Saturday, June 04, 2011

Turned Into Chumps

Robert Wenzel (via TAC):

Instead of long-term conservative planners ruling the roost, it is the Age of the Hustlers.

An acquaintance of mine, a lawyer, with some friends, doctors and such, put together some money during the boom and bought huge vacation properties on the coastline of South Carolina. The properties are mostly intended as investment properties that are rented out by the week. After the real estate market crashed, this lawyer, though all the investors in his group had plenty of cash, decided it was time to spin the banksters for a major reduction in the mortgage payment. So he called a meeting of the partners and advised them that they should stop making the mortgage payments. Some raised concerns about damage to their credit ratings but the lawyer explained how he would handle the negotiations and why it wouldn't damage their credit ratings and so the group stopped paying the mortgage. After some months of this, the bank finally agreed to a major reduction in the mortgage payment. The hustlers won. They pulled a mini-Goldman Sachs play, of a sort, and came out on top.

The world is becoming much more of this hustlers game. The conservative folk, who survive by playing it straight, see rules change and bend before their eyes. They are the ones that get stuck. It is almost impossible to make sound long-term plans when Fed Chairman Bernanke plays the long-term like a fiddle, sometimes hitting high notes by lowering interest rates and at other times low notes by raising interest rates.

The old and unworldly had the worst of it. Many were driven to begging, many to suicide. The young and quick-witted did well. Overnight they became free, rich, and independent. It was a situation in which mental inertia and reliance on past experience were punished by starvation and death, but rapid appraisal of new situations and speed of reaction were rewarded with sudden, vast riches.

-Sebastian Haffner on the early 20's Weimar economy in Defying Hitler

12 Comments:

Anonymous Anonymous said...

Appreciate your timely reminders of what it was like in the Weimar economy. It seems each day brings us closer to decision day, i. e. cling to past conservative values and expire or put it all on the "big sixes", hoping to be one of the lucky ones to strike it rich. Unfortunately I anticipate no positive correlation between financial "intelligence" and striking it rich. Roll the dice and then the victors will be the new guests of the talking heads, instant Donald Trumps if you will.

6/04/2011 11:12 AM  
Blogger billmasi said...

You are still at the top of my blogroll on Google Reader. A delight to see a new post show up and to see it's again up to expectation.

I'd like to continue to encourage you to publish more insights.

Bill M
Roosevelt Isl. NY

6/04/2011 12:04 PM  
Anonymous Ed said...

I echo Bill M's comment, from the other side of the Tram.

The hustlers are definitely winning now, but these things rarely last. Amassing lots of money eventually becomes pointless when the money itself becomes worth nothing.

6/04/2011 9:40 PM  
Blogger Thomas Daulton said...

Agreeing with the others -- I still check your site many times a week and I'm always pleased whenever I see a new post.

I've felt this way for years, that honest work is looked at as a fool's game by the modern American economy. For decades you've been told you have to "sell yourself", not only to get a new job but even to advance your current one -- hence padding of resumes became rampant 15-20 years ago... sorry to sound like a broken record, but it just seems like we are reaching the end-game.

Goldman Sachs ripping off Libya and smaller real estate brokerages is starting to remind me of various sci-fi movies and stories which postulate, what happens when every normal human on Earth is finally bitten and turned into a vampire? What happens is that they turn on each other, the War of All against All...

6/07/2011 12:57 PM  
Blogger Ben said...

Thanks for leading me to read Sebastian Haffner; I have already finished The Meaning of Hitler; Haffner is an excellent and erudite author.

Ben

6/09/2011 8:02 PM  
Anonymous Ed said...

It is hard to know who to root for.

As the other commentators have pointed out, if this sort of thing continues eventually there will be enough of a loss of confidence that money will become worthless. This will be a huge advantage for people without money (many of whom will have had it stolen in one way or another) and would render the hustling pointless. But it would not be a very uncomfortable existence.

So is it better than the leadership has an outbreak of sanity? Or do we root for riding this to its inevitable conclusion. Its hard to say.

6/28/2011 10:50 PM  
Anonymous Anonymous said...

It's not just the upper class hucksters. Two friends, both middle class. The first, two years ago, negotiated a reduction in his mortgage through one of the gov't programs even though he could afford to pay. Purchased a new Harley Davidson a week later. The second, called me this past weekend. Purchased a second home at the peak (kept first as a rental). Under water on both. He wants to relocate to a better part of town and take advantage of better pricing. Banks will not negotiate on his current two mortgages. He's exploring bk or walking away to get out and I presume has cash to get into a new place. We need to coin a new term--something along the lines of "trickle down ecomomics".

7/06/2011 1:15 PM  
Blogger Thomas Daulton said...

..."pissing on economics" ? How about "Golden Shower economics" ?

>:{

I think it was Jim Hightower who said, "Wall Street is whizzing, but it's wizzing on you and me"

Yes, your two middle-class friends are not Wall Street, but the principle is the same. They're only going with the flow. When the entire economy is a criminal enterprise, you can't remain a law-abiding citizen. "You can't be neutral on a moving train"...

7/07/2011 12:43 PM  
Blogger Ben said...

Hoping the Cunning Realist can post soon; at least before 2 months pass...

7/24/2011 9:56 PM  
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5/26/2012 10:03 PM  
Anonymous Toni said...

You are still at the top of my blogroll on Google Reader. A delight to see a new post show up and to see it's again up to expectation. I'd like to continue to encourage you to publish more insights. Bill M Roosevelt Isl. NY

10/25/2012 9:25 PM  

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