Sunday, May 9, 2010

capitalism 101: when you'll lose money, walk away

There's no morality in capitalism. There's only legality. The rich have never hesitated to go bankrupt or walk away from a contractual obligation if that'll benefit them. The middle class is finally learning that lesson.

Mortgages: Walking Away

4 comments:

  1. Robin, that's how I feel. But not everyone had time to study how the game is played. Now they're learning it the hard way.

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  2. "The rich have never hesitated to go bankrupt or walk away from a contractual obligation if that'll benefit them." Bullshit. CORPORATIONS do, but rich individuals don't do it in any greater numbers than individuals from any other class. And those corporations, when they do go bankrupt, usually go reorganization- which means paying back at minimum the principle, which these people have no intention of doing. All this will do is force banks to start treating individuals like corporations- bye bye low money down home loans, bye bye long term low interest rates, and hello to the rest of us having to pay for the deadbeats walking away. Either through higher interest rates, higher down payments, or more tax supported bank bailouts when enough people walk away to put the banks at risk, those of us with a sense of responsibility will have to pay.

    Mr. Deeter, in response to "If everyone did that, the country would be in even bigger trouble", said, "If that starts happening, then that's for the professionals to figure out.", and he feels no responsibility. Somebody else can clean up my mess. So even though he can pay what he promised to pay, he's not going to. Damage his credit rating? I hope it frigging ruins it. His wife ought to realize that when she's spent her youth and looks on bearing and raising his children, he'll decide he's under water with her, too; he'll walk away, save some money, and buy a trophy wife.

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  3. Joel, I learned the lesson in the '80s, when I had a small press. A distributor went bankrupt, then started a new business immediately with the money he saved from me and a lot of little guys who couldn't afford to keep going because of what he did. It was top-down capitalism. You did notice the part of the show that mentioned the big guys who do the same damn thing?

    And here's a secret truth since you're focusing on individuals: Corporations are composed of individuals. That's part of the reason "corporate personhood" is a legal lie.

    As for your last line, well, that's what corporations and governments do. But in the real world, people tend to be able to tell the difference between humans and things. Hell, the thing I hate most about capitalism is it tries to convince people that there is no difference. The logic of right-libertarians is worst here: everyone's property.

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