September 3, 2007

Ant’s Labor Day Theses

From: The Worker Ants of the U.S. Economy

To: The Grasshoppers and Ruling Class Politicians who support them



  • Calling people who got 110% LTV interest-only loans to buy houses “homeowners” is ridiculous and insults the intelligence of anyone who can count.
  • The correct term for these people is “over-leveraged real estate speculators”
  • Calling financial services conglomerates that issued 110% LTV interest-only loans to people who couldn’t possibly repay them unless prices continued to skyrocket “distressed lenders” is equally ridiculous.
  • The correct term for these institutions is “over-leveraged real estate speculators”

Politics – New Rules

  • Politicians currently stumbling all over themselves to get on tv to talk about their shock and dismay with “reckless”, “irresponsible” and predatory lending are required to state at the outset of any interviews their reason for not being concerned with this problem back when there was still time to actually do something about it.
  • Politicians from New York and New York bedroom communiities are not allowed to demagogue on behalf of “homeowners”, period, without first returning all campaign contributions from hedge fund managers who live in their districts.
  • Senator Chris Dodd, in particular, must make the following truth in advertising disclaimer prior to all public comments on the subject of subprime lending. “My name is Chris Dodd and I’m a whore for the financial services industry.
  • While we’re at it, it would save a lot of time if politicians just wore sports jerseys naming their corporate sponsors (like Nascar drivers do) to make it easier to tell who they work for.

The Economy

  • At it’s root the “mortgage crisis” is nothing more than an affordability crisis.  Put simply, people with good jobs, good savings and good credit can no longer afford to purchase a home in many parts of this country without taking on a suicide loan.
  • There are exactly two ways this situation can be corrected in a free market – prices have to drop or incomes have to rise.  A lot.
  • Contrary to popular belief, a housing price contraction is one of the best possible things that could happen for the long term health of the American economy.
  • Those who dispute that fact please answer this question:  pretend you’re a 30 year old software engineer (one of the few industries where America still makes something that the rest of the world wants to buy, and has a positive balance of trade) working in Silicon Valley and competing with engineers in Bangalore and Bulgaria who can live handsomely on $10/hr.  Does being forced to pay 1 million dollars for a starter home make you more or less competitive in the global economy?

My response to “Loan Bailouts a Hard Sell”

I wrote this in response to the John Lasner’s Friday column in the OC Register. The comment board there would not allow me to post it, so I decided to share my rant here instead 😉

His message to “Angry Renters” was:

“If housing’s too expensive for your wallet, don’t root against those who had the nerve to play the game… in many cases it” (taking out suicide loans, lying about income and assets to qualify for a bigger loan, etc.) was “a noble error”


So people who lied and chose to play Russian Roulette with their family’s financial future were “noble” while those who didn’t were chickens who didn’t have “the nerve to play the game?”

That’s both untrue and incredibly insulting.

Real nobility, sir, is being a responsible adult and parent. Nobility is looking your young daughter in the eye when she asks you why she has to live in an apartment when all of her friends live in houses with yards and saying “because we just can’t afford it right now.”

Nobility is explaining to your wife why you can’t afford to buy a house when all of your friends can “afford” it (and seem to be getting rich in the process.) It’s bearing the look of disappointment on her face while she tries to reconcile the words with the emotional reality that her husband works 80+ hours a week – so hard that she never really gets to see him – yet for some reason is unable to provide the home that everyone else around her seems to be able to “afford.” It’s protecting the best interests of your family by sticking to what you know to be true rather than succumbing to the siren song of easy money and getting to look like a hero to your family based on a lie.

Nobility is taking responsibility for your life and planning for the future; telling your wife that the numbers don’t lie, that the “affordability” of ARMs and NINJA mortgages is an illusion, and that when rates reset in a couple of years, the speculators will have to bail out, and you’ll be able to find a home for your family that you can afford without taking out a suicide loan and endangering your family’s future in the process.

Nobility is being an adult. Facing up to hard facts. Telling the truth, even when its painful. Last but not least, it’s rolling up your sleeves and working hard to build honest prosperity for your family rather than thinking you’re entitled to easy money and a life of leisure through engineered asset inflation.

I’m not at all surprised you think it’s a good idea for the government to take the money I’ve worked very hard to save as a down payment on my family’s future, and use it to prop up the value of your wildly overinflated asset, but please spare me the flowery language while you rob me – – it’s an insult to every responsible person reading.

I don’t wish anyone ill, even real estate speculators. I’m also not looking for a handout. I just want a fair shake at a fair market, free of massive credit distortions created by government and wealthy entrenched interests. Is that really too much to ask?

ps – the “logical” arguments you present in your column are every bit as specious as the emotional ones. I’ll cover those next.


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