Wow... I was watching CNN this morning as I was having breakfast and the news item that they were discussing was this one.
Of course the way the item is presented on their web site isn't half as impressive as it was presented on TV but we all know what it means to make a TV show out of news.
Anyway, two things impressed me... They said that currently 500.000 foreclosure cases are pending... Yeap, that's half a million... Can you imagine half a million homes? And that is half a million "American Dream" homes, with their garden and back yard, two stories, garage space for two cars, usually a pool as well. That's a medium sized city...
The second thing that impressed me was an interview with a lady whose home was being foreclosed, because she could pay her mortgage for the last two years. She said something along these lines: "Now I live the American Dream like everybody else, sitting in front of a judge" and there was such pain in her voice...
By her looks, I think she should weigh around 130 kilos, maybe 140... Have you ever spend a minute to think how much effort it takes to keep yourself that fat??? Yes effort, albeit pleasant effort. And have you ever thought how much money you need to spend on food to keep yourself this way? And how much money you need to spend just to maintain an American Dream home for two years?
I don't know about you, but personally I find it insulting to have people dying of hunger in some parts of the world, people working for 1 USD per day, and CNN showing me a fat American woman complaining that she woke up from her American Dreaming. Oh my... life is so hard on her... She must have bought that home for around half a million USD, which is a modest number for American real estate standards. Half a million USD that she didn't have, that's why she got the loan in the first place, right? And now she complains. If she couldn't pay her mortgage then why didn't she move to a 70 sqm apartment in a building somewhere? Oh I forgot, that not part of the American Dream, unless the apartment is overlooking Central Park in New York...
Back in 2006 I spent more than two weeks in the Los Angeles area. That was before the crisis and the real estate meltdown occurred. I had some free time on the weekends so I drove myself around to see the Californian dream. And I was totally shocked... I would walk around a couple of cute little towns, complete with American Dream homes, no apartment buildings or anything, and I would look at the ads outside some of those homes... 3.5 million dollars, 2.8 million dollars, 5 million dollars at the beach front... And most of the homes were inhabited... I remember wondering... "How on earth is it possible that so many people have so much money???"
Well you can probably guess the answer... They didn't have it. Well ok, some had it but what most of them had was a just a high paying job that would qualify them to get the proper loan and then dream their American Dream...
Don't get me wrong here, loans are a useful thing, they enable people to do business and buy homes, but... there is a big BUT!
Loans started out as a useful financial instrument and were slowly turned into something that gave birth to the "Buy Now Pay Later" way of life. "Buy Now Pay Later" is so much engraved in our lives that we cannot see the huge fallacy behind it.
Imagine that instead of "Buy Now Pay Later" I proposed to you the "Graduate Now Study Later" model: "Well, I can see you are a really promising and bright student, you passed the exam to enter medical school, so we will give you your medical degree right away, so you can start working and make money, and you PROMISE to study along the way, ok?"
What about the "Promote me now and I will prove myself later" model? Wow, wouldn't that be cool!!!
I am sure that you will laugh at the idea, but it is the same thing really: "We give you something nice NOW, you promise to do something hard LATER".
And I ask you, isn't this the exact opposite of the "Work hard first, get reward later" model? Which is by the way the right model...
I think it is the opposite. But the idea of getting rewards immediately, without any effort, is so tempting that most people cannot resist it. How could they?
But for me personally, no thanks I will pass. I prefer the old fashioned model, work hard first, get rewards later :-)