On my street – a look at the US financial crisis
I wanted to share a few human stories from my street.
- Hedge Fund guy: We moved into our home in March, 2002.? Hedge Fund guy was one of the first people we met.? We’d never heard of a Hedge Fund.? He was a funny, friendly guy who taught skiing to disabled people in his free time.? He told me, as an aside, that he got into managing a hedge fund after taking a seminar and reading a book.? The greatest thing about running a hedge fund? You didn’t need to secure the money.? Everyone knew that up front. The profits were unbelievable for everyone involved.? And what could possibly go wrong?
- African American Artist guy: In 2003, a friend was rehabbing a house up the street from us. He invited me to see his work.? I joined a group of his friends on a tour of this gorgeous home.? Our friend’s sixty year old wife had just started her first job – writing mortgages.? An accomplished painter, the wife was able to spread the fantastic new loan packages to her artist friends.Standing in the rehabbed kitchen, between the cabinet installer and newly exposed brick wall, I met an African American Artist.? He had just made an offer on a 900 square foot home up the street.? He wept when the wife said that she had finished his loan papers.? Talking in excited sentences, the tears dropping from his unguarded eyes, he spoke of his life long dream of owning his own home.? Not a young man, he was probably in his late sixties when he finally achieved his dream.? The entire room glowed with the promise and excitement created by these ‘new’ loan packages.
- The Jerk: I’ve written about the jerk before.? During my first interaction with him in late 2002, he told me that he made such a much better deal on his house than we had on ours.? His smug face beamed at his brilliance, and our stupidity.? They ‘rehabbed’ the house (which is a whole other story) and, in the fall of 2006, they purchased a new home in a ritzy neighborhood from the equity they generated through their rehab and their financial prowess.
- Barbeque Boy: What can you say about a guy who barbeques on his apartment porch year round?? He rides a Harley and barbeques.? He works an eight hour a day job at a motorcycle shop, parties on the weekends, and barbeques.
- The Young Couple: I heard about these folks from a neighbor who’s son went to school with the young man.? In the blush of love, they bought two story Denver Square up the street.? He worked for one of the large Internet companies here in Denver and she was a teacher. Together, they spent the first years of their marriage lovingly restoring this home.? Every detail was perfect.
When I listen to analysts and pundits talk about ‘what happened’, I think of the people on my street.?? When we ask ‘what happened’, we have to look at the people involved with compassion. Because they’re dreams have been trampled and they will bear the consequences the rest of their lives.
Hedge Fund guy? He’s on the run from the FBI. They just disappeared about a year ago.? No one has seen them.
African American Artist guy? He lost his home.? The realtor, the mortgage broker and my friend’s wife, even the bank, made a lot of money on African American Artist guy.? He not only lost his home, but screwed up his credit and has had to declare bankruptcy.? Before you say that he should have known better, how could he know when the people who knew better, and made money on him, told him he had nothing to worry about?
The Jerk: They told the Jones (you know the people everyone has to keep up with) that they were moving to the Cayman Islands.? Why stay in the US where everything is so expensive?? While begging their renters to pay next month’s rent, both houses went into foreclosure.? We argue as to what happened with the money. D. says that they spent it.? I think they took it with them.? We heard that they received foreclosure assistance, but then heard from the people who bought the home that they didn’t.? Who knows where they are now?
Barbeque Boy: He’s still barbequing, still riding his Harley and still working.? He doesn’t seem affected by all of this financial stuff.
The Young Couple: His job moved off shore to India.? Not able to make it on her salary, they moved to another city where he took a job at 3/4ths the salary.? The house stood abandoned for a long time.? Our neighbor offered to help them rent it out.? But they spent so much time and effort rehabbing it, the couple couldn’t stand the idea of renters in the house.? I heard recently that the couple got divorced and that the house now belonged to the now ex-wife.? It’s still vacant.
This financial crisis was built on the dreams of real people.? Maybe someone should have known better.? But they didn’t and they bear the consequences.? They were told by realtors, mortgage people and bankers, that they had nothing to worry about.
After all, what could possibly go wrong?
