MUST-READ: "If Regular Americans Acted Like the Moneyed Class, Our Country Would Collapse in a Week"

[Hissyspit]

"If regular Americans acted like corporations and the moneyed class, our country would collapse in a week from systemic theft, corruption and greed..."

http://www.salon.com/2014/09/29/the_big_middle_class_rip_off_how_a_short_sale_taught_me_rich_peoples_ethics/

MONDAY, SEP 29, 2014 07:00 AM EDT

The big “middle class” rip-off: How a short sale taught me rich people’s ethics

So many of us are clueless about business and finance. Here's why that's just the way the investment class likes it

EDWIN LYNGAR

“Behind every great fortune lies a great crime.” – Honoré de Balzac.

The closest I ever came to acting like a rich person was two years ago when I short-sold my primary residence. I might have been able to keep it but strategic default made life easier. I owed about $400,000 on a house that short-sold for $150K. The bank lost more than a quarter of a million dollars, and I lost at least $80K in down payment and property improvements. In a short sale the bank agrees to settle debt for the lesser amount and the seller gets nothing but is “punished” by not being able to finance another house for at least two years (rules vary). My moment of acting rich was when I bought a second house before short-selling the first to skirt around the repercussions of my own bad luck.

When the housing market tanked a few years ago, the government rescued every bank and business (even a damned insurance company), while ignoring everyone else. I realized that the game was fatally lopsided, so I didn’t just walk away in middle-class shame, but rather I employed all my (extremely limited) cunning and deviousness to get a similar home before ditching the old one. I was able to cash in on low housing prices from a couple of years ago, coupled with low interest rates, to come out on top. The biggest barrier to getting a great deal was an almost overpowering need to behave like a middle-class sucker.

I was taught growing up to “keep my word” and that your handshake “meant something.” Yet businessmen and individual wealthy people make decisions that are far less moral than a short sale. People “incorporate” so they can avoid legal responsibility for individual actions. It works great. You can stiff creditors, declare bankruptcy, pollute daily and raid pensions to enrich individual executives. If it all goes wrong, like it has so often for Donald Trump, you can keep your mansions and individual fortunes. It is no accident that the best-paid CEO in America has never made a dime for the company. If regular Americans acted like corporations and the moneyed class, our country would collapse in a week from systemic theft, corruption and greed.

I always knew business was getting over on me, but I had no idea the extent until I started looking to short-sell. I first learned all I could about private home financing. I called up some shady investment groups around town and questioned them at length. I didn’t end up using them, but they were frank, informative and unashamed.

“Who would pay 11 percent on a home loan?” I asked.

“Rich people,” said “Bill” from the legal loan-sharking company. “The rich have terrible credit.”

Rich people = bad credit: Just let that sink in.

- snip -

Living a middle-class life is an impediment to meaningful change. We are taught that we have everything we should dare to expect and capitalism has “worked” for us. Middle-class people are also urged to hate poor people, and those who cannot or will not work. They are the “other,” the moocher class. Poor people are the reason you haven’t gotten a raise in five years or that your house is worthless or that your company only gives you one week off a year. Those who have something detest those with nothing. We’re letting rich people get away with fleecing America, while turning our rage on poor people.

When you examine it, you cannot blame the rich for the oligarchy we’ve become or for what looks more and more like the return of Dark Age feudalism. Rather, the blame lies with my fellow work-a-day slobs who vote for politicians and policies that favor investment and wealth over the work of regular people. Middle-class Americans are self-flagellating and dispirited over their own lack of wealth, as if it were a character flaw. At the same time, they fall for the deception that everyone can be rich when, of course, most people lack the connections, education and plain old luck to even get close.

I can uncover an individual’s actual potential for wealth with one easy test: If you equate business opportunity with a multilevel marketing scheme, like Amway, you will never be rich. If that doesn’t work, just ask yourself if you think you’ve got a shot at winning the lottery. If the answer is “yes,” you will most assuredly die poorer than you are now.

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[A Little Weird]

1. Good read

One of his points was that we in the middle class should stop voting for policies that benefit the wealthy class. I agree in principle, but in practice it seems we are only given a limited number of choices to vote for and they all seem pretty keen on protecting the rich.

[Dont call me Shirley]

20. And many in the middle class are not accurately politically educated. I blame it on the

upper class who have tricked us into believing their conniving schemes, their ownership of the media in order to manipulate our thoughts and emotions, their march to overtaking our educational system in order to "dumb down" our children at an early age.

[daleanime]

2. K&R....

[oldandhappy]

3. Thank you

Actually I am glad for you. Glad your 'cunning' worked, smile. Appreciate your post and your comments.

[merrily]

4. Burt Wolf, on certain US immigrants:

"They discovered that, not only were the streets not paved with gold, but they were expected to pave them."

(He is a cookbook author who had a show on PBS for a time, in which he gave mini pop history lessons about various locales.)

[Bettie]

5. K&R

Maybe we non-one percenters should just start learning about the system and playing it too.

Except that most of us have been raised with a set of ethics that would make that really uncomfortable for us.

[JDPriestly]

12. If we non-one percernters committed the fraud and violated the laws to the extent that the big

banks and mortgage companies did prior to the 2008 crash, we would land in prison. We would spend a lot of years in prison. Don't try it.

[Bettie]

15. I know

but sometimes, it would be nice to catch a break.

Instead, any bad decisions we little guys make come back to bite us harder than they should while mistakes the 1% make actually make them even more money.

[MattBaggins]

49. We had some fights here on DU over just that

When the housing collapsed and some people were so upside down that they would never be in the red again in their lifetimes; certain DUers here castigated those who told such people to declare bankruptcy. We were told how immoral we were. Some of them even declared it was OK for the banks and big guys do do it but immoral to walk away from debt if you are working class.

[Bettie]

51. It's sad that that happened

Sometimes, you just have to cut your losses in order to move on.

We've recently learned the meaning of the phrase "enough rope to hang yourself" and are working to get it figured out.

A year of unemployment for the main breadwinner of our household, followed by a new job that included a 20K a year pay cut and a house that is probably worth less than we paid for it in a stagnant real estate market mean we have to move in a direction we're not happy about, but you do what you have to.

It's sad that DUers would not understand that in a rigged system, sometimes there is no good solution, so you take the best of the bad ones.

[MattBaggins]

53. My biggest regret in life

If I could go back in time I would stop myself from joining the Army. If I knew what a fucking selfish nation we would become I would have never fought in the first war for oil.

[Bettie]

54. I understand what you are saying but

thank your for your service anyway.

My niece recently left the army. She was really disillusioned with the whole thing and came to the same conclusion you did.

It has, however, turned her from a left leaner to a hard core liberal.

[1StrongBlackMan]

6. posted to for later

[phantom power]

7. "Rich people = bad credit: Just let that sink in"

[delete_bush]

16. Doesn't sink in with me...

“Rich people,” said “Bill” from the legal loan-sharking company. “The rich have terrible credit.”

A quote from an anonymous loan shark is hardly what I would consider to be overwhelming evidence. I would venture to say that "the rich", however determined, have better credit than those not in that ill-defined group.

[DBoon]

23. The rch get to define credit worthiness

the golden rule - those who have the gold write the rules

[delete_bush]

24. You've not a clue as

to what is being discussed, do you.

[Hissyspit]

26. And neither do you.

[delete_bush]

28. I disagree.

I would submit that an intelligent person would be able to respond to my post with a reasoned counter-argument based on logic and reason. Go for it.

[Hissyspit]

30. Like you did in 24?

[DBoon]

46. A well reasoned argument like "You've not a clue as to what is being discussed"?

Somehow you think you have some credibility. Not sure why.

[delete_bush]

56. Let me recap for you...

The article stated that "Rich people,” said “Bill” from the legal loan-sharking company. “The rich have terrible credit.”


I then posted "A quote from an anonymous loan shark is hardly what I would consider to be overwhelming evidence".

To which Poster A responded with "The rch ("SIC&quot get to define credit worthiness...the golden rule - those who have the gold write the rules"

Not only do I not consider this to be germane to what I posted, it also makes me wonder - perhaps you as well - that if the rich get to define credit worthiness blah blah blah golden rule, then why would they design a system that assigns to them terrible credit? Wouldn't they, since some apparently know they create the rules due to their hoarding of the gold supplies, make the rules such that they have EXCELLENT credit?

Which brings us back full circle, with my comment to Poster A that "I would submit that an intelligent person would be able to respond to my post with a reasoned counter-argument based on logic and reason."

Care to elaborate on my credibility vs. that of Poster A? As you've made the point that you're not sure of it, you should be able to take the facts presented and put forth a reasoned response.

[MattBaggins]

50. What is a proper counter argument to

"I would venture to say"

[DBoon]

47. The rules that define credit-worthiness

are meant to ensure the profitability of financial institutions and the continued wealth of their owners.

They try to look like rules of moral behavior for the everyday citizen, advising everyday citizens on the most prudent way to handle their money.

Their actual effect is to allow the wealthy to set the rules for the common citizen's financial dealings in a way to maximize the benefit to the wealthy.

[delete_bush]

58. The rules that define credit scores

are no doubt based on numerous variables obtained from the payment/default data of millions of borrowers.

So to one of your points yes, narrowing the group of potential borrowers to those who are statistically more likely to pay would in fact add to the bottom line of financial institutions, but so what? They're not and should not be in the business of losing money, it's only prudent to minimize losses.

I don't see how this translates into the "wealthy" setting the rules, it's basic business 101.

[gollygee]

32. I wondered about that too

but I googled "rich people bad credit" or something along those lines and found an awful lot of people say either that or at least that rich people's credit is no better than average.

[delete_bush]

41. It does seem to be that this is the case more often that I imagined.

One article I read stated that Warren Buffett has a FICO score of 718. It seems that a number of the wealthy pay cash for everything and thus don't have much of a credit history. Plus, if they make a late payment it's not as big a deal for them financially, so they get dinged. And having a high income and/or net worth doesn't help with the credit agencies, they look at a number of factors including the amount of credit available.

We were turned down for a card once because although we pay off the balance each month, we were buying a lot of stuff for a business with the card and it was the high monthly balance to card limit that was the reason, coupled with other cards that weren't used much but had reasonably high limits. Makes sense for the issuer, I guess.

[7962]

38. I'm not buying this statement. Private money lenders are for short term use.

They're not "loan sharks". Local investors in any city will loan you money at a higher rate because thats how they make their money. They will NOT loan money on a bad deal or to someone who is a bad risk. I deal with these people all the time. They are almost always used for a real estate deal that needs to be closed quickly and/or an all cash deal. Usually the debtor will end up refinancing with a normal investment loan and payoff the private lender. But 12% int for 6-8 months is a decent return for the lender.
The writer of this article shouldve known better than to buy a damn 400K house to start with.

[delete_bush]

44. Exactly.

It's not that easy to obtain traditional bank financing for bridge and construction loans, for example. They don't want short term loans, and are not familiar with this market. And you're right, these are the higher percentage loans.

For the author to suggest that a "rich" person, regardless of credit score, is going to pay 11% for a home mortgage is ridiculous.

The entire article is such a chock full of holes, bumper sticker mentality meandering rant that I'm surprised Salon published it.

[teenagebambam]

8. I did the same thing in 2008

Bought a car right before short selling. I kept up with my underwater mortgage, and tried for months to alert the bank that a time was coming when I would no longer be able to keep up, but was told they wouldn't even have a discussion with me unless I was already in default.

[Bettie]

52. Right there is a problem too

You can see the problem, but no one will even talk to you until it is a full on disaster.

[Spitfire of ATJ]

9. "Middle-class Americans are self-flagellating and dispirited over their own lack of wealth"

It's NOT a "character flaw" any more than it's the fault of the poor.

The whole "character flaw" thing goes back to the "slightest doubt" thing the church peddles. "Oh, your prayers weren't answered? Well, you have to REALLY BELIEVE and the slightest doubt will blow the whole thing."

You know, like you're casting a spell.

The Right succeeded in merging Capitalism into Government so merging government and religion made Capitalism merge into Religion. This is why Sunday morning God Shows now sound like "Get Rich Quick" schemes. Order their set of CDs or cassettes (For the old folks who never bought one of them new fangled contraptions) and learn how to make money at home on your knees.

[Brigid]

10. What Mr. Lyngar is talking about, of course, is what I call . . .

"Steinbeck Syndrome" -- believing that you, too, can be rich one day. When enough people finally figure out that scam, it will be like those scenes in "The Dark Knight Rises" where Bane and his minions are shooting up the stock exchange and the rich are cowering under the furniture while their mansions are being looted or being forced to choose between death or exile.

[7962]

39. Most everyone CAN attain wealth. Just not all at the same time.

2/3 of the Forbes richest are all self made billionaires. Even the richest guy in the world started with little and no college degree. The richest people I know never went to or finished college. But they worked a lot more than I'm willing to! Its not possible for an entire population to be rich at the same time though.

[JDPriestly]

11. K&R. This should go viral. Americans need to hear this, especially those who live in red states

or districts. This is the awful truth. Absolutely the awful truth.

How many friends do I have who try to sell me enriched water of creams, etc. that are made of the same old mineral oil or petroleum as the ones you can buy cheap elsewhere? Get-rich-quick schemes, excuses for business ventures, Ponzi-investments have become the rule in America. It's time to wake up and insist on repairing our infrastructure and re-industrializing, this time based on renewable energy.

America wake up. You are sleeping your best years away to the tune of Republican lullabies. Wake up. We can do better.

If banks are to be federally insured, they should have to live up to high ethical standards. And that does not mean just making lawyers and "regulators" sign off on lies about what they are really doing. Federally insured banks should be run in the public interest not with conflicts of interest. Federally insured banks should be held to the highest ethical standards.

[lumberjack_jeff]

13. You see it clearly in discussions about ACA subsidies and the Medicaid hole.

Poor working people in states whose governors took advantage of the loophole in the law supplied by the Supreme Court are often ineligible for Medicaid, but their income is also too low to access the federal tax credits to subsidize premiums.

When someone suggests any work arounds (i.e. report the value of all barter transactions; something you're supposed to be doing anyway) people are up in arms about "cheating" and "stealing". Forgotten is the whole point of the law itself; to get YOU insured so your emergency room health care doesn't drive inflation in the whole system.

Poor people are more moral than rich ones? Yes and no. Rich people take advantage of opportunities and sometimes those opportunities have ambiguous morality, but sometimes not. Sometimes it's simply a matter of doing things the way they have always been done.

[questionseverything]

14. sensible people should be scared of "work arounds"

since there is a two layered system of justice

for the 99% any infraction can lead to prosecution

/////////////////

on a separate note... i do think the middle class is more moral, back in about 07 i had the opportunity to invest against the housing bubble,derivatives thingy.....i could not do it tho....it felt like i would be "betting against America''

<shrugs>

[cantbeserious]

17. Well Duh

eom

[Enthusiast]

18. K&R! This post should have hundreds of recommendations!

Thank you, Hissyspit.

[libodem]

19. .

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[classykaren]

34. Wonderful

[blkmusclmachine]

21. ,

,

[delete_bush]

22. I’m curious why you (or anyone else) find this article a “Must Read”

I find it to be nothing more than an appeal to emotion which, unfortunately, provokes in many a knee-jerk reaction. Nothing more than opinion devoid of facts. The sad part is, I highly doubt those exhibiting such a reflexive action have the ability to put forth a reasonable defense of the article.

Perhaps you will give it a try.

For example, as I’ve already posted...
“Rich people,” said “Bill” from the legal loan-sharking company. “The rich have terrible credit.”

A quote from an anonymous loan shark is hardly what I would consider to be overwhelming evidence. I would venture to say that "the rich", however determined, have better credit than those not in that ill-defined group.

Or how about THIS one…

I can uncover an individual’s actual potential for wealth with one easy test: If you equate business opportunity with a multilevel marketing scheme, like Amway, you will never be rich. If that doesn’t work, just ask yourself if you think you’ve got a shot at winning the lottery. If the answer is “yes,” you will most assuredly die poorer than you are now.

One easy test? Care to defend this?

[Hissyspit]

25. Thank you for your concern.

[delete_bush]

27. Translation:

Even though I'm the OP, I don't have the intellectual ability to defend that which I posted. I just expected everyone to mindlessly give me high fives.

[Hissyspit]

29. Yeah, I do.

I just don't want to.

[MatthewStLouis]

35. When someone shares something with you, you take it and don't complain.

Manners people! Manners!

[7962]

40. Its like those who say "I only buy a ticket when its above 50MM"

Like 5 million wouldnt be nearly enough.

[MFrohike]

43. About the MLM thing

If you're buying the tools, that quotation isn't wrong. If you're selling them, it's wrong.

I make no comment on the rest.

[hedgehog]

31. Another example of legal fraud practiced all the time:

1.An person goes to a hospital, and gets billed for something not covered by insurance. Since the person doesn't have a sweet heart deal with the hospital like all the insurance companies do, the hospital charges an outlandishly high amount.

2. The person can't pay the debt, so the hospital sells the debt for pennies on the dollar, and writes off the difference. This "loss", created solely by the hospital setting an outlandish fee, goes toward the hospital's non-profit status.

3. The entity that bought the debt continues to hound the person.

Right now, a hedge fund is using this scam to hound Argentina for a huge amount of money:

http://en.wikipedia.org/wiki/Argentine_debt_restructuring

[raouldukelives]

33. K&R

The blame lies with those who side with and form symbiotic relationships with those destroying our democracy, environment and futures. As the planet burns, as our wildlife gasps and vanishes, as those struggling for freedom & human rights are snuffed out, the funds they hold swell.
All for a better car, a better pair of shoes, a better seat at the nearest country club where they can remain silent lest their "liberal" views be exposed and they find themselves ridiculed by those they freely choose to surround themselves with and support the causes of. If not in spirit, in the only thing that matters to them at the end of the day, the time & money.

[MatthewStLouis]

36. Good article.

Great examples of the mindset of the wealthy classes. They never let their morals get in the way.

[HoosierCowboy]

37. Examine a simple mathematical paradigm

The reason the 1% have control is because they are easier to organize than the other 99% of the population. In the rare cases where some issue actually gets enough attention to get 10% of the population behind it, the 1% will fight it at first, then figure out how to profit from it, (ACA and Insurance Companies), then claim credit for it.

The 99% have only themselves to blame for buying into the MSM propaganda machine. Even most Soviets knew Pravada was BS, but Americans consume the MSM fecal matter put on their plate with ease.

Bon Appetite...

[KentuckyWoman]

45. Big K and R

I came close to doing the same thing for the same reasons. Couldn't make myself do it. Often wish I had. I had the income to pay it, just knew the house will still be underwater in 30 years.... not because I paid too much but because the neighborhood was so deeply scarred by the crash.

Still did short sale and moved back to Kentucky. Now in a family home paid for generations ago and never mortgaged again.

But I totally understand the desire to screw the bank.

[MattBaggins]

48. I have been saying the this part for years

Middle-class people are also urged to hate poor people, and those who cannot or will not work. They are the “other,” the moocher class. Poor people are the reason you haven’t gotten a raise in five years or that your house is worthless or that your company only gives you one week off a year. Those who have something detest those with nothing. We’re letting rich people get away with fleecing America, while turning our rage on poor people.

Why the fuck does anyone not in at least the top 10% vote for Republicans?

[Prophet 451]

55. Guillotines start to look tempting

In both our countries (I'm British), the people have been trained to always kick downward. To resent those below them. Here, the people have been trained to violently resent those on welfare, they have been told it's possible to make more in welfare than in work and they never realise that doesn't mean welfare is too high, it means wages are far too low.

[daredtowork]

57. "We are a caste of customers"

Way to put it in a nutshell!