In a very un-American fashion, I have continued to live without debt for the past two years (after previously having more than $76K of non-mortgage debt). Actually, the two-year anniversary was last week, but I thought there were crises going on several days ago, and wanted to post when things calmed down.
I’m down $80K YTD**, but six years ago, when I got religion about money and started paying off my debts, I adopted a lifestyle which has resulted in my having about 15 months living expenses on hand. I am very bitter. It took a lot of blood, sweat and tears to become a financially responsible person, and every dime of that $76K was paid in full. Now I feel like they’re reaching for my wallet, but they’re jamming their fists up my ass to grab at it from the inside.
The irresponsible mortgages account for (in my estimation) just a small part of the losses everyone’s talking about, and I despise and pity those people, but I don’t see a way out, other than for me to fucking rent my fucking small apartment for another fucking ten years to fucking subsidize those fuckers. The real motherfuckers are the thousands of middlemen who inserted themselves between all debtors and the ultimate bag-holders of their debts. AIG got bailed out. They didn’t have bad mortgages; they were the company which had the bright idea of insuring the CDOs, which were all smoke and mirrors. We bailed them out, and they weren’t about to be kicked out of their homes – they were going to have to pay out on all those CDOs they’d insured. This whole mess (minus the irresponsible mortgages) is me (and you) paying the financial institutions for their CDOs which are exposed as being worth shit.
This isn’t about keeping people in their homes, though portraying it that way is required in order to blackmail Congress into giving out the blank checks. I got so angry that I read the entire 110 page bill (summarized with some editorial slant here), and there are repeated references to the fact that we citizens are not just buying mortgages, or mortgage-backed securities; we’re buying anything the Secretary wants to buy, to keep all those fucking companies alive long enough for their managers to get out while the getting’s good. Yes, we absolutely get an ownership stake in the companies we buy from, but those companies do not deserve to survive, and in fact are already dead. No one wants them, and though they do have some assets worth more than zero, that is trumped by the massive debt they all carry.
The OMG Trillions of dollars of losses we’re all having to pay for are accounting fantasies. Someone “buys” a house worth $100 with $0 down, the bank sells that mortgage for $110 (to someone who borrowed money from someone else), and they sell that for $120, and so on. Fucking AIG insures that first $10, but also that second $20, and so on. At the end of the chain, the companies were offering imaginary debt to financially conservative people, telling them that the debt was AAA-rated, when the original $100 was never going to be worth $100. But that suck-ass imaginary $100 ends up representing $1000 in fake assets. And we citizens are paying every middleman in that chain.
IAC, I’m responsible now. My 401K is taking on water and listing to one side, but it’ll settle down at some (much lower) point. I actually have $23K in gold on hand, along with other stocks worth another $10K, no, $9K, no, $7K, no … crap. I have the $23K. If a can of cat food goes up to $5, that gold will hopefully go up to $100K, so I can buy the same amount of cat food. I’m going to pay off these other peoples’ debts by working more years than I’d intended, still living in this cramped apartment and eating cat food. If I had kids, I’d be sad, because they’ll also be paying taxes up the wazoo for all of their working lives to pay for this mess.
I should end on that bitter note, but I just want to repeat what everyone already knows: we’re handing the keys to Fort Knox to the same people whose criminal irresponsibility caused this mess. In what universe does that make sense?
**I must truthfully report that the bulk of my 401K is in an S&P index fund, which frankly got some benefit from the artificial run-up in stock prices. So I didn’t really have that $80K in the first place. It wasn’t as much of a fantasy as peoples’ real estate empires, but nonetheless it was artifically inflated.