Seth Chalnick

56 Car Economic Pile-Up

Thanks a lot for reading my article and also for your greatly valued feedback. Lock Sang Ho, you make some good points and I look forward to reviewing your articles.

75792 and Pitching Pennies, in my ambition to make the article readable, I perhaps overlooked making the salient points sufficiently clear. Namely, I am going out of my way to not blame the entitlement crowd, or anyone else for that matter… but not placing blame about their decisions, and being ruthless about not catering to their bad decision making are two different things.

Yes, I am ruthless about not throwing good money after bad. Doing so would be fruitless, irresponsible, and stupid. But let's not overlook how greatly in favor I call for lenders to cut their losses and share in the responsibility for allowing the individual incentives of their operators to override the incentives of their industry. I just want it to be done in a way that will stop the hemorrhaging rather than add more bullet holes.

Another review of my article will show that I am not bashing the less fortunate, but rather pointing out the obvious. I do not blame anyone for doing what they thought was right at the time. But I do not feel sorry for folks who didn’t “buy” anything, but instead, merely speculated. And while Pitching Pennies makes some excellent points about innocent hard-working families getting swept up in this firestorm… I respectfully submit how the idea that most speculators are out of the market, is patently false.

On the contrary the majority of the speculators are about to be shown for what they were. The “successful” people referenced, only further highlights the myth that socio-demographic reasons were at play. The folks with sup-prime loans got hit first because they had shorter term rate re-set periods associated with their loans. If we lived in a gentler, kinder universe that offered 7yr fixed to people who could use a break then the “successful” people with their 5yr loans would have been the first to crack.

We have an over-leveraging fallout problem based on math and bad fundamentals… we do nott have a problem with a class of lazy people bringing down our financial universe.

Only the smallest percentage of these “successful” folks’ loans have even begun to re-set yet. When they do, we will begin to see the financial storm come in earnest.

This is why I draw a huge distinction between modifications and refinances as they relate to TARP. I am all for the refinancing or modifying or transferring-of-wealth or extortion or socialism or whatever you want to call it… as long as we’re focusing on helping folks who still have their credit to protect. If something is wrong with the system, then let’s fix the system, but not by rewarding folks who don’t operate within the rules of the system.