Sub Prime Slime

It is known amongst my circles that I am indeed writing a book on the housing crash (and for those interested parties, yes it's off to the publisher). And whenst at parties this usually begets questions of me like;

"How much further does housing have to drop?" - Answer: 10-15%

"Are we in a recession?" - Answer: Not yet

"I hate Bush, he's to blame for all my problems, including the crash." - Answer: Don't worry, I hear Obama will make it all better.

But one of my favorite responses is when inevitably they ask me who to blame, and I say, "sub prime borrowers" the knee jerk "everybody's a winner" reaction is;

"Well the majority of sub prime borrowers still pay their loans on time."

This response is typically based in pity or defense for those who are deemed "sub prime" and ergo are of a lower economic class and therefore deserving of all benefits of the doubts and are above criticism. And while technically true, the majority of the sub prime borrowers do pay back their loans on time, it's not the vast majority.

Based on "vintage" as The Economist refers to it, sub prime borrowers pain the rest of us with default rates anywhere between 20-40%. It is absolutely inexcusable that not only roughly 1 in 4 people default on their loans, but that banks and mortgage lenders were so poor at analyzing the creditworthiness of these borrowers that 30% of their client base is defaulting.



Now the modern day psychology in America is that, by default, these people are victims. Oh, the poor sub prime borrower. Boo hoo, they are in default. They must have come upon hard times. We need to help them.

I, of course, being the evil, right wing fascist who smashes butterflies and doesn't wash after going to the bathroom, am of the more old school American psychology; let them sink. I am also so bold to call these people what they would have been called all of 30 years ago;

Deadbeats.

Give it time, this too will become politically incorrect word you will no longer be able to use.