgage, thus making monthly payments on said mortgage more expensive for the client. Of course, as this happens those who cannot any longer pay their mortgage will inevitably foreclose and the lender will own their house, which they can then sell again and perhaps pick up another mortgage, but in the very least profit on the booming price of the housing bubble as aforementioned.

The problem lies herein... that they knew that they were doing what they were doing. These companies knew that many people would not be able to pay their loans back, but offered them anyway. They knew that once the interest rates began to rise, which they inevitably would, that hundreds of thousands of people would begin to lose their houses. AND, so long as the housing market held strong, the mortgage lenders would continue to turn a profit off of this predatory lending process. However, because of the downturn in the economy and the soaring of unemployment, inflation, and the consumer price index, the housing bubble burst. Prices fell significantly for the first time in 30 years. And now, mortgage lenders, whose incurred debt was paid off by the resale of homes foreclosed upon is now not being paid off in full because they cannot turn a profit on housing sales, are turning belly up.

These lenders sought out the federal government to bail them out. The Federal Reserve lowered interest rates slightly to ease the burden on these companies. Doing so lowered the number of foreclosures, in theory (if the economy hadn't kept going south), and thus lowered the amount of debt still being incurred by lending firms that cannot resell their foreclosed properties for a profit or even to break even. As more foreclose, more debt racks up and companies need to be bailed out further. The US prints more money and gives it to federal banks that offered these predatory loans as a stop-gap measure to insure that the banks will not crash, causing essentially a national economic crisis leading to a new depression. The problem is that inflation is caused by the printing of more money. The consumer price index (how much things cost in relation to what they once did) rises and yet again people begin to foreclose on their homes because they cannot afford to pay their mortgages.

We're back to square one. It is a self-fulfilling prophecy. A bad economy causes foreclosures which lead to brokers looking for help which leads to the federal government printing more money which leads to inflation which leads to more people not being able to afford their houses leading to foreclosures. And the cycle continues.

It all began because lending firms were greedy. They believed that they could feed off of the American people (internationally as well, i.e. England specifically). But, as is a fundamental law of the universe, that with every action comes an equal but opposite reaction. Unfortunately, as everything is connected and everyone is connected, so too will the pain wrought by this greed continue to suffer itself upon everyone: lenders, regular Joe's, and the economy alike. We are in a period of deflation. Not economically so, yet this should too be watched intently for, but metaphorically. Our collective growth over the last decade or so in the housing market is checking itself. Greed is it's weight and suffering it's counterbalance.

What can we do? All we can do is remember not to overreact or to panic. There will be pain because of the housing market bubble bursting for much of the next decade. But, to overkill is to swing the pendulum to the same distance in the opposite direction. Squeezing credit stifles growth which in turn hurts the economy, which in turn stifles growth. It too is cyclical. We must find a happier medium whereby credit is still available but not carelessly given. Laws must be put in place to prevent predatory lending and they in turn must be enforced harshly. To counter the actions of greed we must use only the necessary counterbalance.

We must be watchful and not panic.

Passive Bigotry

I had an interesting conversation last night while playing free online poker that I would like to elaborate on.

Some people are only looking out for themselves. Some people don't care what happens to others because it's never happened to them. They don't care about the health or well-being of other people, because it doesn't "benefit" them. I bring this, albeit common occurrence of the sheeple class, up because of the impending presidential election. These people have a candidate too, oh yes they do. And his name is Ron Paul.

Government shouldn't care about whether people starve. It shouldn't be concerned of whether or not its people get a good education or health care, food or warmth, whether they are discriminated against or not. Why? Because it would give government power over people. Oh horrors. Surely this would be horrible. We cannot possibly give people a good education or health care. People don't deserve food or warmth.

Of course not.

Actually they do. It is our responsibility to care for all of those who cannot care for themselves. This is the meaning of civilized society. If you don't want to be part of civilized society then by all means move out of this country. If you are unwilling to help those in need, you don't deserve to live in a country that protects your rights, especially because you don't want them.

Life sucks and then you die or survival of the fittest. That's their motto. As if there's nothing that we sentient beings can do about it. Why should we let people live in pain and suffering through no fault of their own

The American Melting Pot and The American Dream

A lot can be said about the so-called American "melting pot," the general theory being that people of different cultures come to America and melt into the American 1950's "ideal" family with 2.5 children, a white picket fence around a brand new cookie cutter house, and a dog named Max or Rover or some other American name for a mutt or perhaps a German Shepard or dalmatian.

Of course, the 1950's American Dream comes from an atypical mold. It is impossible for everyone to attain the American Dream because the American Dream as the picture perfect 1950's lifestyle -- with a shiny new family car, ever wise and never rash father figure, docile and obedient wife and children, and a single-income paycheck that will always cover your every need and sometimes a little extra for a gift for the wife and children because they're just so super -- it is ideal for only one member of the family:  the father, traditional and ideal with a sports jacket, loafers, and a shallow, brimmed hat. That's the only person in the atypical "traditional" family that the American Dream really serves.

In fact, the idea behind the "American Dream" is neither American in origin nor a remotely new concept. It stems from the want of an ideal life.  It is a dream life that all who have not wish and desire to attain if they realize that such a thing could even be plausible, regardless of how unlikely. It is for this reason people melt into American culture, perhaps for good reason, to find success. Many times success is found. Many times people are accepted into a culture and into that way of life. They find the path to success and take it.

Others do not make it. And still, others make it for a while and then lose it. Immigrants or natives, it doesn't matter, eventually, there will be someone who doesn't make it because they don't fit into the atypical mold of the American Dream. Maybe it will take a while and they'll successfully run a farm or a business, but then, even two, three or ten generations later, they are not able to secure a place at the table, an economic downturn hits and they are no better off than subsistence, if that, or maybe American society decides to discriminate against them for some reason and they cannot find a job or get a break. Regardless of the reason, they lose the American Dream. They may lose a home or a car; they might not be able to pay for good schools for their kids; they may not be able to pay for food, heat, or health care. And then the dream will have failed them. The promise of a better life will be snatched away, a slap in the face to the hard work of these good people.

But, there's still another group, which up until this point I've only touched upon: Rather than just those who lose the American Dream, there are people that the American Dream, the1950's ideal, does not want. They don't want Blacks. They don't want Muslims. Or gays. Or atheists. Or communists. Or socialists. Or women for that matter. Or any number of groups that hold ideas or genetic material that was seen as evil or bad by conservatives in the 1950's. They wished to make an America in their image, reinforced by Reaganism of the 1980's, a WASP culture, a utopia for those who look and feel and believe like them and them alone. Because their views are tried and true and will always lead them higher up the ladder, further along, the path to success. They will step on the rest and use their toil and labor to elevate themselves and once there expend those who are no longer needed and oppress those who -- once like they themselves were -- are now needed to push higher or drive further along the path to their dream. And in the end, what is that dream for these people but to make it at all costs and by all means necessary.

Those left behind will always lose even if they too desire success. They lose because they are different and their differences can be used as a tool of oppression by others to elevate themselves over them.  And, there is nothing any one person can do about it.

So, America is really two entirely separate melting pots, one of them containing those who have and therefore can fit into the atypical mold for the American Dream and one containing those who have not and for one reason or another cannot be part of that mold.  Those who have hold in common the wealth and 1950's conservatism / 1980's Reaganism and those who have not are gays and atheists and Blacks and Latinos, the inner-city and fringe dwellers who even if born into success know they don't belong but still desire so much for a place at that table that they would change everything they are to be accepted or if this is impossible take down the American elite as much as they can.

101 Days

There are 101 days left to this vacation and already I'm bored silly. Go figure, I know. They, who ever they are, say that vacation is a time for rest and relaxation, but I'm more relaxed when I have something to keep me entertained. Work doesn't really bother me that much, not compared to having nothing to do whatsoever. It gets you moving, keeps you on the ball if you will. Nothing, it keeps you tired and bored and stupid. So tomorrow I'll go find something to do to keep me occupied at least for a little while. Only when there is motivation is there progress, and only with progress do we find greater motivation.

Vacation is nice when it's about a week or so. It's just enough time to lie around and do nothing, thinking about the stuff you've finished since the last time you've sat around thinking about the stuff you've finished since the time before. There's no time for other activities, if there was I'd bet that vacation wouldn't be that fun. A week is all that I need.

Last summer my only goal was to get in touch with who I was, to answer for myself those pesky little questions that everyone has but rarely has the time to think about in detail. Well, I did it. All summer I thought and thought about myself. What it means to be me. What it means to feel. What it means to exist. What purpose I could have. Etc. Etc. All those absurdly rhetorical questions that bug the hell out of every bored person.

To make a long story short: I answered most of those questions, but in the end came up with more questions that I couldn't yet understand or solve. So, I was back to square one. Just great. Just what I needed. So, was it worth it? Sure, analyze away. It's good for people to come to a greater understanding of who they are and what their purpose is. (Etc. Etc.) But don't think that the questions will ever stop. They don't. But that which you gain along the way should be the prize not the destination.

I've got a long while again this year, and while I'm not particularly planning on spending it all thinking about the great new questions that I have, I'm sure a part of the summer will tend towards that. And, at least this time I won't be annoyed when I leave with more pressing questions than I came in with.