How In Hell Did We Qualify?

As the mortgage meltdown spreads because of the government actions, one young husband and father whose hopes and dreams are unravelling asks "How in hell did we qualify?"

Well, you didn't.

The govt lowered interest rates and expanded money and the bankers took the lead, causing the massive misallocation and malinvestment. The bankers were happy to create and extend these toxic loans becuase the fannie mae and freddie mac were happy to buy them. Also, everyone was confident that when it blew up, the govt would bail thgem all out. Almost all (goodbye lehman and wamu) and the govt is in fact trying, but the bailout will not work. it will get worse, far worse.

The problem is leveraging debt. There is a first principle: You cannot prosper through debt. . You prosper through savings.

The Hamiltonian central banking, and leveraging debt leads to fantastic results. 42 inch plasma screen TVs! Jet flights to Aruba! McMansions and stuffed self-storage units. Most people can and will give their allegiance to such a system.

With the government controlling the economy through inflation, there is no money to rebuild New Orleans, but plenty for war in Iraq. There is money to grow more corn than we can consume, and money to ship it overseas, wherein is destroys local farmers wherever it shows up, and then money to send in troops when the region becomes a “failed state.”

The concomitant poverty and the wars can be blamed on others. What we do not see, the good things that are not to be due to starvation from misallocation and malinvestment, well we do not miss what we never saw.

Free marketers know we’d see a more organic, just and peaceful society. Something of a cross betwewen a hong kong and irish countryside. The good of both, not the bad. Not terribly exciting in sensual terms, but something good. We like the growth and improvements of our right wing bretheren, but they hate freedom. We like the concern for the environment of our left wing bretheren, but they hate responsibility.

in self-employment we decide the field we work in and the custoemrs decide what we sell. It is human level organic, and draws on all of our humanity and capabilities. We are happy with our portion.

Employed by others the corporation is a govt-sanctioned entity whose purpose is aligned with the central banking and what opptys in malinvestment and misallocation that precipitates. The corp demands you work in a narrow function, and overpays you for what little it requires of you, but you are unhappy with your poprtion. The focus is on retirement, yet by retirement you learn your muse was chimera.

I did not get stuck in this mess personally because it was clear it was wrong. In fact, the people I read knew it was wrong and I based my reactions on their advice. I’ve shorted this market down from 14,000 to 8,000. I am waiting it to go back up, as it is, until the last drop that will inevitably arrive. Or maybe I am wrong and will lose it all.

This will sort itself out if the govt gets out of the way and stays out of the way. let this go bankrupt. Then it will clear off the junk. Do not bail out the bankers and speculators behind this. Then stay out of the way so new innovations can come forth to lead a recovery. If the govt whishes to see things get better, they could and should deregulate something. Anything. Education. medicine. hell, radio! any thing. The people will do the rest.

Such deregulation is not going to happen. the govt is in fill regulation mode now. So the only hope is for you to start your own biz.

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