Pseudo-Capitalism

True Capitalism is when both parties walk away winners. That's how real businessmen make money. Crooks on the other hand have no interest in the other party, as long as they get their buck. Once the moral foundation of the nation was attacked (by Leftists) crooks posing as businessmen ran wild. But the fact remains that true Capitalism has no losers. We are now seeing the result of the abandonment of real Capitalism.

From AFP (Annoying Frog Press*)...

The dream of home ownership could turn into a living nightmare for millions of Americans in the next couple of years as home foreclosures are expected to skyrocket.

Alarmed lawmakers, such as Republican Senator Richard Shelby of Alabama, say the recent spike in home repossessions is just "the tip of the iceberg."

The fizz came out of the US housing boom last year after several years of stellar growth, fueled in part by a speculative binge, but also by sales of "exotic mortgages" including adjustable rate mortgages (ARMs).

Consumer advocates say such loans are costing many working class families an "ARM and a leg," and that buyers were often unaware ARMs can start out with a low "teaser" interest rate that fast kicks into a much higher rate.

Pressure is mounting on Congress to rein in unscrupulous lenders.

"Predatory practices need to end immediately and solutions must be designed to help the millions of distressed Americans who have mortgages they cannot afford," said Kirsten Keefe, a consumer lawyer and the executive director of Americans for Fairness in Lending.

The problem is when these companies see short-term revenues that result from misleading borrowers as better than long-term revenues from loyal, satisfied customers. Three years at 25% plus late fees, then foreclose, get the tax right-off and flip the house (sell it to someone else), and start the cycle all over again. That as opposed to a reasonable short term loan at an ethical interest rate. The first makes more money--but then so does getting a gun and robbing a bank. Whether you want to believe it or not, Congress is being paid well to ignore the problem, but that looks like it may not be enough if the crooks (the lenders) keep bleeding people dry.

*AFP means something else in French, and I get tired of having to wade through page after page to find it. They annoy me, they're French (thus the Frog part) and I'll give them the benefit of the doubt on the Press thing)

Posted by Danny Carlton at March 26, 2007 7:06 AM