Gonzalo Lira On The Coming Middle-Class Anarchy

Tyler Durden's picture

Submitted by Gonzalo Lira

The Coming Middle-Class Anarchy

True story: A retired couple I know, Brian and Ilsa, own a home in the Southwest. It’s a pretty house, right on the manicured golf course of their gated community (they’re crazy about golf).

The only problem is, they bought the house near the top of the market in 2005, and now find themselves underwater.
They’ve never missed a mortgage payment—Brian and Ilsa are the kind upright, not to say uptight 60-ish white semi-upper-middle-class couple who follow every rule, fill out every form, comply with every norm. In short, they are the backbone of America.
Even after the Global Financial Crisis had seriously hurt their retirement nest egg—and therefore their monthly income—and even fully aware that they would probably not live to see their house regain the value it has lost since they bought it, they kept up the mortgage payments. The idea of them strategically defaulting is as absurd as them sprouting wings.
When HAMP—the Home Affordable Modification Program—was unveiled, they applied, because they qualified: Every single one of the conditions applied to them, so there was no question that they would be approved—at least in theory.

Applying for HAMP was quite a struggle: Go here, go there, talk to this person, that person, et cetera, et cetera, et cetera. “It’s like they didn’t want us to qualify,” Ilsa told me, as she recounted their mind-numbing travails.
It was a months-long struggle—but finally, they were approved for HAMP: Their mortgage period was extended, and the interest rate was lowered. Even though their home was still underwater, and even though they still owed the same principal to their bank, Brian and Ilsa were very happy: Their mortgage payments had gone down by 40%. This was equivalent to about 15% of their retirement income. So of course they were happy.
However, three months later, out of the blue, they got a letter from their bank, Wells Fargo: It said that, after further review, Brian and Ilsa had in fact not qualified for HAMP. Therefore, their mortgage would go back to the old rate. Not only that, they now owed the difference for the three months when they had paid the lowered mortgage—and to add insult to injury, they were assessed a “penalty for non-payment”.
Brian and Ilsa were furious—a fury which soon turned to dour depression: They tried contacting Wells Fargo, to straighten this out. Of course, they were given the run-around once again.
They kept insisting that they qualified—they qualified! But of course, that didn’t help at all—like a football, they were punted around the inner working of the Mortgage Mess, with no answers and no accountability.
Finally, exhausted, Brian and Ilsa sat down, looked at the last letter—which had no signature, and no contact name or number—and wondered what to do.
On television, the news was talking about “robo-signatures” and “foreclosure mills”, and rank illegalities—illegalities which it seemed everyone was getting away with. To top it off, foreclosures have been suspended by the largest of the banks for 90 days—which to Brian and Ilsa meant that people who weren’t paying their mortgages got to live rent free for another quarter, while they were being squeezed out of a stimulus program that had been designed—tailor made—precisely for them.
Brian and Ilsa are salt-of-the-earth people: They put four kids through college, they always paid their taxes. The last time Brian broke the law was in 1998: An illegal U-turn on a suburban street.
“We’ve done everything right, we’ve always paid on time, and this program is supposed to help us,” said Brian. “We follow the rules—but people who bought homes they couldn’t afford get to squat in those McMansions rent free. It would have been smarter if we’d been crooks.”
Now, up to this point, this is just another sob story of the Mortgage Mess—and as sob stories go, up to this point, it’s no big deal.
But here’s where the story gets ominous—here’s where the Jaws soundtrack kicks in:
Brian and Ilsa—the nice upper-middle-class retired couple, who always follow the rules, and never ever break the law—who don’t even cheat on their golf scores—even when they’re playing alone (“Because if you cheat at golf, you’re only cheating yourself”)—have decided to give their bank the middle finger.
They have essentially said, Fuckit.
They haven’t defaulted—not yet. They’re paying the lower mortgage rate. That they’re making payments is because of Brian: He is insisting that they pay something—Ilsa is of the opinion that they should forget about paying the mortgage at all.
“We follow the rules, and look where that’s gotten us?” she says, furious and depressed. “Nowhere. They run us around, like lab rats in a cage. This HAMP business was supposed to help us. I bet the bank went along with the program for three months, so that they could tell the government that they had complied—and when the government got off their backs, they turned around and raised the mortgage back up again!”
“And charged us a penalty,” Brian chimes in. The non-payment penalty was only $84—but it might as well been $84 million, for all the outrage they feel. “A penalty for non-payment!”
Nevertheless, Brian is insisting that they continue paying the mortgage—albeit the lower monthly payment—because he’s still under the atavistic sway of his law-abiding-ness.
But Ilsa is quietly, constantly insisting that they stop paying the mortgage altogether: “Everybody else is doing it—so why shouldn’t we?”
A terrible sentence, when a law-abiding citizen speaks it: Everybody else is doing it—so why don’t we?
I’m like Wayne Gretsky: I don’t concern myself with where the puck has been—I look for where the puck is going to be.
Right now, people are having a little hissy-fit over the robo-signing scandal, and the double-booking scandal (where the same mortgage was signed over to two different bonds), and the little fights between junior tranches and senior tranches and the servicer, in the MBS mess.
But none of that shit is important.
What’s really important is Brian and Ilsa: What’s really important is that law-abiding middle-class citizens are deciding that playing by the rules is nothing but a sucker’s game.
Just like the poker player who’s been fleeced by all the other players, and gets one mean attitude once he finally wakes up to the con? I’m betting that more and more of the solid American middle-class will begin saying what Brian and Ilsa said: Fuckit.
Fuck the rules. Fuck playing the game the banksters want you to play. Fuck being the good citizen. Fuck filling out every form, fuck paying every tax. Fuck the government, fuck the banks who own them. Fuck the free-loaders, living rent-free while we pay. Fuck the legal process, a game which only works if you’ve got the money to pay for the parasite lawyers. Fuck being a chump. Fuck being a stooge. Fuck trying to do the right thing—what good does that get you? What good is coming your way?
When the backbone of a country starts thinking that laws and rules are not worth following, it’s just a hop, skip and a jump to anarchy.
TV has given us the illusion that anarchy is people rioting in the streets, smashing car windows and looting every store in sight. But there’s also the polite, quiet, far deadlier anarchy of the core citizenry—the upright citizenry—throwing in the towel and deciding it’s just not worth it anymore.
If a big enough proportion of the populace—not even a majority, just a largish chunk—decides that it’s just not worth following the rules anymore, then that society’s days are numbered: Not even a police-state with an armed Marine at every corner with Shoot-to-Kill orders can stop such middle-class anarchy.
Brian and Ilsa are such anarchists—grey-haired, well-dressed, golf-loving, well-to-do, exceedingly polite anarchists: But anarchists nevertheless. They are not important, or powerful, or influential: They are average—that’s why they’re so deadly: Their numbers are millions. And they are slowly, painfully coming to the conclusion that it’s just not worth it anymore.
Once enough of these J. Crew Anarchists decide they no longer give a fuck, it’s over for America—because they are America.
Update I:
The Center for Public Integrity has a story, written by Michael Hudson this past August 6, that shines a light on the issue of perverse incentives of the HAMP program. These perverse incentives came to light because of a whistleblower, a former employee of Fannie Mae, filing a lawsuit. Fannie Mae was so keen on being perceived as a money-maker, after the Federal government bailout, that the aid programs passed by the Congress and signed by the President were turned into profit centers.
The former executive, Caroline Herron, recounts:

    “It appeared that Fannie Mae officers were focused on maximizing incentive payments available to Fannie Mae under various federal programs – even if this meant wasting taxpayer money and delaying the implementation of high-priority Treasury programs,” she claims in the lawsuit. 

    Herron alleges that Fannie Mae officials terminated her $200-an-hour consulting work in January because she raised questions about how it was administering the federal government’s push to help homeowners avoid foreclosure, known as the Home Affordable Modification Program, or HAMP.

Herron further alleged that “trial mods” were implemented regardless of eligibility of applicants, so that Fannie Mae would be eligible for Federal government bonuses.
Ms. Herron’s testimony in fact proves Ilsa’s suspicion that there was a scam at bottom. As Mr. Hudson writes, “Herron charges that Fannie Mae continued in headlong pursuit of ‘trial mods’ even though it knew that many had little chance of becoming permanent. [. . .] Fannie preferred doing trials, Herron alleges, because it was eligible to receive incentive payments from the Treasury Department.”
So in the pursuit of these perverse incentives, people who did not qualify for HAMP were enrolled in the program. And when their “trial mods” were up after 90 days, they would be notified that they didn’t qualify—regardless of whether they in fact did qualify, as in the case of Brian and Ilsa.
All so as to be perceived as a profitable operation, worth having been bailed out. All so as to be perceived as “returning America’s money”.
As of February, 2010, of the over one million homeowners’ mortgages under HAMP auspices, 83% were “trial mods”. One would assume that those 850,000 homeowners would also be assessed an $84 penalty for non-payment.
$84 times over 850,000? You do the math.

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RichardP's picture

Feel the fear, and do it anyway.

DosZap's picture


You be as Immoral as the useless fktards that caused your problems,and ruin your character, and your name.

You continue to keep your charater, and your name, until you can no longer DO SO.

When your out of options, then at least you did your best,as far as you could,and can THEN walk with a clean conscience, and a good heart.

Just because someone else robs a store, doesn't give you the right does it?.

How many folks here, have ever BEEN upside down on anything?.

Did you walk it,or did you tough it out,..........your name meant something, you signed a contract, agreeing to terms.

The more normal folks that walk this shit,the worse it will get, and  the more blood will ultimately be shed.

As Celente says, "When you have lost it all, you lose it."


Hansel's picture

Mortgages are a business decision.  The contract never said you couldn't walk away.  It is a valid option.

RockyRacoon's picture

Yep.   There is no morality clause in a mortgage, and no default on the note for moral hazard.

snowball777's picture

Here's hoping their next sob story won't be about how they're being discriminated against by loan officers because of their age, or golf fetish, or whatever else except their troubled credit history.

RichardP's picture

Seek the advice of a real estate attorney.  It matters to your future whether the mortgage is recourse or non-recourse.

ISEEIT's picture

I'm off to find celente. I'm going in assuming that it involves some fear based bullshit? Guess I'll find out huh? Check www.thedailybell.com if you are not already familiar.

Seems to me that the fact that so many are unsatisfied ought to indicate at a minimum that a new game is due?

We are apparhently bored with the old one.

ISEEIT's picture

Went to see the celente commercial. I say bull fucking shit. Anyone with that kind of matrix peddling cred is a scam. The dude is a plant. He forecast so accurately because he is covert.

Don't be a tool.

Wanna get rich? Go contrary GS.

Psych ops only works on people sniffin' around for a plausible way to keep believing that 'all will be well' or at least knowable. Celente is a fucking establihment fraud, a fucking sheeple Herder.

Follow if it gets your down time up. I am heading elsewhere.

Coolidge Low's picture

If you sold short Apple at $30 and road it to $298 would you ask for you money back?  




chopper read's picture

this couple would.  


...what a bunch of pussies we've become in america. 

chopper read's picture

do you think i'd speak for you, you son-of-a-bitch?  :)

are not most Americans proving to be (the proverbial) pussies?  are you not an American?

...what i meant by "what a bunch of pussies we've become in America" was:

"snowball777, you are a pussy".  I hope that is clear enough for you.  ;)

Client 9's picture


I'm with you bro.  Hang in there and protect your credit rating.  Soon enough your principal balance will be inflated away to virtually nothing anyway.  Unless it's a matter of paying for your food/health care/children's clothes I say do what you believe in and ignore these armchair Yosemite Sams.

Also, I would consistently try to renogiate the rate and see if you can even extract some kind of debt forgiveness.  Play the game bro.  You've got options.

chindit13's picture

I was sitting in a tea shop the other day in the place I happen to reside, and a young girl about fifteen sat down on the curb near my table. She had a gruesome looking abcess on her right shin, that was eating away the tibia and pushing shards of it through her skin.  She started pulling shards of her own bone out and tossing them on the ground.  A mangy cat ran up and began eating them.

The young girl was from a northern tribe, and after her parents had died she came to the big city to try to make a go of her life.  She had no money, no family, no job.  Her nation has no social services, no welfare, no free medical care, no entitlements and no sense of entitlement.  She had had the abscess for quite some time.  She assumed it was cancer and she would die soon.  That thought didn't bother her much, as she did not see such a bright future for herself.  She wasn't even complaining, nor was she looking for sympathy.  Tough as nails.  I only know her story because I can speak her language and asked her, before heading to the hospital (doc says she'll be okay after the anti-biotics and a good cleansing). Yea, I know, boo hoo.  Serves her right for getting herself born in a Third World hellhole, when smart people got themselves born in the US of A where if you fuck up overpaying for a home, the taxpayer will cover your ass.

Maybe I'm a fool or have too soft of a heart, but I find it easier to have empathy for this girl than for somebody who paid top tick for a home and now realizes it was a mistake and expects relief from the error.  It's all relative, I guess.  Good luck to you.

ISEEIT's picture

I pray to God that you are not serious? Yeah, I know that shit happens. Worse shit happens.

Makes me (we) want to collapse.

I suppose we should.

chindit13's picture

It's real, but she'll be okay.  There's a whole lot of life-threatening problems in this world that can solved for a very small amount of money and time.  We all just tend to waste too much of both. 

nmewn's picture

+ 10 chin.

Thanks for the dose of reality.

fiftybagger's picture



40 And the King shall answer and say unto them, Verily I say unto you, Inasmuch as ye have done it unto one of the least of these my brethren, ye have done it unto me.

Matthew 25
King James Version





Cathartes Aura's picture

thank you for these posts chindit, a better illustration of the privileges taken for granted in amrka has never been posted here.

the so called "human rights" myth sold over and over, and rarely questioned as truth only seems to apply to certain peoples on this planet - when in fact, those "rights" may be extended temporarily to a privileged few (in comparison to the whole), and they're about to be clawed back in a graphic way over time.

not special, not unique, just lied to.




chindit13's picture

You posted another comment in this thread or the Tavakoli one (I cannot seem to locate it amongst the thousands), which when I read it had only one "junk".  I would have thought there'd be more, albeit for reasons of ego.  You noted the natural advantages that come as a result of birth accidents, as in someone being born a certain race and gender in a certain country at an auspicious time in human history, then attributing any success they may have had in life solely to their own determination and hard work.

I know full well how true that is, and realize my own accident of birth pretty much made failure in life, if it had come, the only surprise.  Of course there is no way to counter this natural advantage, and one should not refrain from using what one inherited, but I do think we all should take a little time to appreciate what random chance handed us, and turn a less critical eye towards those who came out on the short end of the stick.  Yes, we all have things to overcome, but some obstacles are greater than others, and a little humility is not such a bad thing. 

Cathartes Aura's picture

it would do many amrkns a world of good to spend time in countries considered "third world" - not a vacation, but say, a year or three of actually having to live amongst those who have had less opportunities to achieve what is considered important in this country - the acquisition of things and monies in particular. . .at the very least, it would slow down the mindless consumption that characterises amrkns in the world, and perhaps even develop compassion that might override the competitiveness that is such a prized characteristic here.

I was born in SoCal, grew up in chaotic poverty, left as soon as I was legally able to make that choice (adult), and I'm grateful for having held my breath and jumped. . . there are many intersecting "labels" we all get to bear, some give us a leg up, some a smack down - but if we don't acknowledge this, then we are distant from our own truths, and life will have to show us some necessary lessons. . .

which is where a lot of people in this country are headed, and while I can understand their anger, resentment, etc. - it's just a turn of the page, not really so personal, even though media is framing that dialogue, as always. . .

"a little humility" is essential to being called "human". . .

Eureka Springs's picture

Sounds like Wells Fargo played loose and fast with their Hamp game... could be some fraud there, no? It seems to be the tipping point for this couple.

Rodent Freikorps's picture

Due to spending an extra day making sure I have a bolt hole in an un-named south american country, I was a single day late on a mortgage payment. Once in 10 years. Wells Fargo called and told my wife we were in danger of being foreclosed on, but our Beloved Leader had a program to lower our payments. All we had to do was sign on to a variable rate that the cocksucking thief at Wells did not know the upper rate.

She told them to go fuck themselves, and to pass that suggestion to our Beloved Leader. They were not amused. Can't think why they'd be pissed at getting payed.

Strange times.

Freebird's picture

Welcome Ratty, we know where you are :)

Rodent Freikorps's picture

Since I'm not disguising my IP, I'm overjoyed to know the Feds are not totally incompetent.

DosZap's picture


You think your IP is disguised?.LOL

Rodent Freikorps's picture

I said "not". Am I gonna have to rent a place in Matamoros?

Rodent Freikorps's picture
Seriously, you guys keep giving me these lay-ups, and I'm gonna have to think at least 50% of the Federal Government of the United States of America are still on the side of the light.

Almost gives me reason to hope.

Rodent Freikorps's picture

Did I mention that my wife just fucking rocks? I am ready for anything.

doolittlegeorge's picture

awwww.  that's cute.  must be your fine set of chopppers you got there Rodent.

Rodent Freikorps's picture

I would have put it down to her being able to put  a round through your eye at 600 yards, and laugh about it, but you may be right.

Who can tell with women?

Pondmaster's picture

Man , you need some prozac !

Dburn's picture

The first lie in that post was "Man, I feel for these people" as you go on to trash them in the rest of the post. In fact, I'm willing to bet your pretty pleased with their situation. A little payback maybe?  Guess what, that computer your typing your bullshit on was a product of the Me generation. So is most of the stuff you use day in and day out.  Fucking up the economy was cross generational. There was plenty of before and after generations that were there to light this candle and your generation along with the rest were there to fan it into flames.

Don't hold yourself in high esteem. You have nothing to be proud of , trust me . No one would write like that if they actaully done soemthing with their lives

RockyRacoon's picture

I'm one of those old farts.  I recall being 10 years old in 1958, day after Christmas, living in Palm Bay, Florida.  I was heart broken.  My friends were getting transistor radios for gifts and I didn't get one.  They were about $30 and my folks just couldn't afford it.  What was $30 back then -- a couple of hundred dollars today.  And that was just AM radio.  The Japanese took that technology and ran with it, but the whole thing started here.  Carry that to the present day and you are right Dburn -- you iShit brats can stick it.

chopper read's picture

ha, ha.  i love the 'age warfare'.  it makes me laugh.  thanks for the internet, guys.  the deficit? - not so much.  :)

we're doing fine with our lives.  we just like to pick on you old fuckers to see if you're still kicking.  i'm loving the attitude.  keep it coming.  :)

RockyRacoon's picture

It will be your turn some day.  I'll be gone but, I hope you have a country worth caring for.  That's up to you.  It really is no big deal.  We'll all survive and it'll be a helluva ride.  I have lived in the most progressive and richest history man has ever known.

DosZap's picture



–verb (used with object), -tled, -tling. 1. to give (a person or thing) a title, right, or claim to something; furnish with grounds for laying claim.

How can you GIVE something to a person they have GIVEN their own MONEY FOR?.

Seems that falls under grounds for laying CLAIM(to what is theirs already).

If you had set aside $200k, and I TOOK it,(you had no choice) would you not try/want/all some of it back?.

If no, please send me an email, so I can forward you a Bank transfer number............

drwells's picture

Of course you'll be junked to death before I finish this comment. You're either with the homedebtors or you're with the banksters. Same problem people seem to have with D and R. They just can't get that it's two sides of the same thing.

chopper read's picture

Maybe we should publish stories on how the "me" generation of baby boomer lucusts have destroyed the economy and are now crying like whining babies because they have to take responsibility for their actions.


+1, "the weakest generation".   ha, ha. :)     ...never before have so few resources been squandered by so many.  its true!








surfsup's picture

R.I.C.O. bitchez

RagnarDanneskjold's picture

If history is a guide, the strongman will be more on the order of Oliver Cromwell. A man leads the National Rifle Association to victory in a brief civil war, some politicians are shot, Mexico or Canada get invaded and cede some land, and then everything reverts back.

Traveler-2's picture

Finally the middle class is catching on to what it created--let the good times roll!!

Incubus's picture

they'll throw a tantrum until someone sticks another pacifier in their mouths.


You're over-estimating the average person's sense of justice/moral compass:  just conjure up some new & "stable" [for now] fiat currency to replace the dollar with, and they'll go back to coddling their earthly possessions and investments.  They're only looking out for themselves, and if they weren't dragged into this, they couldn't care less about anyone else who happened to be less fortunate than they.

I just think it's sickening how anyone would attempt to drape themselves in some morally righteous agenda, when really, they're just self-serving.




Cathartes Aura's picture

+ another 1000.

time to lose the sense of entitled privilege.

chopper read's picture

+ 1000 x 1000.


Volcker raises rates to 20% to protect the brand-name fiat.  Rates have been coming down ever since, and these losers want to keep skating for another 30 years?  



ha, ha.  get ready for some reality, bitchez!