The $700 Billion Rape

Some things are harder to get over than others. This recent $700 Billion mockery is one of them. This is $700 Billion that we did not have, and had to borrow in order to rescue private financial institutions, who by their own practices torpedoed themselves.

These failed mortgages have mostly been a result of lending in the sub-prime market. Working in the automotive industry, I am very familiar with this market. Sub-prime debtors are a high risk because they have first shown an inability to repay their creditors, have a high debt to income ratio, or have little or no history at all. Secondly, it has been my experience that most of these people often have a very unstable work and residence history accompanying their suspicious credit rating.

Now this is where it gets crazy. People in the lending industry know that sub-prime debtors consistently fail on their commitments at a rate of 30%, in the best of circumstances. On top of this they made it worse by lending amounts for which the debtor was in no way financially qualified to repay. They did this mostly on the ARM. This is a loan repaying only the interest for up to five years, at which time the mortgage payment would increase by a third to a half in order to begin repaying the principal.

I am certain that most of these people would not have qualified for an auto loan, but we’re talking real estate here. Houses don’t have wheels. The lending industry knew they would have valuable collateral in the event that the debtor failed. Lending in a flush economy, they gamble that growth in the market would continue; knowing that they had an ace up their sleeve.

This is not the first time that our government has bailed the industry out of trouble. It’s just the biggest so far, and it will not be the last unless something is done. They really had nothing to lose. It’s extortion, really, and a game at which they had previously succeeded.

This is their scenario. Lend and grow with no restraint. If we get stretched out too far, the money dries out. There is no more money to lend. This, with too many failed mortgages shakes confidence in the economy, and people stop spending. Sales go down. Companies fail. People lose jobs. The stock market recedes, and there is panic in the land. The government feels like it has to step in and buy the idle property to restore confidence and free up money for growth. We then get to start fresh with no penalty.

They win, and we lose. It’s always the way of it, and we have our government to blame; on both sides of the aisle. First they are responsible for failing to control this beast, and then for coddling it when it turns around and bites us.

Contrary to common belief, the government has only one purpose. That is to protect its people from each other and from outside enemies. To that end we have a vast public safety empire that has gone as far as to protect us from bogeymen that don’t exist, and using force, manipulation, and extortion against the enemies of Capitalism abroad. Yet they do nothing to protect us from these corporate pirates, who both prey on us and do more to threaten our national security than any ten anti-American powers.

These are sharks in the waters that slay us inches at a time, and then rub our noses in it. AIG, the largest insurer in the country, through their own faulty investment practices qualified for $700 Million in relief from the government. Upon the bail out that saved many of their skins, the top executives at AIG threw themselves a $500 Thousand; we’re still in business party. Now, 500K is not all that much moola when your business runs to the billions, but it is a lot of money to many of us out here.

The whole thing is revolting, and if we had any courage, we would be too. This is, though, no longer the land of the free and the home of the brave. We are a country of women and the weak, which has sold our freedom for convenience and a false sense of security. We are being herded along into an ever-narrowing chute that leads to our slaughter, at the hands of the powerful and the government they buy, and we do nothing.