The current financial situation has me completely confused. OK, perhaps I’d already earned that distinction before this credit crisis hit. But hear me out.
Supposedly, all this trouble began with innocent homeowners who financed their houses on terms they didn’t understand or have sufficient income to pay. How is this possible? Who would loan money to borrowers who are clearly overextending themselves? I mean, who other than the Federal Reserve and U.S. Treasury.
Are you telling me that people who can successfully navigate pawn shop contracts, check-cashing fees, and bingo parlor rules can’t comprehend the terms of an adjustable rate mortgage? Maybe it’s time we returned to teaching the “3 Rs”: reading, writing, and rotten financing.
Hey, Joe Default, let me break this down for you. If you borrow money, you have to pay it back—with interest, in real dollars, not unredeemed scratch-off lottery tickets!
The amount of profit your lender expects to make will fluctuate, just like your employment, and may be greater in some years than others. But in any event, your payments must cover your share of the lending institution’s multi-million dollar salary obligations to its CEO. (On the other hand, lower level workers and shareholders are more readily converted to corporate road kill.)
Your behaviors affect others in the U.S. and in countries you’ve likely never heard of. And when you fail to make your loan payments, the Global Repo Guy takes away others’ jobs, retirement savings, and their willingness to cheerfully ignore your existence.
You, however, just might get to keep your house.
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