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Why The Status-Quo Is Unsustainable: Interest and Debt (What Yellen Won't Tell You)
Submitted by Charles Hugh-Smith of OfTwoMinds blog,
Even if the economy were growing at a faster pace, it wouldn't come close to offsetting the interest payments on our ever-expanding debt.
If you want to know why the Status Quo is unsustainable, just look at interest and debt. These are not difficult to understand: debt is a loan that must be paid back or discharged/written off and the loss absorbed by the lender. Interest is paid on the debt to compensate the owner of the money for the risk of loaning it to a borrower.
It's easy to see what's happening with debt and the real economy (as measured by GDP, gross domestic product): debt is skyrocketing while real growth is stagnant. Put another way--we have to create a ton of debt to get a pound of growth.
There is no other way to interpret this chart.

source: Acting Man
The Status Quo has only survived this crushing expansion of debt by dropping interest rates to historic lows. This is a chart of the yield on the 10-year Treasury bond, which reflects the extraordinary decline in interest rates over the past two decades.
The Federal Reserve has pegged rates at essentially 0% for years. That means the strategy of lowering interest rates to enable more debt has run out of oxygen: rates can't drop any lower, and so they can either stay at current levels or rise.

Near-zero interest rates for banks borrowing from the Fed doesn't mean conventional borrowers get near-zero rates: auto loans are around 4%, credit cards are still typically 16% to 25%, garden-variety student loans are around 8% and conventional mortgages are about 4.25% to 4.5% for 30-year fixed-rate home loans.
This decline in interest rates means households can borrow more money while paying the same amount in interest.
So the interest payment on a $30,000 car today is actually less than the payment on a $15,000 auto loan back in 2000.

source: The Born Again Debtor
The monthly payment on a $400,000 home mortgage is roughly the same as the payment at much higher rates on a $200,000 home loan 15 years ago.
So dropping the interest rates has enabled a broad-based expansion of debt across the entire economy. Notice how debt has exploded higher in every segment of the economy: household, finance, government, business.

source: The Born Again Debtor
The other half of the debt/interest rate equation is household income: if income is stagnant and declining, the household cannot afford to take on more debt and pay more interest. With real (adjusted for inflation) household income declining for all but the top 10%, households cannot take on more debt unless rates drop significantly.

Now that rates are at historic lows, there is no more room to lower rates further to enable more debt. That gambit has run its course.
Many financial pundits claim private debts can simply be transferred to the government and the problem goes away. Unfortunately, they're dead-wrong. As economist Michael Pettis explains, bad debt cannot simply be “socialized”:
Remember that the only way debt can be resolved is by assigning the losses, either during the period in which the losses occurred or during the subsequent amortization period. There is no other way to “resolve” bad debt – the loss must be assigned, today or tomorrow, to some sector of the economy. “Socializing” the debt, or transferring the debt from one entity to another, does not change this.
There are three sectors to whom the cost can be assigned: households, businesses, or the government.
Earlier losses are still unrecognized and hidden in the country’s various balance sheets. These losses will either be explicitly recognized or they will be implicitly amortized. The only interesting question, as I see it, is which sector will effectively be assigned the losses. This is a political question above all....
In other words, when marginal borrowers--households, students, businesses, local government agencies, etc.--start defaulting, the losses will have to be taken by somebody. This is true of every indebted nation: Japan, the European nations, China and the U.S.
The idea that we can transfer the debt to the government or central bank and the losses magically vanish is simply wrong.
Even if you drop interest rates, if debt keeps soaring the interest soon becomes crushing. Even at historically low rates, the interest on Federal debt will soon double. That means some other spending must be cut or taxes must be increased to pay the higher interest costs. Either action reduces spending and thus growth.
If rates actually normalize, i.e. rise back toward historic norms, interest payments could triple.
Here's one way to understand how reliance on ever-expanding debt hollows out the economy. Let's say the average interest on the $60 trillion in total debt is 4%. (Recall that charge-offs for defaulted loans must be included as debt-related expenses. The interest paid to lenders is only one expense in the debt system; the other is the losses taken by lenders for defaulted credit card loans, mortgages, etc.)
That comes to $2.4 trillion annually.
Now take the $16 trillion U.S. economy and reckon that real growth in gross domestic product (GDP), even with questionable hedonic adjustments and understated inflation, is about 1.5% annually. That's an increase of $240 billion annually.
That means we're eating over $2 trillion every year of our real wealth, i.e. our seed corn, to support an ever-increasing mountain of debt. That is not sustainable. Even if the economy were growing at a faster pace, it wouldn't come close to offsetting the interest payments on our ever-expanding debt.
This leaves the entire Status Quo increasingly vulnerable to any sort of credit shock; either rising rates or a decline in the rate of debt expansion will cause the system to implode.
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Where is something postponed?
And (freshly printed) money are debt instruments with zero maturity...
No one is "priniting" money without taking any kind of collateral into the balance sheet - not even the FED. That would be outright insanity.
Collateral is:
Every kind of money is tied to maturity, even cash. Remember: Credit is created by debt and cash is just a category of credit.
Oh, and after "maturity" of those debts, the FED will get their money back? NOT. Which we already know as irrefutable fact!
Thereby the FED has decided, by taking on these debts mostly at par, that it is assigning the losses to itself and as it has nothing of true value, it instead dilutes the dollar making all dollar holders pay for it.
Everything else are just shell games between different lies.
Correct. The FED destroys the currency. It's the only option left to postpone the final collapse. And no, the FED does not do that to help the poeple - they are acting to help their shareholders and stakeholders.
So then why did you defend Michael Pettis?
Or as bankers like to say, "a rolling loan gathers no loss".
There is also a Foreign Sector, and they can can be assigned losses through gamesmanship of through military conquest.
the interest paid chart is bogus. The govs own numbers for FY2013 was $415,688,781,240. By 2017 the interst will be one third of all tax receipts. should be interesting to see all those newly arrived "citizens" up in arms when their guvmint checks go boing.
It's a lot simpler than that. At the curret manipulated rates, our interest is about $400 BIllion At long term normal it would be 1.2 Trillion and at interest card rates of 18%it would be more than 3.5 Trillon.
Considering that the intake of the fed is only 2.8, yeah, we're toast.
Oh they'll "assign the losses" alright. Not a problem.
It'll fall, inordinately, on the baby boomers. They will not get anywhere near as much promised retirement as their parents.
If by 'anywhere near as much promised...' you mean zero, then yes.
Frederick Nietzsche is the Existentialist philosopher that the money elite follow and are brainwashed to believe at the prestigious American colleges. Nietzsche wrote a treatise called “Beyond Good and Evil” that characterizes the bankster elite psychopathic and irrational thinking; they have no moral foundation like regular humans.
Now, what do you God believing, religious people with morals think about what “Beyond Good and Evil means”? Basically, it means there is no such thing as God, morals or humanitarian restraint in business. There are only winners and losers and you must win at all cost. The bald face lie, greed, fraud and conspiring: is good
Killing millions of people means nothing to the Existentialist, there is no guilt or pity; they have done nothing wrong.
Psychopath murder is not evil for them if they are making money from the murder and do not get caught; that is good.
Most intelligent people realize that the 9/11/01 terrorist attack was an “inside job” that orchestrated us into national debt and “terrorist wars” over the last 13 years.
The Existentialist neo-con terrorist in control of Washington today are the same criminal banksters that orchistrated the 9/11 attacks, destroyed our capitalist economy, destroyed our democracy with a totalitarian police state, attack our American Sovereignty and Independence with UN Agenda 21st. Century attacks, North American Union attacks and illegal immigration attacks,
Who is it that believes that the internet is not under control by NSA and their billion dollar facility in Utah? If I am not logged in, my comments do not appear on Zero-Hedge. When I do log in, which is every time I come on this site, the comments appear.
I have experienced this problem on other sites as well. What you see on your screen, is not necessary what other people see on their screen. Controlling the internet content is easy.
Bear Stearns applied for extensions on leverage and the SEC gave
all the big banks the same deal. They built their calculus around increased housing prices always going up. Theoretically, housing prices cannot go up
and up forever and when housing prices started to go down expectations
changed exponentially without the central banksters of the world worrying
about an implosion because they do not understand basic mathematics
and expectation as that relates to market activity. In brief, and this is exactly how I see the genesis of the implosion, expectation fueled the
run on Bear and the markets responded in kind. Once expectations change in terms of rationally held beliefs that Bear was packed to the rafters with 'shit sandwich' 'toxic waste' there is only one way out of the investment and that is to pull one's money. Rumour did not initiate the Bear run but more aptly it was expectations held by investors. When expectations changed it was enough to generate a Mandelbrot Set Z=Z2+C of new change that has been rolling through the markets
in quantum mechanical waves of quanta that few Quantum Mechanical Engineers have articulated to the masses or politicians let alone economists. Economics in today's world can only be understood through Quantum Mechanical Engineering and everything else is just useless rhetoric IMHO. When American Mechanical Engineers get involved in economics we will start to see improvements but that is best case possible outcome if the Americans get off their duffs immediately.
One recurrent comedy show 'americans' like to stage: they intend to repay on their debt.
Their debt valuation is only one way to "measure" the extra consumption they afford themselves.
Would 'americans' try to pay back on their debt, they could not.
'Americans' came with the idea that they could overcome the environment.
Repaying their debt would mean returning the Earth in the state it was pre 1776.
To pull that out, 'americans' are going to show that they can indeed produce more than they consume.
What status quo?
The guys who are going to take the loss are all the guys who live in countries with a low level of debt. They are generally countries that have been consumed fresh by 'americans'
'Americanism' is not sustainable.It is nothing new.
Every servant to WeThePeople aka the 'american' middle class know that, that is why they see debt for what it is: a way to boost the 'american' consumption.
This article is frightening given the implications outlined. This implosion
of the USA economy is going to happen much faster than people expect IMHO. I certainly appreciate Z/H quite a bit for the education I am getting and the warnings that are arriving proactively. It's unfortunate that the 'central banking' so-called 'professionals' are not taking a page from Z/H.
Tyler should run for political office and mop the floor with the lot of them!
TYLER DURDEN FOR PRESIDENT OF THE UNITED STATES OF AMERICA
I'd vote for him.
fight club, Tyler Durden is a "Community organizer" not a politician
Our rulers know this. That is why they are arming themselves to the teeth.
but the fed says ....
<”If rates actually normalize, i.e. rise back toward historic norms, interest payments could triple..>”
Fools fail to accept the New Normal! This has cost bears a ton of $$ and will keep costing them. THIS is the NEW NORMAL, rates will be at or near zero, FOREVER! Forever is a really long time. Sure it IS sustainable. The government can never quit deficit spending…NEVER! If it does, it all collapses. And yes, the Fed could transfer one TRILLION of student debt onto their books, and student loans get forgiven. Then these former students can borrow more low interest $$ and buy houses. Win-Win. Or, Uncle Sugar could write them off with some new work it off plan; one year at McD’s for each $50k we will forgive.
There is NO reason the Fed Bank cannot expand its balance sheet by TRILLION $ more, and they will if they have to. Inflation does not bother them at all, if fact they love it!
Fundamentals do NOT matter in the New Normal; the Fed will print away any bad news. So, keep waiting for the big blow-off top, then jump into your favorite short positions or inverse ETFs, and watch Janet laugh as she announces another stimulus and Dow soars 500 points
So basically, you are of the "Free Lunch forever" religion.
<”If rates actually normalize, i.e. rise back toward historic norms, interest payments could triple..>”
Fools fail to accept the New Normal! This has cost bears a ton of $$ and will keep costing them. THIS is the NEW NORMAL, rates will be at or near zero, FOREVER! Forever is a really long time. Sure it IS sustainable. The government can never quit deficit spending…NEVER! If it does, it all collapses. And yes, the Fed could transfer one TRILLION of student debt onto their books, and student loans get forgiven. Then these former students can borrow more low interest $$ and buy houses. Win-Win. Or, Uncle Sugar could write them off with some new work it off plan; one year at McD’s for each $50k we will forgive.
There is NO reason the Fed Bank cannot expand its balance sheet by TRILLION $ more, and they will if they have to. Inflation does not bother them at all, if fact they love it!
Fundamentals do NOT matter in the New Normal; the Fed will print away any bad news. So, keep waiting for the big blow-off top, then jump into your favorite short positions or inverse ETFs, and watch Janet laugh as she announces another stimulus and Dow soars 500 points
Retirees won't even be able to afford dog food in a few years.
$20.00 for a gallon of gasoline and/or a loaf of bread while trying to survive the winters in cardboard boxes and forest lean-tos, will far outstrip any ability for people to work harder to exist.
Look for walled-in conclaves of perma-politicians and perma-bureaucrats while faux-Hebrew/Babylonian/Khazarian criminal banksters escape en masse with cadres of protective Blackwater merchants of murder to isolated islands in a South Pacific archipelago.
Instead of showing the credit number in nominal dollars, the first graph should use the same 2009 dollars as real GDP.
Perhaps red meat IS more effectively served by pumping it through a fire hose.
every once and a while someones has remind all the american citizens that the powers that have been, elected, or appointed to care for americas monatary policiy, at this time are a majority keynesians, and seemingly a few mmt's, both groups believe the govt. knows better than the free market on where, and how, americas money is spent.
the key two words are americas money, they justify the $17,000,000,000,000 national debt, and the 121,000,000,000,000 in unfunded entitlements, as just americans owing other americans.
the suprise will come when americans, realize that when tshf they owe everyone in the world, the last i looked $740,000,000,000,000, look at the debt-clock under currurency, and credit derivatives, and foreign debt, and they want paid.
this where the govt., and any law enforcement, or govt. depts. their arming, will use their 1 billion rounds of hollow points up in a week, when they explain the difference between a right, and an entitlement, 45 % + of americans when they get a quick lesson in govt. finance, the fed., central banks and why the check isn't in the mail, are not going to like it.
beings there not enough money in america to repay ,o1% of americas debt, by rights maybe zuckerberg, buffet or even clinton could be my new neighbor in a 50,000.00 dollar home, they're americans right, it's all about equality right?
We need a $Trillion coin...
I thought Ovomit was already using those to pay for him and The Mooch to vacation.....endlessly. Anything left over has been allocated for his retirement mud hut in Kenya.
"....we have to create a ton of debt to get a pound of growth." nail hitting head.
NIRP is the solution. Once all interest rates are negative there is no lower bound. Rates can go to negative infinity. But crossing the Rubicon to NIRP is like crossing an Event Horizon - there is no going back, ever. To have NIRP, physical cash must be eliminated so that there is no exit from the banking system. Then politics takes over, and money changes in ways that few anticipated beforehand. Money will acquire a "color" - like food stamps - to satisfy political demands, and only the Banksters will be able to change one color into another for a fee. Money units can also acquire expiration dates before which they must be spent. This will allow TPTB total control over all. A NIRP economy is a Totalitarian economy.
So it looks like my todays dollar will be worth about 50 cents in five years and in eight years it will be worth about 33 cents.
".......in eight years it(my dollar) will be worth about 33 cents.".......or nothing!
very good article. the rockefeller nazis are sucking every last breath they can out of the aging dying invalid before they kick it to death in their classic rob from the poor and give to the rich conspiracy.
the debt cancer is destroying this nation - it will not exist in its present form by the end of the year.
Yes Charles, I was thinking the same thing today when I was reading Michael Pettis post on China (which you quote)....America...like most of the west has entered what I like to call "Twilight Zone Economics." We can all sit around and speculate on the outcome, but the fact is we (and no one really) knows how this will end - but for sure the system itself is exposing banks to ever increasing risks. And the longer the FED keeps rates low, the more likely it is that credit quality is going to further deteriorate. The OCC had a report on this very topic, that more and more banks are accepting credit increased risks. And the BIS has warned when rates go up banks and investors are not fully prepared. And Zerohedge has written a lot on how junk bonds are getting mixed more and more into bond portfolios to "enhance yield" to get a "fair" rate. The FED is great at creating bubbles and while this one isn’t fully formed yet, you can bet the FED will carry us well past the 9th inning. I would love to start hearing ideas from people on where the cracks in the system are and what the next catalyst will be?! China will likely be able to bail out its banks (or hide the problems long enough to amortize the bad debt), the EU has room to ease and go on a printing mandate, the US certainly can (and will) keep stocking the debt binge to keep the economy revving…My guess is we need more time…to see where the cracks are and who might be swimming naked in the water…who knows...maybe the EU will let a critical bank go bust (I dont expect it...but who knows...)
This article (like many of my ZH message rants) contains the answer to "where things are going". Things are going where they must... collapse.
To be specific, buying on debt simply pulls future spending (economic activity) forward to today... AND... simply erases some additional future spending (economic activity) on top of that (interest payments).
The article also implies (or outright states for those of us who know how to think while we read) that prices people are willing to pay for their largest expenses (homes, cars, education) have grown to insane levels... because people decide how much to spend on homes, cars, education ONLY on the basis of "how much will they lend me" and "how much is the monthly payment". As a consequence, people have taken on MANY TIMES as much debt as is prudent.
So I'll answer you with a concrete example that is admittedly exaggerated, but nonetheless describes where things are going. And the real point is... how slightly exaggerated this exaggeration really is.
People (and government and many companies) have SO overspent, and SO overloaded themselves with debt, and brought SO much future spending into the present via debt...
... that in the future their entire income will be barely sufficient to make payments on their home, their cars and their college brainwashing.
And NOTHING will be left over for any other expenses.
But... "the economy" mostly IS those other expenses.
And so, the economy is destined to die. As it should.
But before that happens, the few human beings who have been frugal and prudent, and have saved rather than spent, and have never borrowed... WILL BE RAPED of their savings. That is, except those of us who converted our savings into physical gold (or even better, productive machinery that creates basic goods)... at least those of us who managed to hide and obscure where our goodies are.
Which means, the predators-that-be and debtors of all kinds will eat virtually ALL the seed required to build the economy once it collapses. They'll act like locusts and denude the world of the last scraps of wealth in the hands of producers who know how to rebuild.
That's what will happen.
Meanwhile, about 0.001% of us will be living in the extreme boonies in our self-sufficient little hideouts, and hopefully most of us will manage to avoid the death and destruction that almost everyone else sanctioned if not caused.
Then another 0.001% who have been the predators-that-be who directed the collapse of mankind will also enjoy their fancy life in their fortified compounds wherever they may choose to hide. Let's hope that out of the billions of dying human beings, at least a few of them can track down the 0.001% who lead mankind down the toilet... and eat them alive. Literally. But slowly.
PS: The further the predators-that-be and scam-artists manage to put off the collapse, the worse the collapse will be. Every day another million basically honest, ethical, benevolent, productive human beings say "screw this" and go on strike in one way or other. As they should.
honestann Oh baby just you shut your mouth.
write it off -- Fed has 4 trillion -- write it off
Funny YouTube video on unsustainable, but I digress, figure the maximum human bearing potential for America, divide it by our growth including immigration legal and otherwise and you can calculate how long we have before they make changes, until then they will print.
It took the Romans 900 years to kill their empire, and somebody was playing unsustainable on a lute for 850 of those 900.
Put it all on the IRS computers. They crash, debt is gone, and Nobody goes to jail! Don't forget to trash the hard drives
The banking Oligarchy at the cross roads.
We keep reading that the combined efforts of the CB's "statist" plays have caused this crisis.
We all know this is not true. The Crisis was spawned by the private sector Oligarchy under Reaganomics voodoo mantra where WS assets were pumped on steroids.
The subsequent post Lehman moment FED panic plays and cover up for the Oligarchs created the further breach of world monetary cohesion in dystopian QE type plays; aka not only denial that the Titanic's hull had been breached but by blatant pouring of oil on to the fire of its burning engine room.
Now that its every man --or Oligarchical clan-- for himself, the Oligarchy thieves of Davos financialista conclave have fallen out, from Iraq to Ukraine and beyond, in their rampant ambitions to exploit the South China Seas and the remaining resources of Africa.
And this increasing divide is now becoming more and more perceptible as indicated here :
http://www.thefinancialist.com/as-monetary-policy-diverges-so-could-equi...
Will this tug of war on all fronts, in an increasingly fallacious economic framework by any yardstick, withstand the acid test of law of diminishing returns on "free" money thrown into the casino economy; only time will tell.
My gut feeling is that 2015-2016 will be dangerous times as the divide between real wealth and virtual wealth can only get wider as time goes by.
Negative deposit rates! I suppose we haven't seen everything. Not even close.
It might soon become apparent the economic efficiency of credit is beginning to collapse and the additional money poured into the system coupled with lower rates can no longer drive the economy forward. When this happens we are at the end game.
At some point the return on loaning money is simply not worth the risk! Why do you want to loan money if most likely you will never be repaid or repaid with something that is totally worthless? When this happens the only safe place to store wealth will be in "tangible assets" and the only lenders will be those who print the money that nobody wants.
The collapse of credit can pose major problems such as what we saw when many sellers were forced to demand payment up front before shipping goods in 2008. More on this subject below.
http://brucewilds.blogspot.com/2014/06/the-economic-efficiency-of-credit...
My first thought when I read this article was that it must have been written 7 or 10 years ago. I like CHS, but I'm a little surprised that this is a recent article.
I realize that I'm jousting with windmills trying to explain this, but here goes (again):
The past 40 years have been nothing but a giant credit bubble. Low interest rates are a result of no growth. Look at the chart. Low interest rates discourage saving and encourage borrowing, therefore, they increase the money supply. THAT is the inflation!
Inflation = Increase in money supply = Increase in demand = Increase in prices
(all other things being equal)
So here's the thing. The inflation (increase in money supply) occurred mostly through mortgages. The money was created out of thin air. Then those mortgages were turned into derivatives (to the tune of 500 trillion dollars +) all based on the idea that houses would double in price every few years.
Well, of course buyers and borrowers couldn't keep up with that ponzi scheme. I'm sorry ZH didn't exist in 2004, or I would have told you what was coming. The ponzi was about to come to a screeching halt. Which it did.
Once the last wave of buyers, borrowers, and re-financers was done, the ponzi was done. And then poof, 2007-2008 happened. Now, in a free market, it all would have come undone, and who knows how many households, banks, businesses, governments, pensions, retirement accounts, etc, would have gone bankrupt. Instead, we got bailouts and government programs like TARP and QE.
But here's what people don't get. QE is not increasing the money supply. It is trying to slow the DECREASE in the money supply. When the money supply increases out of thin air (credit), it evaporates back into thin air when someone defaults. Poof.
Worse, when that ONE mortgage has been built into a pyramid scheme (derivatives)......default.........poof......poof........poof........poof. Who knows how many thousands, millions, billions, trillions, ONE mortgage default takes out?
Hence the TARP and the QE and the too-big-to-fail, and all the other crap.
All this talk about tapering QE and rising interest rates.....okay, QE can't go on forever. It's a ponzi scheme in its own right. As for rising interest rates, sure they might go up a little if they can fake enough growth (which is negative so far this year!). But interest rates only fundamentally go up when there is too much growth, in order to tamp down that growth (ie, encourage saving and discourage spending / borrowing. Do you see that happening?
By the way, if interest rates do go up, that is DEFLATION, not inflation. I beg people to learn the difference.
I don't know, but i been told that there are nominal interest rates, and then there are them pesky real interest rates: that's where the inflationists conduct all their business. It's also useful to know the difference.
The 10-year treasury still has a long way down to go. Hell, we're still at 2.55% or thereabouts, while the Bund is hovering around 1.7%, and the Jap 10-year is fagedaboutit! like 0.6%. So, the US gov and the Fed and Wall St. still has more time to shake, rattle and roll that paper. QE has been winding down and the stock market keeps going up, so, the Fed must be happy with that, and, remember, now they can always unwrap a new round of QE, since the last few have worked out so well.
Just in case nobody's noticing, there are still a lot of (take your pick) well-off middle class retirees, pretty well-off working class stiffs (albeit fewer than before, and most of them are in the Public sector), welfare queens, idiots spending $XXXX to send their spoiled kids to school, mammoth tax receipts (wanna get sick, try a school district budget of $67 million to educate 3600 kids from K-12), car loans and leases, people buying houses at ridiculously-inflated prices.
OK, you get my drift. There's still lots of money floating around and the bankers, .gov and the Fed still have more to skim. Why would they willingly end this massive ponzi upon which they sit at the top? This is going to go on and on and on. It's been six years since the crash of '08, and nobody expected us to be where we are now, back then, so, I think nobody expects this to go on much longer, but normalcy bias and cognitive dissonance will outlast rational economic policies (already have).
Consider: Five years ago today, my father died. Left me his house and other assets. I stopped paying the mortgage immediately. Bank started foreclosure in March 2010, since then, crickets. I am still here. Bank knows the house is worth maybe 2/3rds or less of what they appraised it for in 2007. If they prevail in foreclosure, they lose. If they make a deal with me, they lose. If they keep the non-performing loan on their books at par: WIN, WIN, WIN, because they never have to realize the loss.
Some people ask me if it is stressful to live in a house I do not own (depends on how you look at it). I've rationalized that the bank (BofA) does not have any good solution. I also don't want to move, or pay, so, essentially, we're (the bank and me) both faking it, which makes certain sense, since the money is fake, the mortgage was based on fraud and all wealth is just more massive fakery.
Who's rich? I know a guy with $5-7 million in the bank and he doesn't know what the hell to do with it. He's still working at age 65, drives a Prius for god's sake. I have almost nothing, and love my life, my little garden, fish ponds, a life of leisure and literature, could care less about money because it's all fake, and I've always been able to make as much as I need since I was 16 (now 60).
So, who's rich? The "wealthy" boob without a clue, or me, as I sit by the fish pond, reading Thoreau or Dante or Milton, in the sunshine as my garden grows by nature. The garden will sustain me. All the money in the world cannot buy that kind of security nor peace of mind.
You judge for yourself. Sure, I'd take that guy's $6 million, buy a big-assed piece of land and you'd never see me again. But this fool can't figure that far. I stopped working full time in 1999, because I always felt the rat race was just that: working just to pay bills. A fool's game. So, I don't have much in terms of money, but I have lots of physical assets which are either useful or valuable, tangible and intangible, no stress and much happiness.
Everybody talks about retirement, but what is the point. I know some idiots who retired and then got a job. WTF? My idea of retirement is what I do now. Work a little (I average about two hours a day), chill, drink, laugh. It's pretty easy.
OK, I'm rambling, but I keep thinking about that cryptic message by that IMF bitch (what's her name? LeGarde, whatever?) about the number seven and 7/20/2014. Having studied numerology (did you know it was invented by Pythagoras? Yep, that guy!) I see it this way: If she was sending a message, well, too many people caught on, and, yeah, something may have been planned for that date, but plans change, and, things seem to be going pretty good for the status quo right now, so why mess with it? Something may happen this Sunday, but it probably won't be as dramatic as anyone expects. I'm thinking it's all hot air. Personally, I'm going to a party.
Try to change your lifestyle. Be more self-reliant. Try not driving for a day, a few days. Don't watch TV. Cook for yourself. It's refreshing.
Your story becomes a lot different if you don't have that inheritance.