Saturday, February 9, 2008


The truth about the subprime mortgage industry

I’m sure you heard about being able to get loans with bad credit. It was all the rage after the Enron and Worldcom scandals. The banks and money lenders were getting paid anyway, if not by the people who borrowed the money, then by the tax payers.

Does anyone remember the Lincoln Savings and Loan Scandal? Remember Senator John McCain’s involvement in that? That little steaming nugget will be dredged up soon enough; it’s not the story right now.

Lending money to people who are known not to afford it has been reported in the news as a “disaster”, reported as a “mistake,” and journalists and pundits alike have been scratching their heads wondering why it was done. Why were all those poor people allowed to borrow money they couldn’t pay back? What were those bankers thinking? Were they stupid?

No. They knew exactly what they were doing. They were investing in living, breathing people who would be forced to sweat and toil to pay them back, plus interest of course, as long as they lived, and if they didn’t, it would be their children’s burden.

It’s like switching investments from stocks to bonds or gold during hard-times. You can switch your investments from manufactured commodities to entire living, breathing families to pay you back, because it’s the law.

Another word for it is indentured servitude. If you have a credit card, a mortgage, a car loan, or are mandated by your state to get car insurance, or you pay rent, you qualify as an indentured servant if your expenses exceed your savings.

Debt Equity is the possession of the living breathing entity (in this case, multiple generations of families) that pays the money, not the money itself.

Banks and other lenders can track you down anywhere in the country with the help of their police (you don’t have any police.) because you need money to try and emulate the so-called “American Dream” as taught in public schools. As comedian George Carlin said “It’s called the American Dream because you have to be asleep to believe it.”

This is the dirty little secret of the “free market economy” that republicans desire so much. They keep complaining that regulations are keeping down the power of the free market. Regulations are the products of lessons learned from deaths and disasters. Just pick up a book by John Steinbeck, Upton Sinclair, or Mark Twain and you can read about what it was like when the economy was really free.