MUST-READ: "If Regular Americans Acted Like the Moneyed Class, Our Country Would Collapse in a Week" [View all]

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"If regular Americans acted like corporations and the moneyed class, our country would collapse in a week from systemic theft, corruption and greed..."

http://www.salon.com/2014/09/29/the_big_middle_class_rip_off_how_a_short_sale_taught_me_rich_peoples_ethics/

MONDAY, SEP 29, 2014 07:00 AM EDT

The big “middle class” rip-off: How a short sale taught me rich people’s ethics

So many of us are clueless about business and finance. Here's why that's just the way the investment class likes it

EDWIN LYNGAR

“Behind every great fortune lies a great crime.” – Honoré de Balzac.

The closest I ever came to acting like a rich person was two years ago when I short-sold my primary residence. I might have been able to keep it but strategic default made life easier. I owed about $400,000 on a house that short-sold for $150K. The bank lost more than a quarter of a million dollars, and I lost at least $80K in down payment and property improvements. In a short sale the bank agrees to settle debt for the lesser amount and the seller gets nothing but is “punished” by not being able to finance another house for at least two years (rules vary). My moment of acting rich was when I bought a second house before short-selling the first to skirt around the repercussions of my own bad luck.

When the housing market tanked a few years ago, the government rescued every bank and business (even a damned insurance company), while ignoring everyone else. I realized that the game was fatally lopsided, so I didn’t just walk away in middle-class shame, but rather I employed all my (extremely limited) cunning and deviousness to get a similar home before ditching the old one. I was able to cash in on low housing prices from a couple of years ago, coupled with low interest rates, to come out on top. The biggest barrier to getting a great deal was an almost overpowering need to behave like a middle-class sucker.

I was taught growing up to “keep my word” and that your handshake “meant something.” Yet businessmen and individual wealthy people make decisions that are far less moral than a short sale. People “incorporate” so they can avoid legal responsibility for individual actions. It works great. You can stiff creditors, declare bankruptcy, pollute daily and raid pensions to enrich individual executives. If it all goes wrong, like it has so often for Donald Trump, you can keep your mansions and individual fortunes. It is no accident that the best-paid CEO in America has never made a dime for the company. If regular Americans acted like corporations and the moneyed class, our country would collapse in a week from systemic theft, corruption and greed.

I always knew business was getting over on me, but I had no idea the extent until I started looking to short-sell. I first learned all I could about private home financing. I called up some shady investment groups around town and questioned them at length. I didn’t end up using them, but they were frank, informative and unashamed.

“Who would pay 11 percent on a home loan?” I asked.

“Rich people,” said “Bill” from the legal loan-sharking company. “The rich have terrible credit.”

Rich people = bad credit: Just let that sink in.

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Living a middle-class life is an impediment to meaningful change. We are taught that we have everything we should dare to expect and capitalism has “worked” for us. Middle-class people are also urged to hate poor people, and those who cannot or will not work. They are the “other,” the moocher class. Poor people are the reason you haven’t gotten a raise in five years or that your house is worthless or that your company only gives you one week off a year. Those who have something detest those with nothing. We’re letting rich people get away with fleecing America, while turning our rage on poor people.

When you examine it, you cannot blame the rich for the oligarchy we’ve become or for what looks more and more like the return of Dark Age feudalism. Rather, the blame lies with my fellow work-a-day slobs who vote for politicians and policies that favor investment and wealth over the work of regular people. Middle-class Americans are self-flagellating and dispirited over their own lack of wealth, as if it were a character flaw. At the same time, they fall for the deception that everyone can be rich when, of course, most people lack the connections, education and plain old luck to even get close.

I can uncover an individual’s actual potential for wealth with one easy test: If you equate business opportunity with a multilevel marketing scheme, like Amway, you will never be rich. If that doesn’t work, just ask yourself if you think you’ve got a shot at winning the lottery. If the answer is “yes,” you will most assuredly die poorer than you are now.

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