Sub-prime Mortgages. The term has entered the vernacular like some kind of ringworm, but even though they proved to be the jenga block that pulled the whole tower down, who really understands what they are? Or how they came to be the beginning of the end?
I have a general working knowledge of what is going on, but like most of us, I still would like to know who to blame. I mean, that’s what everyone else seems to be doing – banks blame government, government blames banks, auto manufacturers blame governments, workers blame manufacturers, importers blame exporters, all of the above blame the consumers, and everyone blames China.
Back in the 80s, every 20-something was pretty much an arrogant little fart who graduated into high paying jobs and spent, spent, spent. I know this; I finished university in ’84, and watched it happen all around me. Unfortunately, I started my own company, and lived on handouts from my parents while my peers were buying their first Beemer and looking down their nose at me. This Age of Consumption was pretty gross, in retrospect, and it didn’t last.
But of course, humans are dumb, and everyone scrambled on board for the next uptick, and continued the same ridiculous spending. In my tiny little mind, big screen TVs are the true symbol of lunacy. Over the past few years, everyone – I mean everyone – had to have one. Didn’t matter if you had a great job, or no job, you had to have one. So you could sit and watch a life instead of living one. The other constant symbol of all things stupid? Don’t Pay A Cent events. When a store says ‘no interest for two years, no payments’…run. This means you will have this almost always inferior quality living room set (or whatever) for two years (or whatever) before you have to pay for it. It will look like crap then. It will look like crap in 6 months, actually, and you will resent having to pay anything for it, let alone too much.
Enough from me. Here is a tremendous article in a publication called Portfolio.com. Michael Lewis wrote Liar’s Poker about his time as a young Turk in the 80s in trading houses, where he knew admittedly knew nothing. Not little, nothing. This piece, called The End, explains the current situation, and how we got here. It’s long – take the time. It’s complicated – there are still bits I don’t get. Then again, I’m starting to believe that the subprime is so blantantly stupid that most of us are looking for complicated pieces of knowledge that just aren’t there.