The Losers of America

In case you happened to miss the rant by CNBC’s Rick Santelli….

At :38 into the clip Santelli calls out to President Obama, “Why don’t you put up a website to have people vote on the Internet as a referendum to see if we really want to subsidize the losers’ mortgages…”

Where to start…?

“The losers mortgages'”, as Santelli sees it, refers to the roughly 9 million Americans that are in danger of living on the street. Since there are about 75 million homeowners in America, Santelli believes that about one in every 8 homeowners you come acroess is a “loser”.

Deep at heart, I’m still a 12 year old boy, so in order to lose, there must be a game involved.

I believe this game plays by the following rules:

1) Fall into the widely adopted misperception of skyrocketing home prices (largely created by institutions that were becoming more and more lenient in their lending practices)

2) Purchase a house beyond your current means, because if the previous two years are any sort of indication, the future equity of your home will more than compensate for any debt you’ll incur.

3) A combination of horrible lending practices and ignorant mortgage purchases shall further dillute the market prices for houses.

4) Meanwhile, completely outside of your control, Wall St. will buy and sell little pieces of our horrible loans. Intelligent financial instruments deem this to be a full-proof method to properly diversify risk while still driving the market forward.

5) Witness our economy completely implode upon itself. Banks fail, credit freezes, businesses cannot operate properly and are forced to lay off workers, the unemployed can’t afford their mortgage payments on houses that are now worth a fraction of their purchase price, banks fall into deeper trouble as they can’t collect on even higher quality mortgages due to the lack of income of those recently laid off, disposable income for many disappears and those who are fortunate to have some spare cash bury it under their mattress, businesses fall further into the red and cut more workers, rinse and repeat.

Your losing prize (oxymoron): You’re kicked out of your house, most likely without a job and needing to support a family. A simple equation that ends in suffering.

Roughly 9 million played the game of the American dream, and lost. True- many of these mortgages were the responsibility of ignorant consumers spending far beyond their means. There should be a rule of thumb that says if you make $45,000 a year, maybe buying a $300,000 house isn’t such a good idea. There were those, however, purchasing homes within their means (at least by our standards) playing off of the assumption that the value of their house would increase over the next 5-10 years; history made that a pretty safe bet. In the process, they fell victim to the collapse of commerce largely manufactured by greedy investors buying these “losers” mortgages. Those on Wall St. multiplied the effect of these bad mortgages and sent the economy into a tailspin. What did they get? Massive bonuses and a bailout. Now that President Obama wants to lend a hand to those on Main St., Wall St. is crying foul.

The truth is, these people shouldn’t have been qualifying for such horrible loans in the first place. No bank should be able to make such miserable loans and live to lend tomorrow. The simple fact is we had to bail out our largest banks to prevent the economy from completely failing and causing the world to become a state of anarchy.

Why bail out the homeowners? Same reason. If Joe the plumber (had to dust that one off) can pay off his mortgage, as undeserving as the help may be, banks will slowly start to regain their footing.

I hope the majority of Americans are willing to shed their laissez faire attitude when it comes to watching nearly 10 million of their neighbors suffer.

That is assuming, of course, that you’re neighbors with such “losers”.

An issue Mr. Santelli likely avoids.

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This entire subject got taken to a new level on the daily show. It’s conclusion/climax is here in John Stewart’s interview with Jim Cramer. Chances are you’ve seen this interview already. If not, you’re in luck….

Cramer v. Stewart