A modern parable of foolish actions

Wayne Stephens
Published: February 6, 2008

Once upon a time, in the year of our Lord 2002 (or thereabouts), a very self- absorbed man we shall call Greedhead decided that he simply must live in a larger, more luxurious house than his family, college friends and co-workers. After all, he deserved it.

So Greedhead bought a 6,500-square-foot "McMansion" in a subdivision of other 6,500- square-foot McMansions.
He paid way too much money for way more house than he needed and he had to finance it using an interest- only, adjustable-rate mortgage. This didn't matter to Greedhead, though, because everyone knows that the value of real estate always goes up, and Greedhead was desperate to impress everyone and show them how successful he was. 

Over the course of two years or so, Greedhead's house greatly appreciated in value and interest rates dropped a bit. This allowed Greedhead to refinance his McMansion with another interest only, ad-justable rate mortgage and to receive a large amount of cash back.

Greedhead promptly used the proceeds from his enormous windfall to purchase a brand new Hummer H2 for himself and a brand new Mercedes Benz SLK for his wife. Greedhead even had enough cash left over to buy a couple of jetskis and a trailer.

The small increase in Greedhead's monthly mortgage payment just wasn't that big a deal at the time.

Greedhead was now as happy as he had ever been. His "stuff" was so new and so nice that he could look smugly down his nose at nearly all his friends and acquaintances, those "suckers" who, not realiz-ing that the real estate market is always a "sure thing," chose to drive old cars, continue paying their conventional mortgages on their modest 2,000 SF houses and do their best to live within their means.

After a couple more years, the real estate "bubble" burst.
House values were no longer outstripping inflation by a factor of 5-1. Greedhead's house actually declined in value! Greedhead's adjustable rate mortgage went up several percentage points and the principal was now going to have to be paid down.

All of a sudden, Greedhead could no longer afford to pay his mortgage.

He was about to lose his house through no fault of his own. Who could possibly have seen this coming- What could poor Greedhead do-

This problem wasn't his fault. Nothing that went wrong in his life was ever his fault. Greedhead complained to the government about how unfair his lender was being because this whole thing was the mortgage company's fault. They engaged in predatory lending practices. They practically made Greedhead borrow so much money. And sure enough, the government has decided to come through for Greedhead.

Under a proposal made by Sen. Chris Dodd, D-Conn., last week, U.S. taxpayers will soon be stepping in to help make sure Greedhead doesn't lose his McMansion, or his Hummer, or his wife's Mercedes.

After all, Greedhead is the victim here.
Of course, it's not my fault either, with my regular mortgage and my 10-year-old car. But now, thanks to Sen. Dodd, I will be paying Greedhead's mortgage as well as my own!
Is this a great country or what-