By Mencken’s Ghost
August 9, 2011
According to a recent story in the Wall Street Journal, a construction worker by the name of Gutierrez bought a Vallejo, California home in 2003 for $340,000, putting a measly five percent down and paying the remainder with a $322,700 loan, which resulted in monthly payments of $2,500. The genius then refinanced the home five times, thus increasing the debt he owed on the house to $400,000. After he lost the house to foreclosure, an investor bought it for $155,000. Our poster child for greed, Mr. Gutierrez, is now living in the house as a renter and paying $1,800 a month in rent.
Someone had to eat the loan loss of $245,000, which is the difference between the $400,000 in loans that Gutierrez took out and the $155,000 that the house sold for in foreclosure. It’s almost impossible to follow the trail of imbeciles who ate the loss, because Gutierrez’s loans, as well as the loans of hundreds of thousands of people with the same judgment as Gutierrez, were sliced and diced and packaged and repackaged and bought and sold multiple times, with leverage piled upon leverage each time.
Some of the loss eaters were commercial banks, investment banks, and mortgage companies. But the losses were too big to be swallowed in their entirety by these institutions and the oligarchs who ran them. As a result, the caring U.S. government, under both Republican and Democrat administrations, with the help of the Federal Reserve, socialized the losses, meaning that society at large, including completely innocent citizens who had nothing to do with causing the problem, had to eat the bad loans.
The oligarchs were not imprisoned for their crimes. But neither were the tens of thousands of borrowers who lied on mortgage documents about their income.
The innocents who had to eat the losses didn’t revolt, because they had become docile and brainwashed from 12 years of government schooling and from watching 42 commercials per hour on television instead of reading history and philosophy.
Yes, according to my count, that’s how many commercials are run per hour, not counting the obnoxious commercials that appear at the bottom of the screen during a program. Since, according to some sources, the average American watches 151 hours of television a month, that comes to 6,342 commercials per month. Since the average teen watches 103 hours of TV a month instead of studying, that comes to 4,326 commercials a month watched by the next generation (the tattooed and backward-cap generation) that will be running the country.
The commercials have the same messages: Buy, buy, buy . . . borrow, borrow, borrow. Over the decades, these messages had replaced the wise messages of the generation that had lived through the Great Depression: Live below your means and save, save, save.
To be fair, the Greatest Generation wasn’t as great as the myth says. This was the generation that fell for the hokum of their idol, FDR, who in turn had fallen for the hokum of Bismarck. The hokum was that each generation could send its retirement bills to the next generation, ad infinitum, without the system collapsing someday.
Like Gutierrez, subsequent presidents and congresses stole from the Social Security Fund and borrowed new money to keep the Ponzi schemes going. As with Europe, the United States became a bloated welfare state full of sniveling, dependent citizens, a state in which the primary purpose of government was to redistribute wealth instead of making it easy to produce it.
Two presidents then came along who had enough initial popularity to stop the spending and borrowing and to avoid economic calamity. The first was the patriot and faux cowboy George W. Bush, who wrapped himself in a swaddling leather flight jacket and proceeded to take the unpatriotic actions of spending more than $1 trillion on wars and a new prescription drug entitlement. The next was the hater of America, Barack Obama, who wrapped himself in his race, which protected him from media investigation and criticism. Thus protected, he surrounded himself with fellow neo-Marxist revolutionaries and proceeded to nationalize health care and spend multiple times more than his predecessor on Keynesian experiments while blaming his predecessor for the spending.
The masses didn’t revolt, because they had become docile and brainwashed from 12 years of government schooling and from watching 42 commercials per hour on television instead of reading history and philosophy. Rather than revolt, they retreated to their respective political camps and blamed the other camp for the economic calamity, which is exactly what the plutocrats who run the two camps want, because it keeps them in power. It also keeps them from getting what they deserve--namely, the same punishment meted out to Benito Mussolini and his mistress.
What about Gutierrez, who, along with millions of other greedy imbeciles, shares the blame for what has happened? Well, he hasn’t learned a damn thing. Speaking about living in the very same house that he foolishly tried to buy with loans he couldn’t afford, he said, “It’s confusing, because sometimes I think it’s my house, but I have to remind myself that it’s not.”
Note to confused Gutierrez: It was never your house.