IS THE DREAM OVER?

Is the dream over? The American dream that so many millions have grown up believing in appears to be nothing more than a frightful nightmare as we have been forced to wake up from our slumber.

The "book" on the American dream has been revealed has a work of fiction after being accepted as truthful by so many for so long is a difficult reality to face.

For well over 200 years our country has grown and developed through countless trials and challenges. This has all been done with (or despite) a vast growth of Federal, State and local Government. At times the Government has over reached and at times was irrelevant. American commerce grew and expanded because of the efforts of her people and the reward for those efforts was supposed to be our ability to live a fruitful live and be protected from our enemies from within and outside our borders. In good times we all want Government to go away and leave us alone. In bad times we want Government to come to our rescue. What do we actually want?

How did the country get into this mess? The simple answer is greed. Historically, the economy of business and individuals has grown at a moderate (if not slow) pace. This was true for most of our history until insanity set in about 25 years ago. My parents purchased their house in 1953 for $19,000. In 1970 the house was "worth" about $45,000. This showed an increased "worth" of $26,000 in 17 years or just under 5.5% per year. That rate of "worth" increase stayed pretty much the same throughout the 1970's and into the 1980's until the insanity began to show itself. The perception of "worth" began to escalate so that between 1970 and 1994 (24 years) this modest house that my parents bought in 1953 (built in 1940) was supposedly "worth" $230,000 or a rate or "worth" increase of over 7.5% per year. The real insanity set in during the years from 1999 to the end of 2006. In 1999 my parents home was supposedly "worth" $253,000 and in just 7 years this house was supposedly "worth" a staggering $900,000 or an increased "worth" of 355%!! The actual belief that a 1450 square foot home (granted with a pool) built in 1940 could possibly be "worth" $900,000 is truly an example of a delusional mindset. Since reaching that lofty "worth" level the most recent "worth" estimate is down to about $650,000 which in one way could be considered a "loss" of $250,000 to my 90 year old Mother (who still lives in that house) and her heirs. In another and more realistic way even the $650,000 "worth" estimate is stunning and still represents a "worth" increase of $400,000 just during the past 9 years. The questions must be; "has my Mother actually "lost" $250,000 since the end of 2006 or was the $900,000 "worth" attached to her home at the end of 2006 a completely insane number?" Is a 69 year old, 1450 square foot house (granted with a poll) actually "worth" even the $650,000 that estimates currently show?"

The point of the above example is that it can be multiplied by millions of homes across the country and the roots of our current financial collapse become very clear. National insanity affected virtually everyone and every sector. Homeowners (those who like my Mother) who already owned their homes before "worth" became so unreal suddenly found themselves living in a pot of gold. For my mother and many others the "worth" doesn't really mean much because she has always intended to live out her days in her home so she will never see the financial benefit of any amount or perceived "worth" (real or not). The effects of the unreal "worth" on so many people who have always intended to simply live in their homes has been a massive increase in property taxes and homeowner insurance premiums which has lead to greater revenue for the States and insurance industry at the expense of the homeowner. No surprise there, right? So, the government basically turned their backs and encouraged the insanity by promoting home ownership to virtually everyone, whether they could afford it or not. This, in turn "created" the supply and demand factor to kick in and led to an insane amount of building to accommodate this growing demand. All of this appeared great for the economy because people were working and the "worth" of homes kept exploding so why think about the reality, right? Well, the banks and investment firms wanted in on the action as well so they created a massive pyramid of mortgage loan packages (based on unreal worth of homes) and then sold them to anyone who was willingly to blindly buy them. There was plenty of profit to be made and greed took over as it usually does. Lenders relaxed virtually all reasonable qualification requirements to bring as many loans into the loop as possible. The result was that millions of people got mortgages they simply could not afford. Some now feel they were somehow "tricked" because they did not understand the interest and payment structure that was in the contract they signed. Well, that, sadly cannot be used as an excuse or a reason for a rescue by the taxpayers. Some (like my brother) took a different route. He purchased his home about 1980 for about $48,000. When the "worth" insanity set in my brother chose to begin a series of refinances and equity loans beginning in the mid 1990's in order to take advantage of the exploding value of his house. He took almost $600,000 from his house during the past 15 years through this process and was allowed to do this by lenders who continued to perpetuate the "worth" insanity. It became a computer program game and as long as the "worth" entered into the computer continued to be within the programmed relationship of debt to value my brother continued to get refinancing. Of course, throughout all of this, his monthly payment kept increasing (to a current payment of $4560 per month not counting property tax or insurance) and worse is the fact that the policy of not verifying income or other ability to repay was still being ignored. Multiple this situation by tens or hundreds of thousands and you find a whole group of homeowners who have created current loan balances from a low starting point to an insane number now. When the housing bubble began leaking in 2007 and has now burst, the ability to subsidize lifestyles through the equity refinance process went away. The equally insane credit card limits were quickly used up to try and cover this problem and of course that has led to an inability to make the mountain of payments due each and every month. In the end, many, many people (including my brother) find themselves with a mountain of debt and little ability to repay it. Should these people be able to receive taxpayer dollars to fix their careless decisions? I think not. The fact the "worth" insanity showed that my brother's house increased in "worth" from $48000 in 1980 to $875,000 (almost 1800%!) in early 2007) should be a perfect example of why this segment of homeowners is now is deep trouble. Now multiple this by tens of thousands.

As the "worth" insanity exploded the need for new borrowers grew as well and lenders (with the support of Government) disregarded most qualification guidelines in order to keep the system moving. After all, if people were unable to get loans simply because they couldn't afford them the whole process would be slowed down and collective greed would not allow that to happen. I bought my first home in 1972 in West Covina, California for $24,000. It was brand new and had four bedrooms and 1600 square feet which I needed for my wife and four young children. I earned about $13,000 a year back then as a manager in an envelope company. I qualified for that home because I put 20% down and did not (at the time) have any other major debt. My payment was just over $200 per month and that stretched the budget when trying to also raise four kids. Well, life happened. My wife began a lifelong series of illnesses which ate into the family budget for many years. Those were the days where insurance coverage was the 80/20 plan. I would end up with close to $200,000 in out of pocket medical bills during the next 14 years aside from everything else. So, I began working at second night jobs, and other ways to generate cash. I relocated several times (first in 1974 after selling my house) for the opportunity to make the needed money (at the emotional expense of my kids) and it would be 24 years before I was able to buy another home and well after my children were grown and gone and my wfie had become my ex-wife and after a triple bypass surgery and two heart attacks in the mid 1990's as my "reward" for a lifetime of stress. Throughout all of it, no bailouts, no whining. Life reveals itself it ways we do not always expect. I worked. I struggled. I paid everyone every cent I ever owed and I did it with a refusal to give up or rely on the Government to come to my rescue. Many people have similiar stories I am sure. Since my "medically forced" retirement I still survive. I have "given" my own children virtually all I had to try and assist them in their struggles with daily life but that's been my assignment all along. The message is, if you cannot afford the bills you have, then you must get rid of the bills and that means your house, your boat, or whatever. The only thing to do is to look in the reality mirror, face it and do what you have to do for yourself and your family. No one said life would be easy or that anyone would be passing out relief to any of us. That is just a fact.

For those who bought homes within the past five years I would ask; "Could you afford the house and the resulting payments?" "Did you buy the home to live in and raise your family for the long term?" Are you still able to make your mortgage payments or are you in trouble because of "other" debt?" If you are upset because the current "worth" of your house has decreased over the past 18 to 24 months you must accept that reality as well and realize that the inflated number was never real anyway. If you are still able to stay in your home and your original intention was always to live in it and raise your family then, in the end, the current "worth" does mean your dream has been destroyed.

For those who purchased homes simply for the investment and potential of profits the current "worth" decline is nothing more than the basic risk of any investment. The shock to you is that the insanity finally began turning around and the thought that this could happen rarely occurs to us as long as things are on the upswing. Reality sometimes makes an appearance. Bailout for you? I think not.

For those who purchased homes that had they really looked into that "reality mirror" knew they actually could not afford the commitment and did it anyway, while unfortunate, is in the end, a poor decision and if you now cannot continue to make the payments you should and you must give up the house and start your quest of the American dream again. Bailout for you? I think not.

For the of you who played the game correctly, meaning you worked hard, saved your money, did not get into mindless debt and invested in your new home (15 or 20%) down and got a proper loan without all the fancy inclusions that lenders had been offering, but now find yourselves unable to make your payments simply because you have lost your job or have experienced some personal calamity, the most sympathy for assistance goes to you. If temporary Government and or lender assistance should be made available it should be to this group. The main reason is that this group is the most likely to work their way out of their current situation if they can just get back to work. This group has not been the ones who continually seek taxpayer help but truly need it on a temporary basis. But, even this group must face the possibility that whatever has happened (even through no direct fault of theirs) is still not, utlimatelt the responsibility of the Government and the taxpayers. For the people to commit to keeping people in their homes (without direct intervention and authority over their entire budget) can be a slippery slope indeed.

For the banks and lenders who issued all the mortgage loans (both proper and improper) these loans were always a matter of choice and your own business model and have always had inherrant risks. The interest earned on these loans are the reward for taking the risk. The fact that so many loans have gone into default or are about to is basically not the publics business and since the public (all the public) did not receive a monthly portion of the interest earned during the time payments were being made the banks and lenders should not expect the people (through Government taxpayer dollars) to bail them out now. Like any other business if you cannot survive because of business decisions or market conditions then the business must fail.

The main problem with this, of course, is that the people are deeply involved with the results of bank and lender decisions because of stock investments and other funds which have a direct bearing on individual retirement plans or other forms of measuring "worth". The people are deeply involved because our Government (approved by our elected officials) have made assurances of Government backing to banks and lenders and (in our names) assumed a porion of the loan risk and thus lessoned the risk to the banks. To make matters worse and because of the business and certainly the poltical rewards the Government allowed regulations to either expire or to be ignored as the whole financial system joined in the insanity to make the "house of cards" much too high to survive. In other words, everyone is at fault and now everyone will suffer as the country and the world faces the grim reality of our greed.

If there are those who might actually read this piece who might be saying; "But wait, I didn't do anything wrong, why should I have to pay because someone else made a poor decision?" The quick answer is that everyone allowed this "worth" insanity to expand and those with "no problem" now (still a majority) certainly have had no complaints as they reaped the fianancial rewards for many years with at least one blind eye and in the end the fact that the "worth" is now reduced for so many is just the end result of greed and trying to get to the American dream by taking unsafe shortcuts.

The question now is whether or not the collective "we" are going to take responsibility as a whole nation and work together to bring ourselves out of this mess or are "we" going to continue to bicker and divide ourselves even further for the sake of our selfishness and greed for power.

If nothing is done as it relates to efforts to "bailout" banks, businesses and individuals (and I basically do not agree with that tactic either), then America and its people must be willing to endure an even deeper collapse of our economy that we have already seen. There may, in fact, be no complete solution at this point but doing nothing and walking away from the problem just doesn't seem to be the American way that I grew up in and if you're not part of a possible solution you're just part of the problem.

If you believe in saving America and whether you agree with current proposals or not, dig in (hold your nose if necessary) and let's get this nation moving again. Opponents can always come back later and change things. We have certainly done that throughout our history.

Good luck, America.