I'm just a simple guy that likes to have enough money in his pocket to buy a beer and the odd bag of Cheetos. I'm no economist. But just so I'm clear:1) People bought houses they couldn't afford.
2) Banks lent them money, knowing full well these people couldn't afford the houses.
3) It was all perfectly harmless, as everyone thought the price of houses would keep going up.
4) Banks thought the government would bail them out in the very unlikely event that the housing market went in the crapper.
5) The housing market went in the crapper.
6) People that couldn't afford their houses were out of luck. The bankers who lent them the money were out of luck, too, because the houses weren't worth as much as they were before. Everyone's credit, including the bank's, bottomed out, their assets worth a fraction of what they were.
7) Right up to today, CEOs and bankers have been living the high life, and even when fired, they've received severance packages worth millions. They made silly investments inside and outside of the housing market, and they figured the government (read, taxpayers) would bail them out if things got bad.
8) Well, things are now bad. And the Fed is walking away, refusing to bail out the latest headcase bank, Lehman Brothers. Wall Street has hit the wall, and it is a "nightmare for everybody."
Two stories from my life. Once upon a time, I knew a clerk at a mortgage house. She was a Canadian, lest any of you reading this are crowing over American bank failures (Brits might also like to know that 2007 was a record year for personal bankruptcy in the UK, with 53 114 people throwing in the towel). The mortgage clerk told me that she filled out a lot of paperwork every day for people whom she didn't think could pay their mortgages. Her boss believed they could. She literally told me, "Every day, I pray these people will pay their mortgage. After they leave my office, I say, 'Please, please, pay your mortgage.'" So if you think it can't happen in Canada, think again. Greed doesn't have a nationality.
Another story: I was sitting around with the father of a friend, and I was telling him about all of the nice cars and houses my friend's buddies owned. I said I was too busy blowing cash on good times, and maybe I should buy the nice stuff. He laughed and said, "They don't own any of that crap." I asked what he meant and he said, "When they say 'my house,' they don't mean 'my house.' They don't own their cars or houses. The bank does."
The bank sure does, until it all blows up in the bank's face. And what's that called? A "nightmare for everybody."
Not everybody. I am about as capitalist and free market as it gets, so let me say it plain: if you can afford beer and Cheetos, buy beer and Cheetos. Don't buy a damn house, default on your loan, and cry the blues. You had your shot, and you blew it. For you bankers, don't lend people money when you know they can't afford to pay it back. Now the taxpayers have to clean up your mess. Me, I'm against even that. I wish the world could let them crash. All of them. Start over from the ashes. I'm pleased that Lehman Brothers got told to go screw itself, but too many of these hotshots have been getting away with murder as the government bails them out.
Next time, these boneheads need to save us the hassle. One word for the homeowners: rent. Two words for the bankers: casino dealer.
(Here's a Scotsman article that will give you the goods on the Lehman Brothers fiasco. It has an unbelievable account of the cynical crooks who run these outfits).
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