I Am Sub-Prime

The sub-prime meltdown and the ensuing tsk-tsk's started me thinking (good thing I had my Excedrin handy, thinking always gives me a headache). The general attitude seems to be "well, the borrowers should have known better" and, "obviously, borrowers should have known that those rates weren't forever" or even, "you simply cannot get a house for free."

OK, I hear and understand all of the above. But here's the thing. In a very real way, we are all sub-prime borrowers. Not because of any fallout regarding mortgages. Nope, not that simple. We're all involved because we, as voters, have all bought into the GOP notion that "deficits don't matter." (Well not all Americans. H-Blog readers are well aware of that this GOP notion is utter nonsense-quick examples here, here, here, and here. Two, four, six, eight, who do we appreciate? H-blog, H-blog, yaaaaaaaay H-blog).

For example, when we fund a multi-gazillion dollar war solely on debt, we're signing on the "no money down" line of our nations mortgage loan.

When we continue to borrow, and assume that we will aways grow our way out of our debt payments, we're committing the "I'll always get raises to cover my spending" mistake that leads to taking on more debt than our nation's household can reasonably sustain.

When we continue to borrow thinking that we can always get others to finance our spending, we're committing the "Las Vegas homes will always go up in value" mistake of the real estate speculator who does OK in good times but goes busted in bad.

So before anyone gets too high and mighty on those who are going busted in sub-prime, I suggest taking a good long look in the mirror. By default, you're in just as deep (I say deeper) and you've fallen for the same "it will all work out, sign here" scam as those who bought their house with too much leverage. You bought the same, "it will cost you nothing" argument, the same, "you can always make the payments" argument, and the same, "someone will aways be there to buy it at a profit argument" argument. In the end, you accepted the same, "it all makes sense in the math, just sign here" argument. Why? Because we really didn't understand the math, because we trusted "experts" who were conflicted because they were profiting on our signature, and most importantly, because we wanted to. So show a little sympathy for the busted homeowners. Your heading in the same direction.

Bush's real, lasting, legacy will be that of the mortgage broker who got the nation to sign away the house. I wonder who was first in that line? Oh yes, thank you for signing Mr Malone, here's your free toaster.