Sunday, September 21, 2008

A Hard Sell

If I were to offer you a choice between two items which would both serve your needs well, but one you need to learn, study and work to adapt to your life while the other is plug and play taking little of your effort to maintain, which would you choose?

We all know that FRE and FNM did not happen overnight and that CFC,LEH, BSC, and the rest of the banks, mortgage brokers, financials were not totally blind as to what was happening in the credit markets. Enough has been said about them over the the past couple of years to alert most even if most did not wish to acknowledge the coming failures. It has been coming down the pike for longer than most of us realized, looking back it was brewing even while we were enjoying the .com boom and lamenting the .com bust. But like a dormant volcano, it was slowly percolating below ground and slowly growing a dome and most were enjoying riding the wave rather than acknowledging the possibility of its eminent eruption and consequent destruction of anything in its way. We as the consumers of its products were very happy to partake in its generosity while the growth took place and most did not question the the cost it will eventually demand of us; after all, that was someone else's problem. But what seemed to good was again proven to be so.. too good.. and now that we need to pay for it, most of us wish someone else to do it as we claim no responsibility of its creation. Sound like: Congress, the banks, the brokers, the investors, the borrowers??

Truth being said, those who could not otherwise afford loans for homes they otherwise would not have even looked at, were now being sold the idea that they could with certain "breaks" afford them. Truth is that those borrowers knew that they could not afford them, yet they were easy to sell the idea that their time has come to finally partake in what was "promised" to them under the American dream: home ownership. Truth is, that all that cash sitting on the sidelines since the late 1990's early 2000's needed to be invested somewhere and that they were clamoring for a good return on their dollars, and bundled loans seemed a good way in a rising real estate market which they helped fuel. Truth is, that the ever increasing demand of government to do something for low income families demanded the discard of common sense; but hey, they were buying votes; and it was an easy sell.

Now, let me add to my first paragraph that the items you need to choose from one would need your diligence to maintain, and work on possibly increasing it's value but also if it breaks you need to replace it out of pocket; while the other will be maintained and will be upgraded as needed for a fee, if it breaks well, too bad for you we will charge you a replacement fee, but you'll never have to worry, we'll take care of it for you. Now which one would you choose?

We all wish, from time to time, to be bailed out of our problems; most of us would like to disavow any help in creating them, for we've been told for a long time that our problems stem from some lack in our society and that is the root of all of our personal failures, therefore, society should take care of our problems as well as us. We practice blame for our problems every day .. we hear it from our politicians in every sentence. It's an easy sell.

We also hear promises regularly from all advertising, from all politicians, from all market gurus and analysts, with which we'll be saved, helped, given what is our due. Yes, everyone with something to sell. We just have to follow their advice to make us feel good and be alright. We would all like to think that others have our best interest at heart; that those we entrust with our money and lives will look out for us as our parents would. It's an easy sell and enough have bought and are buying.

The forefathers of this nation did not believe in regular taxation for a very good reason: Power coupled with money corrupt. Once the income tax was approved, the idea of "great society" was not far behind, after all, those that we pay "owe" us. Not enough were considering the true cost: an ever enlarging governmental body, a hungry monster forever needing to be fed for taking care of us. Too many generations have passed; who's to remember what it was like without all that dependence. Isn't it just easier to succumb and let them take care of us; to join the global community and be as one?

We have taken a huge step toward that end this past two weeks. Government not admitting it's own helplessness and its own role in the creation of this drama, it still is pretending to be able to take care of something it has no business in. Most have accepted that it needs to "do something", and forgetting about the "strapping of debt" to future generations, it becomes even a bigger monster; and it's an easy sell.

So back to the items that you need. Have you thought about the cost? If I were to tell you that one you'll pay for dearly with blood, sweat, tears, frustration at first, then a feeling of achievement, triumph, self contentment and success later, but without a guarantee. The other you'll pay for dearly with your joy, freedom, self will, to later achieve some comfort in mediocrity, complacency, frustration and hopelessness. Which one would you choose?

Like in day trading, or anything you do, taking total responsibility for yourself and your actions, is a hard sell.

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