The Screaming Viking

I’m looking forward to the day when I can live mortgage free (or rent free, too). Paying off the mortgage is a slow grind, so for me that day is still many years in the future. But apparently I’m an idiot. I should have moved to the land of opportunity, the good ‘ol US of A, and I could be living mortgage free TODAY, without the hassle of paying for my house.

For you see, down there, not paying your mortgage is apparently perfectly acceptable. Heck, not paying for anything you’ve agreed to pay for is fast becoming the expected way to live. Yes, I fully realize that sometimes people go through a rough patch and due to circumstances beyond their control, “life” sucker punches them up side the head. Before you jump all over me and tell me that things like that happen, I’d submit that on a national scale, the circumstances were completely within control, but most people chose to willfully ignore the usual control mechanisms.

Today, Bank of America’s president of their home loans unit will appear before the US Congress to update them on the bank’s progress for helping out people in mortgage trouble. Some items of note that she will be discussing:

“Bank of America’s top mortgage executive, testifying today before Congress, will release sobering details of home-loan delinquencies, including that “hundreds of thousands of customers” haven’t made a payment in more than a year.

…

Perhaps one of the most telling signs: The bank is fielding more than 125,000 calls a day from people seeking mortgage help.”

Catch that in the first paragraph?: hundreds of thousands of customers haven’t made a payment in more than a year. And this is just FROM ONE BANK. Think of ALL the other lenders out there in America and do some simple math to figure out how many people are not paying their mortgages.

To me, that’s not a few people that have had “life” deal them a bad hand. That’s getting close to a society living past its means, not taking responsibility for its actions and always assuming the good times will keep rolling. Yeah, it’s great to live that way. But when you’re playing musical chairs and the music stops, you better know where your seat is, or you’re toast. Sounds like someone removed a helluva lot of seats in the last round, and now “hundreds of thousands of customers” are ill prepared.

But why are the banks letting this many people live in houses for FREE for over a year? Simple. The economy tanked, people couldn’t borrow so they couldn’t falsely live inflated lifestyles. This lead to house prices declining. All of a sudden, all those hundreds of thousands of people that can’t afford to make their mortgage payments are likely sitting in a house that is now worth, say $200,000, but for which they owe $300,000 (or quite likely, much, much more). The banks still show these houses as ‘worth’ $300,000 for accounting purposes (note: this is a form of fraud, but congress and the financial accounting standards board have basically said this is A-OK). If the banks were to foreclose and kick these people out of all these houses (like they’re supposed to do), they would then HAVE to adjust their accounting to show the REAL value of the house. But this would show that the banks are broke, and that would suck for all the rich bankers and politicians.

So what we have now is a system where the banks pretend to be healthy, politicians pretend the economy is recovering and hundreds of thousands (more like millions) of people live rent free.

Oh, and what do you suppose a good majority of these millions of people that now don’t have to pay any rent or mortgage are doing with any money they might be receiving? (Either from a job, or from government handouts). Well, they keep right on buying ‘stuff’, cause ‘stuff’ makes ‘em happy. Not having to pay $1000+ a month on a mortgage allows them to buy all kinds of Amazon Kindles, Apple iPhones, iPads, iDouches (not my original joke, but I liked it so thought I’d pass it on) and, oh yeah, food and clothing.

So the ‘economic recovery’ marches on. The government has spent $1.5 trillion dollars MORE than it took in (eg: money it didn’t have), to pay for bailouts, stimulus, unemployment, etc. People spent their mortgage money (eg: money they don’t really have) to pay for essentials AND frivolous items. The Gross Domestic Product (GDP) is now growing again, so we can drop that nasty ‘recession’ word from our vocabulary. Yeah, it’s amazing how GDP can grow when the government drops money from the sky and people don’t have to pay for things they contractually agreed to pay for.

I want to believe things are getting better. I WANT things to get better. But I can’t stand it when the “leaders” and media tell me things are better, but they’re not.

And while this has been a mostly US based rant, don’t worry, Canada is just as screwed. We’ve pretended our house prices aren’t inflated. We’ve pretended it’s different for us. We’ve pretended our banks are “more sound”. But sadly we’ve been doing a lot of pretending, and it will catch up to us eventually. More ramblings on the Canadian housing market whenever I find some time.

But if you believe I’m out to lunch, and that what the tee vee tells you is more accurate, by all means go out and spend. The Canadian housing market is not in a bubble, the US is on the road to recovery and countries like Greece really don’t have any sovereign debt issues because they’ll get “bailed out”, just like anything and everything in the world that borrowed lots and lots of money and is now realizing that “sh!t, somebody expects it to be paid back”.