Tuesday, March 23, 2010

Financial House O'Cards

I am not a big newspaper reader (I do love the comics); however, there are always a few news items that catch my eye, even though I know that I personally can do nothing about them - now is that really true?
Yes, it has been said that we elect to office those who are like us. So I want you to remember the majority rules for later on.
The first story last week that happened to pop off the pages, was that of Prime Minister Wei of China and the U.S. economy. As it turns out the majority of the "Lord only knows how huge the deficit really is" has been lent to us by the Great Red Dragon - China. Wei in a statement had said in words that were far more stern that the USA had better get its financial house together.
Sounds like a threat.
So?

So? Heed this warning John Q. Consumer, They own over 70% of our assets.
So?

So? You like your house, and your car, and your moronic big screen TV, and your Hollywood? Well how about your amber waves of grain, your purple mountains majesty above the fruited plain? I hope you're not allergic to MSG.
Calling all loans! Calling all loans!
Let's imagine that John Q. Consumer is a real guy. Let's imagine that John wants to have all of the finest things in life: big house in the suburbs, fancy sports car, big screen TV with HiDef, designer clothing. John has all of these things in his possession, and he is proud to have them all; chicks love his clothes and his car and that house - why, he seems to have it all together. Of course, he did not have all of the money up front, so he purchased them using credit.
Credit comes from those who have the means to pay for that stuff.
So?

It's not John's stuff.
What?!

Who paid for it?
Well...

Not John. Nice job he has, but not that nice. Who paid for it?
The bank?

That's right! The bank! You remember those evil monstrosities that the government just butted-up to stay operational, whether they needed the support or not? They are the mob who own John Q. Consumer's stuff - not John. John is tending to them and using them as "pride leverage", believing that his stuff represents him.
Let's say that John gets sick or loses his job.
That's entirely possible.

Yes, it is. John has no equity in any of these possessions; however, he still has the obligation to pay for them.
So?

So, if you were the bank who gave John the money or the ability to hold these things, would you be willing to let him slide without him paying you. Let's say he owes you $50,000.
Wow! That's a lot of money.

Well?
I trusted him to pay me back, and he had better do it. That's not his, it's mine.

Right.
Well, ol' Johnnie boy had better scrape together some cash or I am taking the stuff.

Banks do it all the time. The problem there is that banks (And mind you I do not sympathise with banks and usury), in order to recover their losses from a deadbeat...
That's not nice.

What?
Deadbeat. That's not very nice. John lost his job.

He owes you money. He has some very nice things that are yours.
Deadbeat!

To recover their losses banks must either collect whatever assets he owns and the items under contract. Unfortunately, in this fast paced consumer society, where bigger, faster, harder are king, those items that have been in his possession have lost value. For example, that big screen television,is antiquated the moment he plugs it into his wall. And that American sports dream, devalued by at least 40%the moment the front tires hit the road, because as it turns out that GMAC loan at 0% APR for 60 months is designed to make you think the car was a steal, when in fact it crushed the marketability of John's hunk of crap under insurance, and resale value.
Didn't the government just give like a gazillion dollars to the Autoworker's union, GM and GMAC?

Yes.
That's my money too.

Technically - China loaned us that money.
Will we have to pay it back with interest?

Usury.
John needs a job. Now!

Well, John is comfortable. He makes more money now, being on unemployment. He still has his house, because the government thought that it would be a shame to foreclose on him, and the bank did not want his big screen TV, and John, using the money he got while in bankruptcy court, bought himself another car - used from GMAC financing at an incredible APR.
Holy crap!

My point is this: The financial mess in our nation while going deep into the White House, actually takes root in its people. You see, we elect those like ourselves. Spending freely, not expecting to have our legs cut out from underneath us, because our jobs are secure, and our egos unwavering. We have not a problem in the world, so we'll make promises to one another, and break them because that's what we do. And Prime Minister Wei will get his, once we get ours and so on -
Today's news is more entertaining - as it turns out our credit rating has just been slashed. I hope you're ready for hyperinflation and more taxes.
Do you think we'll be able to get out of this mess?

Usury I do, but I am not sure this time.

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