"Enough! We cannot live like this any longer. Everything must be done in a new way. We must reconsider our concepts, our approaches, our views of the past and our future.… There has come an understanding that it is simply impossible to live as we lived before -- intolerably, humiliatingly."
- Aleksandr Yakovlev, Soviet Embassador to Canada. (Foreign Policy.com)
So what do the rioting mobs of criminals who cut loose this Memorial Day have in common with a nice, elderly couple trapped in Foreclosure, AZ? A cursory glance suggests nary a thing. The mobs and grandma and grandpa might as well live on different planets. And yet they have one thing in common. In their own unique ways, each exemplifies the Postmodern death of American Exceptionalism.
Even more tragically, each of these people mirrors the hypocrisy and contempt that our current social and political elite show for their own national tradition. Anyone with even a cursory knowledge of Treasury Secretary Timothy Geithner’s personal history would know why what follows is so bad that it no longer even qualifies as wrong.
When Ellmers finally told Geithner that “the point is we need jobs,” he responded that the administration felt it had “no alternative” but to raise taxes on small businesses because otherwise “you have to shrink the overall size of government programs”—including federal education spending.
A man who can’t even be bothered with diligently calculating and paying his own personal income taxes informs us that everyone else has to pay more, or else he and the rest of The Federal Gubbermint just won’t be there to help us. Oh, the calamity. They may not be able to fund schools, like the ones in Detroit, MI.
The extent to which our corrupt and dishonest Federal Government helps people is fully borne out by the story of what happened to Bryan and Ilsa, from Foreclosure, AZ, who put their faith in the US government and the benevolence of The HAMP program.
…but finally, they were approved for HAMP: Their mortgage period was extended, and the interest rate was lowered. Even though their home was still underwater, and even though they still owed the same principal to their bank, Brian and Ilsa were very happy: Their mortgage payments had gone down by 40%. This was equivalent to about 15% of their retirement income. So of course they were happy. However, three months later, out of the blue, they got a letter from their bank, Wells Fargo: It said that, after further review, Brian and Ilsa had in fact not qualified for HAMP. Therefore, their mortgage would go back to the old rate. Not only that, they now owed the difference for the three months when they had paid the lowered mortgage—and to add insult to injury, they were assessed a “penalty for non-payment”.
At this point, something changed. At this point, the elderly couple in Arizona became like the Memorial Day Mobs. They didn’t smash anything, they didn’t hurt anyone physically, but in their hearts and in their minds, they just stopped believing that America rewarded honesty or civil decency anymore.
“We’ve done everything right, we’ve always paid on time, and this program is supposed to help us,” said Brian. “We follow the rules—but people who bought homes they couldn’t afford get to squat in those McMansions rent free. It would have been smarter if we’d been crooks.”
This was not just one broken man’s dispirited observation. People have discovered that they can pretty much stop paying on a hopelessly underwater house and live rent-free for long periods of time until they can be evicted. Felix Salmon describes the process.
That’s 19 months, give or take, without having to make any mortgage payments at all. And if it turns out that your mortgage is one of the millions whose documentation is so screwed up that the loan servicer can’t prove you actually owe them any money at all, then there’s really no end to the amount of time you can sit in your house rent- and mortgage-free.
This reminds me of the Old Russian joke. “We pretend to work, they pretend to pay us.” The bank doesn’t want the property. They don’t want to admit that you are a non-performing asset, because it will call the MBS that includes the homeowners note into question. In the near-term, some banks are better served by actually letting you sit there and lie.
At some point everyone will grow tired of this sort of bull hockey. They will grow tired of reading that 73% of the adults in Detroit, MI have HS diplomas but that only 53% of them can read. They will grow tired of being told that if they don’t pass the next stimulus plan, unemployment might get as high as 8%. They may get tired of being told that while only 64.2% of the eligible workforce can find work, the most popular measure of US Unemployment (U3) only comes it at about 9%.
For now, unlike the rioting mobs in the cities or homeowners resorting to “jingle mail” in FL, CA and AZ, most of us still want our society to work. A large majority of us wouldn’t really want to see Atlas shrug quite yet. It benefits me personally far more to continue as I am, and to just suck it up and pay for the negative externalities inflicted by those who “stick it to the man.” But one can’t help but wonder how long we can expect “American Exceptionalism” to paper over these vast stupidities.
Like the quantum population inversion required to charge up a laser, a lot of people are living lives and being told to swallow garbage that they would rather not be swallowing. This sets up a situation increasingly like the one in late 1980’s Russia. Just one stupid act, just one wrong move, and a vast swath of tired and frustrated people could just mail in the keys. It would be one of those historical collapses, like the one in Soviet Russia, that none of the experts saw coming.