Diary

Who found the lost money?

Now I’m no economist; I had to get married to get my checkbook balanced.  That said, I think I do have a peasant’s common sense about some things and I want some of those fancy MBAs and other biz school weenies out there to enlighten me on this.

So, in keeping with the irrational exuberance of the last decade I’m hypothetically one of those people who bought a house that I couldn’t afford on an arm or a balloon thinking I was one of them real speculators and house flippers like they had on TV and I could flip it and make a ton before the payments went to the stratosphere or the balloon came due.  Well, that didnt work out.  The house I bought at $600K with no down and interest payments only is now worth essentially zero because it can’t be sold and my gross income is less than the $6K and change house payment.  Now, I’m living in the minivan, hiding from the car repo man, and praying to Obama for “recovery.”  OK, sad story if you have any sympathy for losing gamblers or just stupid people.  But that isn’t my real inquiry.

So, the Acme Bank and Trust foolishly gave me a loan for $600K and costs.  The seller got that $600K and Acme got the costs and will get some interest.  Some loan manager probably got a nice commission from Acme’s expected earnings.  Acme doesn’t really do that loan watching stuff, so they sold the loan to some other bank at a profit, that profit being a discount from the ultimate payoff of the loan but more than the principal.  That buyer sells it to Fannie or Freddie also at the same sort of discount from the ultimate payoff but more than the present value.  Everybody’s making money, yet the house that the mortgage represents is still worth only $600K, and probably less.  Yet, the mortgage on that house is being sold at ever increasing prices and people are raking money off at every level.

Fast forward and the American economy has collapsed because they couldn’t keep enough new money coming in.  The $600K house is worthless and is now a crack house and hostel run by The People’s Committee.  Where is all that money?  Who is it that is sitting on a beach collecting 20% on that Ponzi Scheme?  And how to I find them, give them a 9mm brain hemorrhage, and start tricking their wives and daughters?