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Burnett's Urban Etiquette

Monday, December 10, 2007

Not fair, I waited in line!

In college I had the luxury of having a couple of buddies who were in the nightclub promotion business. In fact, on a few occasions I did a little promotion with them to make extra money on the side.

The result was that my buddies and I built friendly rapports with the various groups who operated the hottest nightclubs in town. And whenever we wanted to go to small concerts or just for a night out, we needed only to make eye contact with the right bouncer or concierge and they would wave us on in, allowing us to skip the cover charges and the long lines of people awaiting entry.

Inevitably, someone who was suffering velvet rope burn in the queue outdoors would blurt out something to the effect of "not fair! I've been in line for an hour!"

As I read with incredulity that the Bush White House is making moves to bail out homeowners with subprime mortgages by freezing their interest rates to give them enough time to refinance or sell or simply get more money to pay their bills, I sort of feel like those folks standing in line outside the club.

I understand that there are some people out there who just didn't have the wits about them to read the fine print and gather that after so many years of fixed, low interest, their mortgages would one day be subject to the whims of the economy. And if, when that happened, the economy was doing badly, then their new "flexible" interest rate would likely also be bad.

However, I'm not convinced that's the majority of subprime mortgage holders. Just based on what I've seen in South Florida alone, a lot of what we're seeing is the result of people desperate to live above their means. I've talked to dudes on waiter's salaries who live in $400,000 houses in nice neighborhoods. How? They had "funny" mortgages that allowed them to put zero down, finance for a million years, and go five years without paying interest on their home loan. Why? Because they were desperate to keep up with the Joneses. Now the interest has kicked in and guys like these are paying 10, 12, even 15% on their mortgages. They're finding their payments climbing exponentially. And they're crying out for help.

There was a time back in the day when the norm was that you saved your loot till you could land a "normal" loan and finance the property you wanted to buy. Or you bought small, maintained your loan and your property for a few years, then you traded up.

The same goes for cars and any other thing of value. My guys and I in high school all started off with junkers in various stages of disrepair. We fixed them up. We drove them for a couple of years. By the time we were in college and had jobs, we were able to trade or sell our junkers and buy nice cars. The point is we waited till we could afford the nice stuff. We didn't try to bend space and time to redefine what "afford" means.

This logic or lack thereof works for jobs too. Ask the average, healthy, unemployed, unmotivated young man what he's waiting for, and he's going to tell you something to the effect of "the right job," or "the right opportunity." Now, you would think with no income, the right job would be any job that pays a steady wage. But again, American society has convinced a lot of people that they shouldn't work certain gigs, 'cause those gigs are beneath them. They should go straight to the top, to the big-paying jobs.

So here we are at this subprime mortgage thing. When Mrs. B and I moved to Florida a couple of years ago, we drove through neighborhoods that made us salivate. But then we crunched the numbers and we realized that if we were going to live with our heads above water and keep them above water we had to go elsewhere. And we bought a house in a neighborhood that was acceptable, nice even. And we determined that when the time was right we would sell our property - hopefully at a profit - and then buy something a little better in a better 'hood.

Tell me quick - what's the point of waiting in line?

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  • My wife and I did the same thing,, drove junkers and lived in cracker box houses until our income caught up with our tastes.

    I was wondering how the guy working at the stop and rob had a pool and a mercedes...looks like he'll get to keep them too..

    By Blogger Hammer, at 6:16 PM  

  • Kind of reminds me of how millionaires (and their companies) file bankruptcy at an alarming rate; it's not just the lower end of society that lives above its means--it's the new American dream!

    By Blogger sognatrice, at 5:09 AM  

  • James,

    As much as I want an Audi, I'm going to keep my Volkswagen--at least until I pay the damn thing off.

    Now, I'm waiting on a job offer that won't pay me a million dollars... but this time, I'm going to have a good attitude about it.

    Yeah, I guess this "maturity" thing hits you sometime in your 30s.

    By Blogger M@, at 10:23 AM  

  • Speaking of "rope burn," the other day I smiled at the black DMV lady handing out the appointment tickets.

    I swear to Christ she gave me a lower number. I skipped to the front of the line for having a good attitude.

    By Blogger M@, at 10:25 AM  

  • That all depends on where the line leads.

    By Blogger thirdworstpoetinthegalaxy, at 12:17 PM  

  • When did paying for something or saving up for it become a bad thing? Subprime mortgages opened up a whole new world to people who wanted to live above their means when they couldn't really afford it. It's sad, because it's usually not the white, suburban family with the golden retriever and 2.5 kids that gets hurt in this thing - at least here in NYC it's the folks lower on the financial totem pole who saw an opportunity to have something that they could never have afforded otherwise. Bad decision making abounds.

    By Blogger Melissa, at 12:19 PM  

  • I may be the only person in the US who doesn't lust after the huge house. I'd like a nice cute little something. The point is, however, that I have been saving money for my cute little house for years. Tiny amounts, but still. I know that we can't let everyone in those 'funny' mortgages go under b/c that could lead to financial problems for ALL of us, but I'm with you on this one - it isn't fair.

    By Blogger WNG, at 1:31 PM  

  • "Tell me quick - what's the point of waiting in line?"

    To avoid bankruptcy, evictions, repossessions, ulcers, sleepless nights, non-stop worry, headaches, and popping a thousand aspirins.

    By Anonymous before the mayflower, at 8:20 PM  

  • I think it's complete bull crap that the government is helping out those who can't afford their bad decisions (read: SUB-PRIME loans). What about the people who CAN afford them? Will they be allocated the same subsidiary?

    By Anonymous girlsnap, at 10:44 PM  

  • These folk who bought way above their means will continue to do so until it all comes crashing down on them. Bush may be saving their necks right at this moment (in my opinion, trying to save his own), but eventually, the guillotine will fall. We just have to wait in our safe little line.

    Frankily Yours

    By Anonymous Franki, at 6:59 AM  

  • I totally agree, James. I have watched young couples stroll thru my office, buying houses twice as nice as the one I've lived in for 14 years, and sign up for a payment that is right on the edge of their budget. I was jealous for years, until I realized that most of them ended up in financial distress, or having to give up a new car, etc. I have lived in a $35K old Victorian, and FINALLY have the means to move. Waiting in line means you don't suffer the same fate as the others, b/c even after this bailout, they will still face foreclosure and credit woes.

    BTW, try to visit my blog - I think you'll be able to add to today's post in a VERY meaningful way!

    By Blogger Tiggerlane, at 2:38 PM  

  • The great hope is that by freezing the interest rate for five years, the sub-prime, meaning less credit worthy people, will be able to work out a better solution that doesn't include foreclosure.

    The economy is currently in what is called a credit-crunch. All the maneuvering by the Fed, etc. is because people aren't able to borrow money from banks at the moment unless they have absolutely stellar credit. So the economy slows. As business slows, they lay people off. Right now, unemployment is about 4.7%. There's some question as to the accuracy of the number or if the Bureau of Labor Statistics has played with the way the statistic is actually generated, but that's not for the comment section of your blog. As long as unemployment stays low, things will remain alright.

    If unemployment starts to soar, say above 7% next year, we'll see a recession, namely two (2) quarters of no growth or loss in the Gross Domestic Product.

    So, option arm mortgages in sub-prime holders really is something akin to passing out bottles of vodka at an AA meeting by a crack dealer.

    Just my opinion.


    By Blogger The CEO, at 10:45 PM  

  • I have a friend from college who is all about NOT waiting in line. She graduated from graduate school a few months ago and was offered a few jobs, but she's holding off until she finds a job that she feels would be perceived as a more respected job. That's the problem.

    People are too concerned about how they are perceived. They get the nice house, the nice car..etc, because it's perceived to mean you're a baller, or looking to boost their ego. They'll get suckered into these interest rate scams..then get their arses kicked in the long run.

    By Blogger Rune, at 11:00 PM  

  • Sounds like south Florida and northern California are about the same. My husband and I have seen more folks get foreclosed on (with a Mastercraft boat and Humvee in the garage) than we have teeth in our head.

    The latest move to freeze interest rates just irks me in that "they made their bed" kind of way. There's nothing wrong with buying a modest home and working your way up and I fail to see why we should let these schmucks off the hook.


    By Blogger qofd, at 11:48 PM  

  • the ceo wrote:

    "So, option arm mortgages in sub-prime holders really is something akin to passing out bottles of vodka at an AA meeting by a crack dealer."

    You suggest but fail to mention that both benefit--one gets drunk (no need to change behavior, just continue to act irresponsibly) the other rich.

    What we see here is greed run amuck.

    To followup with your analogy, I suppose the American people/government is the AA seeking to change harmful self-inflicted behavior via homilies, and non-lethal substitutes.

    By Anonymous before the mayflower, at 2:09 AM  

  • The American Govt would like to think it could act as beneficially as AA. Instead, they would be making the regulations as to where the AA meetings could be held, mandating the quantity of alcohol per person, and collecting usage taxes, air rights, and trying to license the crack dealer. This would be either Party. We have a Congress and a grand old tradition to support, you know.

    By Blogger The CEO, at 8:08 AM  

  • You have accurately identified the real problem behind the mortgage fiasco that so many are now facing: the desire to live above our means as a birthright.

    When you have a very large sector of society doing that, the whole structure is so out of whack that eventually it just collapses on itself.

    It reminds me of when I lived in a college dorm and realized for the first time that most other girls were wearing falsies, thereby creating the illusion that American women were a big chested lot with the result that those who wore only the equipment they had grown themselves looked flat chested by comparison.

    When most are living above their means, the few who don't are perceived as subsisting in dire poverty.

    We are a very strange culture indeed.

    By Blogger heartinsanfrancisco, at 3:34 PM  

  • Also, why would anyone expect fairness from this president?

    By Blogger heartinsanfrancisco, at 3:36 PM  

  • I seethed at those news myself. I've saved, invested and lived below my means for years. I now live in a 1.5 million home in the middle of the Gables French Village... which is almost paid for. I hadn't realized our government had turned communist.

    By Anonymous Anonymous, at 3:21 PM  

  • A whole round of new laws and regs will be passed. In the future all will have to jump through more hoops.

    Either way this mess is handled... - by the government putting a freeze on the rates hoping that this will discourage foreclosures/bankruptcies, or letting the mortgage companies bottom out and fail - ... the rest of us will be burdened by the result.

    By Blogger Pamela, at 4:40 PM  

  • I'm beginning to feel better about waiting to buy a house. The whole prospect is a bit scary. And I don't want you guys talking bad about me!

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    By Blogger Semen Rendi, at 2:43 PM  

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