Discrediting Subprime “Victims”

We recently mocked big business for outsmarting themselves in the subprime crisis, but it seems that there’s plenty of criticism to go around. Take for example, this powerful New York Times article of the subprime crisis’ impact on communities. To be sure, people are living scared and are understandably nervous about losing their homes and even treading financial water. And we can even grant that lenders have and still do engage in predatory lending practices, including student loans.
But just as we must hold big businesses accountable for their unethical practices, we must also examine the motivations of the affected individuals involved as well. Specifically, while big businesses are motivated by profit, many “victims” sought to maximize consumption with minimum immediate and therefore minimum visible cost. For example, the article reports that one person facing foreclosure, “bought her Bronx home for $535,000 with no cash down.” For many people, myself included, $535,000 is a great deal of money. To “purchase” a house for that amount entirely on credit demonstrates not just a lack of financial acumen, but the immature mentality of expectation and entitlement i.e. that desires ought to be satisfied immediately.
Worse is that people aren’t even learning from their mistakes. The article continues:

In some cases they cannot even work up the money to furnish their homes. Few customers have visited Boston Road Furniture, despite a handwritten come-on taped to the window that promises anyone can ?Get Up to $3,000 Instantly No Job No Credit Check.?

The proprietor adds:

?We need a government loan,? he said. ?This country is falling apart. We need customers. We need some help. So many ?For Sale? signs in this neighborhood. People just have to leave their homes and run.? [emphasis added]

The communal mentality is firmly entrenched in credit as a normal way of operation. True credit and financial liquidity are an essential part of economic systems, but here we have the epitome of short term financial thinking. Immediate interests are always satisfied, while the inevitable costs are simply ignored and disregarded – out of sight, out of mind.
Big businesses did take a hit for their own corporate greed to the tune of several billion dollars, and deservedly so. But while there are no doubt actual victims of the subprime crisis, there are also affected individuals who are now facing the consequences of their own materialism.
I refer all others to SNL’a helpful advice.

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