Also could be titled "We Saw The Enemy And He Was Us" or "What Goes Around Comes Around" - either way a lot of you really aren't going to like what I am about to write. I don't like Paulson's plan but the investors in the MBS's are the ones who brought this on. I call them the nuevo-riche, candy ass, pansie pants little yellow bellied cry babies and in spite of the fact that I need them for my business to survive I think they are all whiny little wusses.
The media giveth and the media taketh away.
I know I have been telling people 2008 is my year of kindness and encouragement. The closer we get to New Year's the more difficult that sounds. If you've been around enough to have inhaled one of my blogs you know I don't have much to say. Or, maybe it's the other way around. Either way let me use the media as a whipping boy and the Wall Street Whiners as the target just once more.
It all started like this: Up until the late 1990's and early 2000's when investors were gobbling up tech stocks and dot com IPO's like a group of fat kids on jello a borrower had to have good credit, good income, stable employment and good assets as well as a down payment or equity to get a loan. The media and the socialists kept whining that "the little people" were being held back from the American dream by the big banks and the "evil Republican capitalist regime".
Dot com went bye-bye boom boom. Nuevo-riche investors and wanna-bees had no place to play. The along came a few forward thinkers who created massive Real Estate Investment Trusts and started snapping up mortgage backed securities as quickly as they came available. The early successes were phenomenal as the lending guidelines were still somewhat common sense based on over a hundred years of data and risk management. An old stable investment vehicle was marked for doom.
But it wasn't enough - the candy-asses wanted MORE and they brought in their friends to play and hedged their bets on massive successes across the board. Then they discovered all they had to do was to buy whatever the lenders could originate and the lenders discovered the inexperienced, greedy youth from the streets of America and the world would buy almost anything. A marriage made in hell! Or maybe just a really disgusting one night stand?
Non-conforming soon became known as sub-prime. Kids who couldn't make enough delivering pizzas were hired as "loan consultants" and with little training were turned loose on the unwary public to just do whatever their managers told them to do.
It was the perfect storm
You can't have a circus without an audience. Welcome to the script greedy, uneducated and lazy borrowers ... millions and millions of them! They didn't care about the small print, the details or the future. All they heard was CASH OUT THOUSANDS OF DOLLARS PAYMENTS LOWER THAN BEFORE or IT DOESN'T MATTER IF YOU'RE FINANCIALLY WORTHLESS HERE ARE THE KEYS TO YOUR DREAM HOME! Sorry I was all-caps for effect.
It couldn't have happened in the 50's or 60's because people actually took responsibility for their own actions. It wasn't until the freedom movement and the socialism of America - originally called "The Great Awakening" but affectionately referred to by me as "The Day America Puked Out Its Brains". Citizens of the 1950's and 1960's cared about their credit, their finances and their future. Their rotten ass spoiled brat little punks could care less. That's why it was very easy for big name national lenders to get people with stellar credit to sing on the line on some really crappy loans to people who have no sense of personal responsibility.
America is ripe for the picking by a socialist agenda
Meanwhile Wall Street was churning out millions and billions in ORIGINATION dollars. No new loans - no profit. The candy-ass investors were just as stupid and greedy as the people selling their souls to them. As long as new loans were being made, packaged and traded everybody was happy. Remember, this all started as a capitulation to the whining left and media that the underserved were being ... well, underserved. Some where along the lines someone forgot that was because the underserved were undeserving. You must watch your spelling for those two are similar!
So now the care-free were being care-less on both sides of the investment pile. One side was getting a few dollars or a new home. The other side was swimming in massive profits but what they forgot was the media is never your friend. The media giveth and the media taketh away. The media had allowed this monster to grow unchecked. Now it had a veracious appetite and the incredible turned into the unrealistic and the piper started demanding some pay.
Nevermind that the candy-asses had made billions of dollars now their 30% annual increases were becoming 15% annual increases and the media told them - "you are doomed". They believed it after about 12 months of having foreclosures stuffed in their face and failed to enjoy the massive profits they were still makeing.
So they left.
Wall Street must have seemed vacant that day in 2007 when the market stopped buying MBS's. The big problem? The originators had told all those borrowers, "Don't worry, we'll watch the market when the rates drop we'll refinance you for free. We're good everyone else is scum." Then suddenly, like a thief in the night, all hope was gone. It got stuck in the bank account after the last transaction when the cry baby little pink pants investors took their millions and billions and went home. There would be no more refinances. The books were rolled back to 1999.
Will Paulson's plan work?
No. Government plans rarely do. That's why communism and socialism destroy economies and capitalism always rights itself. No form of government is perfect but mine is damn close ;)
My suggestion? There is only one everything else won't work. HANDS OFF. Let the market fix itself.