The Death of the American Dream

The American dream, as we know it is going to die this year. Cause of death? It was legislated to death by the Obama/Reid/Pelosi axis of fiscal evil.

The American dream. We all know it. Everyone expects to grow up and own their own home. What people want as a home is as varied as the people in America. Some want a small zero lot line, while others want the traditional suburban home. Some want rehabs in a gentrified community while others want a nice house and forty (or more) acres. Some want mansions. Regardless, that home is the American dream. After this year, it will die.

The legislation that will kill the American dream is the new bankruptcy code. It is yet another manufactured crisis. The Federal government created most of the foreclosure crisis, encouraging or even forcing banks and mortgage companies to make what can only be described as risky mortgages. Mortgages were given to people who could not qualify in any rational sense for a loan. A few years ago, “No Doc” loans or stated income loans became popular. Some of my friends in the mortgage industry called them “liar loans,” as it would be obviously on many of the applications, the people were simply lying about income and assets. This does not even count the loans given to illegal aliens.

Now that the chickens have come home to roost, the democrats, the one’s who are primarily responsible for us being in this mess, now offer another screwed up solution. The House is currently working on passing new bankruptcy legislation. This new bankruptcy code has what is called a “cram down” provision. While, as of this writing, it is not finalized, it will allow bankruptcy judges to “rewrite” mortgages, including reducing the amount of principle owed to the lender.

In bankruptcy, creditors are given certain priorities. It is no shock that the government has the highest priority. It is followed by secured creditors and then unsecured creditors (such as credit cards). When someone goes into bankruptcy, the unsecured creditors will often only get pennies on the dollar. Secured creditors are either fully paid or they get their collateral (e.g. a home) back.

Under this new bankruptcy law, a bankruptcy judge will be able to slice the amount of the principle owed. While some of this may “help” people who are down on their luck, such as someone who got laid off and cannot find work, the primary beneficiaries of this new law are going to be the irresponsible people who went out and bought houses they could not possibly afford. As is typical Democratic policy, the prudent and productive are going to be screwed.

The Democrats are sending a message. Greed and dishonesty pay. Do not follow the rules. Just steal!

The real losers are going to be the American people. The reason credit card companies charge such high interest rates is the risk involved. I do not know the exact number, but a huge percentage of credit card customers default in one way or another. Credit card companies frequently are forced to write off that debt. Mortgages are another story. Until now, mortgages have been protected and therefore good investments for banks. No more.

When this new law becomes effective, you will see the end of mortgages, as you know them. While most zero down loans are dead anyway, you will now see ten percent (or higher) mortgage rates as the norm. Banks will tighten lending requirements. Ten or twenty percent down payments will be the norm. Two generations ago, young couples would have to save for years for the down payment for their first home.

This is simply another frontal assault on the American way of life by the Democrats. They want to destroy the stock market, small business, and home ownership.

Why?

It is simple. Research shows that if you own your own home, have a 401(k) or otherwise invest in the stock market or own a business, you are much more likely to vote Republican. If you are dependent on the government, you are much more likely to vote Democrat. Obama/Reid/Pelosi want the Democrats to be in power for decades. And this is all a part of their plane to make America, a one party nation.