Life Isn't Fair

Michelle Malkin makes some great points in her recent article Illegal Immigration and the Mortgage Mess:

Fraudsters have engaged in massive house-flipping rings using illegal aliens as straw buyers. Among many examples cited by the FBI: a conspiracy in Las Vegas involving a former Nevada First Residential Mortgage Company branch manager who directed loan officers and processors in the origination of 233 fraudulent Federal Housing Authority loans valued at over $25 million. The defrauders manufactured and submitted false employment and income documentation for borrowers; most were illegal immigrants from Mexico.

What she hints at while addressing the large issue of illegal immigration and the effects of giving preferred lending to individuals who are not financially astute is these moral hazards. First, the many crimes that take place in illegal land deals, second, the inability for many to delay gratification and patiently work into purchasing more complex assets and finally, the enabling by elected leaders who profit (financially and electorally) of this poor and imprudent behavior.

This was anything but unforeseen. I personally experienced the shady real estate transactions taking place day in a day out. When I am competing for property (and all investing is competition for valuable assets) against unscrupulous devils who lie, cheat and steal their way into government subsidized profits I will loose. And I did. Beyond that these actions drive up home prices unrealistically for all home buyers. Purchase prices of all houses new and existing will rise in accordance with over all supply and demand. There is a cascading effect when less desirable homes have prices that are inflated yet money is made available at low (introductory) rates to buy them. Within months McMansions in the suburbs are going for $1M.

However this is a subset of one of the greatest moral failing in our country today. We will not settle for less that the best and we want it now. A definition of “the best” varies from person to person but everyone believes that they are entitled to have some of the finer things in life, a nice home that appreciates, a nice car that does not breakdown and all of the clothes and food we crave. And we want them now. Not later, now. Not in months or years. Now. This inability to delay gratification, the denial of natural patience that build character and grows our determination and proficiencies has undone much of our society. For example, we once saved and produced, now we only consume and recycle. This problem ran rampant in the subprime mortgage market and created this so called crisis.

Further, the politicians who acted as willing accomplices exacerbated the problem by feeding into the greed this illustrates. These anti-leaders supported constituency groups with handouts of cheap loans. Even better than wads of cash, these bureaucrats gave people homes above their level of income. As a result they become perpetual victims indebted to the state. See one of final scenes in Million Dollar Baby where the lead character’s mother can’t accept a new home because she would loose her government dependency status and have to work to buy food, food. Nanny States fill seats with enabling parents who give into demanding children even when these kids are harmed by acquiesce instead of correction and discipline.

If this sounds harsh. It is. Didn’t your mother and father ever tell you “Life isn’t fair.”