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You are currently browsing the Stupidity In Society blog archives for September, 2008.

Sep

26

Financial Bailout: Bad for Everyone

By admin

There is absolutely no segment of society or business which will benefit from the utterly ridiculous $700 billion (with a b) bailout package that our idiotic legislators are arguing out. And I mean nobody. Usually at least the politicians benefit from this kind of thing, but this time the public as a whole is even against it. So the politicians don’t even get credit for trying to save some group of people somewhere, because nobody is buying it this time. Everybody already knows that all we are doing is reimbursing large corporations for gambling losses, billing the taxpayers for it, and as a result inflating the national deficit beyond any hope of ever getting a grip on it again.

But if we don’t do this financial companies will fail. That’s what they say to the criticism. What they don’t understand is that it’s necessary for failing businesses to fail. That is a critical part of capitalism. Throwing billions of dollars at a sinking ship is a gigantic waste of time and resources.

We could be looking at a 1930’s style depression if we do nothing! Yes, we could be. But it’s a huge mistake to try and stop it by putting a $700 billion (with a b) bandaid on a corpse. That money could be used for something good and productive – like say not tacking $700 billion (with a b) on to the federal deficit. You can’t stop financial market cycles, you can only prolong the agony of them and make them worse as a result. Every single time in history any world government has done something to try and influence natural free market cycles it has failed. You are simply better off not interfering.

Think of it like removing a bandaid. You can pull it off in one quick motion with an initial burst of pain that is quickly over, or you can slowly and agonizingly remove it bit-by-bit. Government bailouts are the latter method. If the housing and credit markets were allowed to simply crash (as they were meant to), we’d be at least halfway through the down-cycle by now. Instead we are still sitting at the tip of the iceberg nearly two years into it, burning through unfathomable piles of money in a vain attempt to prevent the inevitable.

Papa Riah knows what he is talking about, by the way. I spent the first six years of this decade as a subprime mortgage lender, a very successful one at that. I started predicting the downfall of the credit markets in 2004, about 2 years too early. Now I collect unemployment checks and write a blog.

The runaway real estate market of this era was only propped up by the exotic financing we were offering. Anybody who could fog a mirror could get a $600,000 home loan with zero down, was not required to show any proof of income, and was given an interest only payment (or even less). So this is how everybody financed their homes, because nobody could actually qualify for the loans on these property values if they had to show their actual income. Now keep in mind that if 50% of your gross income (gross, not net) is going to your house payment you qualified for the loan! But nobody could even do that – so they all went stated income.

Should you now be responsible for making the house payments nobody could ever afford? That’s what your government wants you to do. We all need to come together and make each other’s house payments, otherwise there might be a depression. Do you see what madness this is?

Papa Riah went to lunch with a mortgage broker friend of his last week. I asked him about alternative finance lenders and he replied: What alternative lenders? Fannie, Freddie, and FHA are it now. And at the end of the year the Fannie/Freddie max loan amounts drop back down. (As they should, I might add.)

Get ready for a housing market crash folks. You ain’t seen nothing yet. Nobody can qualify for loans on current home prices. There is no more stated income, no more interest only, no more 50% max debt ratio, and only very high credit scores can get 100% financing now. Bank-owned properties are becoming a larger and larger percentage of homes on the market. In order to sell them the banks must take huge hits. This is killing their bottom line, and $700 billion (with a b) isn’t going to save them because they will be operating at a loss for years to come.

Let the markets crash if they need to. It’s healthy. Trying to manipulate free markets is unhealthy and foolhardy. Letting them correct by themselves gets it over with quicker (and we can then start the silly process all over again). If a depression is due then so be it – seems like once every 100 years or so that needs to happen and we might be just about ready.

The bottom line is: Somebody has to pay. The federal government doesn’t have the money so they’ll have to borrow it from their ever-more-questionable future. If we want to painfully drag out the housing market correction by tacking $700 billion (with a b) on to the deficit then there will come a day when that comes home to roost.

Think a severe housing correction sounds unappealing? Think a 1930’s style depression sounds bad? If we keep putting all of this off into the deficit then when the day comes that we finally have to pay it all off at once things will be much worse than you can ever imagine. How are you going to be set when the U.S. dollar becomes completely worthless and your bank accounts are all suddenly up in smoke? Got any real assets like chickens and pigs to trade?

Papa Riah

Sep

25

A Confederacy of Dunces

By admin

The title of this post is borrowed from the title of an excellent novel that is highly recommended by Papa Riah. It seemed appropriate for my inaugural post in the Idiots Everywhere category. If you are looking for a good read pick it up. The story behind the book is just as interesting as the book itself, which you can read in the forward. Although the novel is not about being surrounded by idiots, it will have you in stitches and enthusiastically giving the book to friends when you are done.

But the title of the book does accurately describe our modern society. Idiots are all around us and it seems as though there is a conspiracy against anybody who still possesses common sense. There is just no getting away from them. Idiots are on the television, the radio, live next door, and are all around you at work. Don’t look for any help from the government with them, as their ranks have been particularly infiltrated – right up to the highest levels.

Perhaps nowhere in this more evident than on the roads. Simply trying to drive to work and back or even to the grocery store without being inconvenienced by a complete dolt is nearly impossible. It is my contention that either the DMV has simply thrown their hands in the air and just started giving anyone with a heartbeat a license, or that an alarming percentage of drivers don’t even bother getting one any more.

Papa Riah lives in an area where there are a lot of freeways nearby. The most dangerous thing on these highways are twenty-something year olds who have gotten the idea that they are bullet-proof. Many of them drive lowered Hondas with tinted windows mistakenly thinking they look cool. I don’t know whether these guys are Nascar fans or have just seen Too Fast Too Furious too many times, but they are flat-out dangerous. They come out of nowhere at ridiculous speeds up to about two inches off your bumper, and change two or three lanes at a time without signalling while weaving through traffic at extremely high speeds.

The problem is, they don’t kill themselves enough. By coming too close to your rear bumper they actually end up doing a pit manuever on you, spinning you out into other lanes of traffic putting your life in serious peril. Also when they do crack up, all to often it’s an innocent driver who ends up in the obituaries. When Papa Riah learned to drive we were taught to drive defensively, but this didn’t become a necessity until this decade for some reason. Now if you don’t watch out for idiots everywhere, quite literally, one of them is likely to get you killed.

Sep

24

Barry Bonds Get Real

By admin

When observing our modern society, very often one is tempted to say Get Real at somebody or some thing. Perhaps a more trendy version of this expression is simply Unreal. You hear people saying that all the time, usually while shaking their head in disbelief. Papa Riah is no exception. In fact because I see social issues so clearly, I probably utter these phrases more than the average person. This is because once you start to see things clearly you see what an utter joke much of our culture has become.

I think that does a good job of explaining what this category is all about, so let’s dive right in to something: Barry Bonds. In case you are not a sports fan, he is the guy everybody hates who is also the all-time home run record holder. Now why does everybody hate a national sports hero? I mean everybody usually loves guys who break major records like that.

He is neck-deep in the steroids scandal, but that isn’t the reason for the public’s disdain of him – after all most baseball stars are caught up in that. This guy just plain isn’t likeable. I can’t recall ever seeing him smile. He always has this scowl on his face, which kind of looks like he is disgusted at everything around him because he is not getting enough of what he deserves. The guy has major entitlement issues. If we crowned him king of the world and all bowed down to worship him everyday, I’m sure he still wouldn’t be happy. Let’s see now; you are living the American dream, break the one record that is every kid’s fantasy, and makes gobs and gobs of money for playing a game – and yet you aren’t happy. Get real.

As far as the steroids go, he is one of the last hold-outs that are vehemently denying using them. And of course he has the same angry attitude about it that he has always had (even back when reporters tried to interview him after hitting game-winning home runs). Have you seen pictures of the guy early in his career? He was a matchstick! In several years time he went from being a skinny little runt to the incredible hulk. In one season his hat size increased 3 times. And he’s going to look everyone in the eye and swear up and down he never used steroids in an era when most successful players used them? Get real.

Although he was available for play this year, no team wanted him. I mean he is without question the best hitter the game has ever seen, and nobody wants him. Congratulations Bonds – that is quite a trick.