Another Strategic Default (that people approve of)

Saturday, February 12, 2011
Posted in category Financial Markets

In this interview that was published on mortgageorb.com, I was asked this by the interviewer: “Why is it that strategic defaulting at a corporate level is not actively challenged, but it is being challenged at a consumer level?” That was, of course, a great question.

As I wrote, the notion of approving business defaults while flogging one’s neighbor for walking away from his mortgage is entirely irrational. A corporate Chapter 11 is a strategic default, and these business decisions are never questioned by the same masses of folks who are enraged over specious charges of moral failure on the part of homeowners who walk away from homes that are collapsing their financial condition. This is because people who are financially ignorant think that households do not have to make strategic financial plans – only businesses do. It is a temperamental response triggered by ignorance and emotional blame.

One of my favorite companies, ever, is preparing to strategically default: Borders Group, Inc. I knew this three years ago when analysts still thought the bookseller’s problems could be solved by short-term marketing gimmicks. The company’s financial condition was troubled early in 2008, and its business model had already been taking a plunge. Liquidation seems likely, but Borders, a Michigan company, leaves behind many great memories as the first mega-bookstore with greats service, selection, and a striking physical ambience. Unfortunately, after a few years of struggling to reinvent itself as a top contender in a field with little room for competitors (brick-and-mortar bookstores), Borders Group has to default and turn the keys over to the bankruptcy court.

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12 Responses to Another Strategic Default (that people approve of)

  1. Iluvatar says:

    February 13th, 2011 at 1:24 pm

    If they liquidate, I will miss them – kinda liked that store (and I am paper nut, don’t like e-books).

    You wrote a post once that could be co-joined w/ this one.

    And I think it bears repeating.

    A house is a durable good – sorta like a car. All you do is throw money after it down a dark hole. It ain’t an asset.

    I heard a good line recently: an asset class is something that PAYS you money – that’s a slam dunk.

    As it is more a privelege to own a car (b/c you can pay for the upkeep), so it is w/ a house.

    The population needs to be released from this hoodwinking experiment that housing is an asset. Viewed as a financial instrument it acts more like a commodity in the sense that you are buying this now in the hopes of finding a greater fool in the future to take it off your hands?

    If you took a view that it was a durable good that you were going to throw a lot of money at – it would have severe repercussions in your decision to even consider buying a house (since you would then have to afford alternative means to building a retirement portfolio!).

    I think I only missed 2-3 points…

  2. Alex says:

    February 14th, 2011 at 9:53 am

    Karen, so far Borders is trying to maintain and stay in business, which is why they are a Chapter 11 “Debtor-in-Possession” case, as opposed to a straight Chapter 7 liquidation (like Circuit City was). It remains to be seen whether they can make it through Chapter 11 without having to convert to a 7. I doubt it. I will miss those 40% off coupons in the email! (lol)

    Barnes and Noble stays buoyant (for now), because they went after colleges and universities when Amazon started rising (many universities and colleges have basically farmed out their school bookstores to B&N). Thus, B&N became more than a bookstore, and more like a business contractor and management firm for schools’ encompassing all the school’s for-purchase paraphernalia, not just books.

    I don’t see much growth for B&N, except wherever they can scarf up Borders’s brick and mortar remains. The flagship store in Chicago on the so-called “Magnificent Mile” (or, as I call it, “The Kilometer of Konsumption”) closed last month. So far, the other branches in all the yuppie neighborhoods (including mine) are still open. Waiting to see if their other downtown Chicago branch gives up the ghost, too.

    Part of what doomed Borders is not only the paradigm shift from paper to digital works, but also that strategy of “gracious browsing,” i.e. letting people hang out at the store just sipping coffee and reading books without buying for hours on end. This works well for small, used and classic book shops, no so well for mega-chains. The average borders is a bunch of people in the Seattle’s Best bar sucking up “free” wi-fi, or thumbing through magazines they don’t intend to purchase. Now I see why all those grocery stores, when I was kid, used to have signs at the magazine rack that read “No browsing”!

  3. clark says:

    February 19th, 2011 at 2:45 am

    I posted a link to this blog entry into a comments section, thought you might be interested in reading the few responses it generated,… or not (no biggie) it’s probably pretty typical, the first comment is what caused me to post:

    OhioPrepper:

    “… I do not however have any sympathy whatsoever for the folks he talked about who are losing their homes. Seems to me like more nanny state attitude. He says a neighbor is walking away because he can’t afford to pay his obligations, which is what they are. The fact that his wife wanted “to live a certain lifestyle”, and they will now just walk away and stick someone else with the bill for their life choices clearly demonstrates that fact. As for considering myself lucky for living in a rural area, there’s no luck involved. You have to understand that my friends, neighbors and I also want to live a certain lifestyle. Self sufficiency, obligations we can afford, and to act life conscientious adults. Many years ago a few years after getting out of college I got myself in over my head with debt, but I didn’t just walk away from it. I lived frugally and spent 18 months getting everything paid down. I’ve not carried any substantial debt since then and now live in a fully paid off homestead on acreage in the country. It was a long road with sacrifices and hard work and I resent anyone telling me how lucky I am. Hopefully a few years living in Slab City will make these people understand and appreciate what’s important in life; but, somehow I doubt it. It will no doubt be the fault of the evil banker or someone else, not poor decisions that these folks made. I’m not angry or bitter, just fed up with other people whining and not taking responsibility for their own actions.
    I read on this blog about people whose prep for the week was a few extra cans of vegetables, or a brick of .22 ammunition and who can’t afford anything else until payday, These are the folks who could legitimately complain and whine and want help, but prefer to act like responsible adults, and be as self sufficient as they can. Someone walking away from a $4500.00 per month mortgage doesn’t even come close to these people in integrity, honesty, or hard work. Kudos to everyone on this blog who has made the choice to prepare as much as you can afford. You in my opinion are the real hope for this country.”

    Reply

    clark February 18, 2011 at 12:07 AM

    OhioPrepper said, “…they will now just walk away and stick someone else with the bill for their life choices”

    From what I gather, that’s Not true at all, and your attitude is the wrong one to take.

    People facing foreclosure should read these links, imho:

    “It May Be Financially Irresponsible to Pay Your Mortgage” and “Why a Strategic Mortgage Default May Be Your Best Option),” I discussed this topic at great length. I talked about why there is no moral obligation in the purchase contract. The mortgage is a legal contract, not a moral promise. I explained why turning over the keys to the home is fulfilling the terms of the contract. I wrote about how big government and the Wall Street Banksters (yes, I repeat myself) have worked to shame people into staying in their mortgage loans for the benefit of collective “consumer confidence,” the big, bailed-out banks, Fannie Mae and Freddie Mac, and the ownership society that keeps the middle class tied down in perpetual debt while selling a phony moral obligation…”

    http://karendecoster.com/will-2011-be-a-banner-year-for-strategic-defaults.html

    The bank gets the house back according to the terms, fair and square. And then there’s this:

    “…the notion of approving business defaults while flogging one’s neighbor for walking away from his mortgage is entirely irrational. A corporate Chapter 11 is a strategic default, and these business decisions are never questioned by the same masses of folks who are enraged over specious charges of moral failure on the part of homeowners who walk away from homes that are collapsing their financial condition. This is because people who are financially ignorant think that households do not have to make strategic financial plans – only businesses do. It is a temperamental response triggered by ignorance and emotional blame…”

    http://karendecoster.com/another-strategic-default-that-people-approve-of.html

    Reply

    OhioPrepper February 18, 2011 at 11:16 AM

    Let see. You buy more house than you can afford. Someone loans you the money for the purchase, and you have no moral obligation to pay back the money. And I have the wrong attitude. And we wonder why the country is going down the tubes.
    Sorry, but having worked through debt, working extra jobs, and doing without, I sincerely disagree.
    But then again I was more into acting like an adult, and not “Resisting Tyranny”

    Reply

    Jim Murphy February 18, 2011 at 3:14 PM

    OhioPrepper, If I had a nickel for everytime I saw someone telling
    another that their thinking is flawed or they are being irrational and here are the web links to prove it, I’d be a millionaire. Your handling of that was very “adult” and “rational”.

    Reply

    Steve February 18, 2011 at 7:07 PM

    Ohio,

    I fully agree with you because it’s about integrity & character.

    The bank loans you money to buy a house, why?

    A. You asked
    B. They said yes but let’s check a few things – your credit, the income you can prove, bank statements showing that you actually make the income you claim etc.
    C. Next we want to analyze the market conditions (trends) and see if your purchase is fair market value. We aplolgize doing this but we need to protect our interests (and yours too by default).
    D. You promise to pay us back in writing, ok?
    F. If the property increases in value by double the price you paid & you decide to sell it, you keep the ALL of the profit just pay us back the remaining balance.
    G. You need 90% of the value loaned to you, sure because you qualified and we trust you.
    H. Before you can get the money please review all of the terms, payments, interest rates etc & sign again you know what your getting into – ok? If not, please do not take our money.

    So now it’s 3-5 years later & what happened to the profit you promised me? I’m under-employed & unwilling to help myself by getting more work, having the spouse work or whatever.

    And look at the value today!!!!! Why should I keep this, we are upside down & my buddy just bought my model house for 50% less, I got ripped off!! Well, it’s the bank’s problem now, harrumph!!!

    Come on kids, let me show how to handle things when things get tough ….

    Gee, thanks daddy but can mommy still keep her new Esclade?

    Sure kids, it was not included in our bankruptcy – mommy deserves to look good at the Starbucks drive thru. Besides, the repo man won’t know we moved across town.

    Daddy, you’re my hero!!

    The endangered species is our youth ….

    Reply

    chemman February 18, 2011 at 5:37 PM

    Clark, I’m with OP on this. I’m of the old school generation on honoring your word even to your own hurt. The idea that a home is an investment rather than a place to live is what caused this fiasco in the first place. I own 38 acres with a 1000 sf cabin, 3600 watts of solar panels, a 1000 watt wind generator, a 20 kw whole house back up generator and a well. I’ve spent around $250,000 for the whole thing. I couldn’t sell for half that price with the way the markets are today. But guess what I’m not losing any sleep over it because it is mine and I can use my money for preparing for the worst while hoping for the best.

    Reply

    Steve February 18, 2011 at 7:18 PM

    Clark, Pretend for a moment that it was your bank at ALL of your personal money loaned out to people who promised to pay you back, how would you feel if they read these articles and said “nah, I’m not paying you any more – suck it up rich boy”.

    It’s not quite the same, is it?

    Reply

    clark February 19, 2011 at 1:45 AM

    Your comment is awaiting moderation.

    OhioPrepper said, “and you have no moral obligation to pay back the money.”

    Nope. A Person’s obligation is to pay back the money, OR give back the house. It’s that simple.

    It doesn’t sound like you were more into acting like an adult, it sounds like you were Not acting like a business, which is the whole point.

    Because people don’t treat their personal finances the same way a business would is partly why, “the country is going down the tubes.”

    You guys don’t seem to have read the links. It’s Not about integrity & character, it is about business and terms of a contract.

    Steve listed off a few errors, such as, “B. They said yes but let’s check a few things.”
    No, they didn’t. More often than not they didn’t check a thing which resulted in loans being given that should not have been given.

    Another error by Steve, “C. Next we want to analyze the market conditions”
    There was widespread fraud by appraisers and bankers alike to hit the numbers resulting in inaccurate results.

    Then Steve is incomplete when he says, “D. You promise to pay us back in writing, ok?”
    … Or, you give back the house, give up any equity and get hounded for any shortfall.

    Steve said, “G. You need 90% of the value loaned to you, sure because you qualified…” No, it’s called NINJA loans. No Income, No Job Approval. Fraud was widespread.

    3-5 years later – when those who shouldn’t have qualified for the loan but were fraudulently approved – then default, the banks should have seen that coming but refused to do due diligence because they didn’t hold the loan they sold it in the mortgage market.

    Steve, sorry, but you seem to have no clue.

    chemman, it was the easy money from the Federal Reserve that created the housing bubble which allowed the mania to take off. That was the root of the disaster.

    Steve, like I said, the bank had terms in a contract, pay or give back the house, simple. Plus, the bank sold the note and is not owed anything, they were already paid in full. It’s all a big lying scam you guys are rooting for, it’s not about honor or integrity, it’s business and terms of a contract.

    Sorry to rant on, but People should know. There’s this place called thehousingbubbleblog.com perhaps you should check it out sometime?

    http://www.thesurvivalistblog.net/uncategorized/rv-bug-out-vehicle/

  4. Alex says:

    February 19th, 2011 at 7:57 pm

    Marketing is some wonderful psychological stuff (lol). They’re closing all the Borders in Chicago except two. Both the ones in my old hometown are gone as of April. Lines were hella-crazy today, and the stores were only offering a 20% discount (40% on crappier titles). The weekly Borders membership, however, gets you at least 33%-40% at any Borders store (for now).

    I’m firmly convinced Borders is heading for a conversion from C11 to C7 bankruptcy. We’ll see. Analysts are talking about B&N acquiring Borders assets, but I don’t see it. If Borders couldn’t make it as an individual chain why would B&N want to play TimeWarner to the latest AOL?

  5. Karen De Coster says:

    February 20th, 2011 at 7:51 pm

    Clark – unfortunately, these survivalist “preppers” are clueless, and they even state that they are not interested in knowing the truth about the economy, the housing market, and the tyranny of the central planners upon property owners. But they are prepping for doomsday, right? Because they are bored and have nothing else to do?

  6. Iluvatar says:

    February 20th, 2011 at 8:28 pm

    Clark

    Nice re-thread post.

    I read Ohio prepper and there were some things that he got right and some things I think he got wrong (nanny state comment?? Only if the person leaving the house was looking to the Gov to solve his problem, & then his understanding of contract law).

    But where he seemed to get it right was in his resolving to manage his debt situation; and keep his head above water.

    When you walk away from a house, you do get burned. The losers DO LOSE & it is deflationary since money stock/credit is destroyed in the operation.

    Contract failures do not come for free – it bears a responsibilty & both parties do lose.

    But that is how ABC Theory predicts the cycle when too cheap credit expansion occurs.

    Markets DO get distorted and a mis-allocation of capital (oooops, but not in this instance No Money Down!) occurs.

    Now, we are looking at priced-up equities & commodities thanks to the Fed (Hey Ben?, just luv ya man!).

    `Nuff said…

  7. clark says:

    February 21st, 2011 at 3:40 pm

    One of them seems to be a bit more than just a bored prepper (quite the intimidating nasty little fellow too) he is “a loss litigation consultant who helped set-up and initiate systems & processes for HFC, B of A & several regional banks in the 90′s”

    That tells me all I need to know, but if you’re interested here’s the rest of the postings:

    Steve February 19, 2011 at 10:32 AM

    Clerk, Au contraire my fine, generalizing simpleton ….

    1. Underwriters were required to check things such as credit, residency status, bank statements etc. IF the mortgage broker <<< get that, a mortgage broker, falsified documents, that was between the cheating mortgage broker & the borrower willfully taking advantage. Did you know the borrower signed the loan application as the foregoing being true?

    2. Appraisal fraud, how much fraud could they possibly create – a 20% differential?? Wrong, again! The 90's established rules that prevented that from happening because of a condition that existed in the late 80's. BUT IF it did happen & get through that gauntlet, that was once again against the cheating created by the mortgage broker who blatantly violated their fiduciary duty – not the bank. Get the distinction yet??

    The banks sold off the mortgages & retained the servicing rights – so what? They have been doing that for decades.

    Once again I ask you – imagine if the money being loaned out was YOUR personal money, how would you respond to these people who decided to walk away for unknown reasons?

    Better yet – loan me $100K of your cash & draw up a contract anyway you like & I'll willfully default within 6 months. What will you do, sue me? Ha! I'll seek bankruptcy protection as is my right!

    Here's a little PS for you – the multiple class action suits against the banks are based upon loop holes in the system like "produce the note" or other idiotic lawyer tricks designed for the banks to settle – not draw out years long expensive litigation. You see, there is a delta or a squeal point where it makes more sense to pay a settlement rather than fighting for right – sad but true.

    Gee Clark, how many litigants would be in the entitlement, give me something for nothing line had the market continued to rise – ZERO! But wait …. ah,,,, I,I,I, I got cheated by the big bad greddy bank but still made a 10 to 1 return on my investment, can't I still sue???

    Here's the point Clunk – There's legitimate hardship where the borrower can loose the house in foreclosure however, much of the market is being driven by people who have decided that integrity is relative to market conditions.

    Contracts are drawn up and created FROM honor & integrity or have you forgotten that?

    Lastly, had the banks been able to see this coming & are greedy pigs as you espoused, do you really think they would have really chosen this position?

    The bane of this condition & the single greatest enemy to this mortgage problem is the armchair quarterbacks who encourage & influence all to do the wrong thing.

    BTW, paying Federal Income Tax is voluntary – look it up, it's totally true. Why not use that argument against the IRS & see how far you get …… now imagine the banks being able to wield that same type of jackbooted power – probably would cure the problem, eh?

    Reply

    OhioPrepper February 20, 2011 at 4:18 AM

    Steve, “integrity is relative to market conditions” – Well said. Legal contract with no moral obligation my A**. …
    Actually you sound like yet another who doesn’t read the contract. Your obligation is to pay back the money, period. The house is used as collateral, and will be forfeited if you fail your obligation. If the bank wanted a house, they wouldn’t need you as the middle man.
    Whether or not you’re acting like an adult, or a business, you have a contract, and walking away from it especially as a business is unethical at best. Hopefully you’ll never pay a business to provide you with goods or a service that walks away with your money without providing the contracted goods or services. Somehow I suspect you would sing a different tune in that case.
    I realize that in our modern “me first” society, things like morals and ethics have become an anachronism, but that I guess is the difference between a child and a mature adult.

    Reply

    clark February 21, 2011 at 4:16 AM

    You’re wrong, Steve, about many things, especially this one

    2. Appraisal fraud, how much fraud could they possibly create – Lots, more than you give credit, the banks most certainly did get appraisers to hit the numbers or the appraisers didn’t get work.

    You both make a lot of assumptions, and worked hard to defend the banks and the reasons why People should stay trapped in financial ruin.

    It is Not unethical to strategically default, your attempts to try to prove otherwise are appalling.

    The house is used as collateral, and will be forfeited if you fail your obligation, and that is the risk.

    People need to consider strategically defaulting for their own good, for the good of the nation and to help end the support for the unrealistic and unsustainable prices in housing.

    Reply

    Steve February 21, 2011 at 1:53 PM

    Clark, What I am wrong about is my unwillingness to buy into the “strategic default” as a viable solution to an upside down mortgage position. I do not defend the banks nor will defend those who are doing wrong.

    By way of background, I am a loss litigation consultant, with more than 20 years – hands on experience, and helped set-up and initiate systems & processes for HFC, B of A & several regional banks in the 90′s. My specific area of specialty is/was Human Factoring – how & why people respond, in this case, to default positions. I have done the studies & watched how institutions respond to consumers is a seemingly antiseptic manner without being “human” to the stressed consumer.

    Currently, I am the creative head of a national default solution platform that runs in harmony with but is independent of, banks. Our platform is a reversed engineered process that is completely consumer driven. I personally designed the consumer response mechanisms & discovered that they work relative to base integrity and fundamental truths.

    Believe it or not, when someone is giving the opportunity to do the right thing AND you can minimize the pain (for most), people by in large do the right thing. Think about it – you see someone drop a quarter, you pick it up and hand it to them, no thought. If they drop a $100 bill & don’t know it & nobody else sees it but you, do you feel the same sense of doing right? The elements & conditions are exactly the same, the increased stimulus became the difference however, right is right.

    Many try to spin the contractual rights into their favor but the system breaks down because ultimately, the consumer loses in the short & long term and globally. Bottom line Clark, people borrowed the money and are obligated to pay it back and must do the best they can to what is right whether it is Wells Fargo or you who loaned it. Strategic default is not part of that equation.

    Appraisal – Many fail safe strategies were implemented in the 90′s (the acquisition 2nd & 3rd independent opinions) and continued to be modified. Entering the 21st century the online analytics made a greater presence and were widely used as a fail safe. All of these were to protect the bank AND the consumer. Remember, the banks assumed the greater risk not the borrower.

    From 2002-2006 the market was spiking upward and IF the value was pushed, it was relatively risk free because of market conditions. Loans got underwritten BUT had to pass through the secondary online valuation analytic or it could not be approved which means – no loan.

    “Strategic default” by definition & design lacks integrity and is independent of contractual rights of the consumer. Who has the right to strategically default? Nobody – there is absolutely no provision(s) in the mortgage loan contract that allows a borrower to strategically default therefore, it’s wrong.

    So why do people do it? Because it seems easy and, wow – “I must be missing an opportunity to take advantage of a condition” now pervasive mindset. Those people want something for nothing and feel entitled to do so for irrational reasons. People who default care only about one thing – themselves, not the future value or lack thereof, of real estate.

    Your idea of mass strategic defaulting to bring housing prices in line with whatever you believe is fair is completely unfair to the far greater majority who work hard and went the extra miles to keep their word & in accordance to the business obligation – contract, they signed.

    Your argument will never wash because it’s foundation lacks integrity pure and simple.

    Integrity is what you bring to a condition, not the reverse.

  8. Dedicated_Dad says:

    April 12th, 2011 at 12:31 am

    K,

    I usually agree with everything you write, but unless I’m misreading you here, you’ve REALLY dropped the ball!

    All I have in life is my word – my personal integrity. If I make a promise, I keep it if it is within my power to do so — even if it is not in my best interest.

    A mortgage note is a promise – nothing more, nothing less. Mine could be one paragraph.

    The BIGGEST reason we are where we are today as a society is because of the death of personal integrity.

    Nearly 20 years ago now, I met a woman in a bar. My daughter was born 10 months and 2 days later. This woman turned out to be violently mentally-ill. I did my best – stuck it out for 5.5 years – but eventually came to understand that I was harming my kids by staying – so I got out and took them with me. She pulled a “Snatch-and-run”, The State got involved (with predictable outcome) and I learned the truth about our “justice system” — but I digress…

    In the process of the separation and divorce, this truly evil woman did all she could to screw me financially — even when it didn’t benefit her at all. I ended up stuck with nearly 100k worth of bills – much of it due to a couple of my daughter’s.hospital stays.

    I’d tried (just after separation) to add kids to my medical insurance, but could not because Mom had already enrolled them on welfare/medicaid. I needed the “policy” info, which she refused to provide. The State — who would ruin my life if I failed to cut them a check every week — refused to even discuss the matter with me due to “her right to privacy.”

    So, she tells the hospital that I am the “financially-responsible party” and… I am! Barring a court-order to the contrary, we were actually both jointly and severally responsible — but with her on welfare and me with a job, it’s not hard to figure out who they came after…

    Things got SO bad – between the state seizing half my income for “child support” and collections coming after me for all these bills I hadn’t even assumed — that I simply had no choice. I was FORCED to declare bankruptcy to stop them from taking the literal only asset I had left – my car – which was the only thing allowing me to commute to work.

    I filed the first set of papers, sent out the “stop screwing with me” notices, and… stumbled into a new job which more than doubled my income in one large step.

    At this point I couldn’t justify continuing with the bankruptcy — after all, these people had provided care that saved my daughter’s life! They deserved to be paid, if it was possible for me to pay them, and now it was — so I did!

    It took quite some time — several years — for me to finally clear all the debts, but I finally did. it was then that I learned how our system rewards such integrity — my credit history was screwed for 7 years from the date of my last payment — a total of ~12.5 years vs the 7 it would have cost me if i had continued with the bankruptcy…

    But that’s OK!

    My FICO score today is in the 830s. I can borrow almost any sum I please, just with my signature.

    Why?

    BECAUSE PEOPLE KNOW I WILL PAY THEM.

    If everyone acted as you prescribe, we’d have no economy — all would be chaos because contracts would be meaningless.

    If everyone acted as i do, all contracts could be one or two sentences.

    Think about that for a bit……

  9. Dedicated_Dad says:

    April 12th, 2011 at 12:40 am

    CRAP!

    I left out one more important point…

    I bought my house – a trashed foreclosure – in 2000. The day we closed it was worth 2x what we paid for it. We invested some money in repairs and improvements, and have lived very well, but also well within our means.

    Our newest car is 9 years old, all have 150-300k miles on them but are well maintained and reliable. I bought my wife our first “flat-panel” TV for Christmas. Other than our mortgage, we have no debt.

    Our neighbors OTOH bought a brand new house they couldn’t afford. They then borrowed (“equity” loan) 120% of its inflated value at the peak of the bubble.

    Large in-ground pool, nice big hot-tub, whirlpool tubs, marble counters, flat-panels in every room… A boat, jet-skis, 4-wheelers — no shortage of toys for these folks! They even built an addition with a full “mother-in-law” apartment.

    These folks were living high on the hog, right down to his & hers Lexus vehicles in the driveway — all paid for with “equity” from their home.

    They’re in the process of moving now. Naturally they’re taking everything that’s not nailed down. I’d estimate there’s a good $200k worth of property they’re taking with them — property that they didn’t earn and will never pay for.

    “Strategic default”? Sorry — for most, it’s more like “asset stripping.”

    Meanwhile, *MY* taxes will be increased to cover their losses.

    This is IMMORAL – PERIOD.

  10. Karen De Coster says:

    April 12th, 2011 at 6:06 am

    D Dad: you did not read what I wrote. personal integrity is NOT a part of the contract. A default, with turning over the asset, is. I haven’t dropped any “ball.” I know this issue backward, forward, and sideways because I have studied it, and I do not let emotion play a role.

    You say: “The BIGGEST reason we are where we are today as a society is because of the death of personal integrity.” This is a cliche. Where is “here?” What does “here” mean? No – we got here because of the total state, its credit bubble, the Federal Reserve, and the control of the monetary system by despots who benefit at our expense.

  11. Jeannie Queenie says:

    April 12th, 2011 at 5:47 pm

    @ Dedicated Dad…first let me applaud you for being more than a man in a very evil and extreme situation in which your children were at risk. Secondly, be assured that you are not the only man who has been royally screwed by a very sick woman and equally sick state, the latter often backing up the wicked witch/bitches from wild west via their lying lawyers.

    My man has a story that matches yours and then some. No. 1 tried to use rat poison on him..then No 2 in her and the state’s attempts to gain his millions, forced him into a 15 year 3 times a month court appearance, in their futile attempts to steal.
    Much to his credit as a man who thinks, reads much and has three degrees along with a background as CIA followed by years as federal agent, he won out bigtime over the state.

    He represented himself as no lawyer/state stooge could help him in his fight against the state. At one point in a courtrooom, he went so far as to start taking off his shirt when the judge asked him what the hell he was doing. To which he replied,
    “you guys are so hard up, thought I’d give the shirt off my back”..the forty something female lawyer fighting him would have killed him if given the chance. He knew that the state would do anything it could to get their grubby greedy hands on his hard earned money…he didn’t allow it. He even had a DA threaten to put him in prison on a trumped up charge that was totally fabricated…DA’s ploy went thusly..”don’t you think that 25 grand is a better deal than 25 years in prison?” Friend replied that yes, 25,000 was a small price to get out of 25 yrs of time, but then he would have to look in the mirror everyday for the rest of his life and realize he had lied by going along with that extortion. Asshole DA fell in the hallway he was so upset, and friend in front of all in courthouse told him he was a real crook and a major asshole. Am I proud of him, you bet!

    Now onto your bit about personal integrity…am totally on that page with you. Just because the rest of the world is going to hell in a hand basket and crooks abound in all spheres now from politicians to banksters, to professors/teachers and yes, even manufacturers turning out crap products and looking to make big bucks in screwing others. So if my neighbor is a crook or a nincompoop that bought more house and then filled it with granite countertops and the whole enchilada, am I supposed to feel sorry for that asshole…DON’T THINK SO. If he or she was so stupid as to not do the math first, felt that they were ‘ENTITLED TO EVERY LITTLE WHIM THEIR PUNY LITTLE HEARTS DESIRED’, that does not give me the right to follow suit and dump on the neighbor on the other side of me.
    Why would anyone want to lower themselves to the lowest common denominator?

  12. Iluvatar says:

    April 14th, 2011 at 12:14 am

    @ JQ: just a side statement here.

    The notion of personal integrity MUST be a part of the contract agreement. It is a part of the failure mode of the contract – o/w you do not have the “spirit of the agreement” which is tantamount to a correct contract. If the contract fails, the recourse is a part of the failure agreement of the contract.

    That is how correct contracts work and why invalid contracts work out so badly.

    I actually “lurned this in skool” (more the pity).

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