Living in the World
Dream or Opportunity

The recent mortgage crisis that has lead to the credit problems in the world economy has been based on achieving “the American Dream.” The theory is that everyone in America is entitled to be a home owner. From 2002 to early this year, homes have been sold to many people in many ways. Unprecedented home ownership has lead to unprecedented financial problems.

Smart people bundled questionable loans, made them into securities and sold them all over the world. By keeping the prime rate low, the Federal Reserve made money cheap to obtain. Together [cheap money and securitizing bad loans] the so called “housing bubble” was created. The bubble burst and the entire world has been splashed with red ink. The stock markets have tanked, millions of investors have lost the lion’s share of their retirement investments, job losses are rapidly increasing, the government is madly printing money and increasing national debt to try and stem the tide. To date, it has had very little impact. The “American Dream” has become the “American Nightmare”.

It seems like an appropriate time to revisit this idea of home ownership as “the American Dream”. A dream is, after all, something that is not real. It may be a subconscious idea of what the dreamer wants to be real. Yet, is does not usually comport with the way it is. And, when you think about it, that is the housing crisis. Who would actually believe that non qualified individuals could actually be homeowners? No docs, no down payments, no income, variable low rates, interest only…all these ideas could only seemingly work in an artificial environment. That environment was the concept that the housing bubble would never bust. Sure you can’t own a home. But, we can get you in a home with unrealistic terms. And, when the good terms expire, you can refinance using the increased equity value that your home will gain during the time you hold the original loan.

The only problem was that values of homes plummeted. When the “good deals” expired, instead of a higher value, you had less equity than you were obligated to pay. The dream died, as dreams always do when you wake up. But, unlike dreams in your head, real life consequences ensued. And, the consequences were visited on us all. The “American Dream” lead to a “Worldwide Nightmare”.

The United States used to be called the land of opportunity, not dreams. Opportunities are based on substance—education and employment, for instance. Obtain a good education, get a job, earn money and save for a down payment, then you can buy the home of your “dreams”. The dream is achieved by taking advantage of the opportunities. Home ownership was always looked upon as a tangible achievement by industrious, hardworking folk who made a dream tangible.

In the past half dozen years, homeownership became an entitlement. Congresscreatures seeking votes, unscrupulous lenders seeking wealth, and greedy, envious people who wanted a home they could not afford, combined to concoct schemes that really were dreams.
Opportunity provides access to knowledge, self discipline and virtue that can be translated into rewards, financial and otherwise. The attempt to hand out rewards without effort equals a dream turned nightmare. It just does not work. Consider welfare payments, individual and corporate. What have they accomplished over the years? Dis-incentive and stagnation result. Recipients of the government largess rarely move on to personal responsibility and accomplishment without the need of government help.

How do we escape this mess? It all starts with the government. As a social institution, the government should promote opportunity so people can achieve their dreams. It is true; some will not take advantage of the opportunity. But, that is the individual’s failure to cultivate the opportunity. Fulfilling dreams through magical schemes that seem impossible is impossible. Trying to have dreams substitute for opportunity and hard work is a dead end process. Let us make the US the land of opportunity again. Please Uncle Sam, no more trillion dollar nightmares that our grandchildren will be paying. Give us opportunity not unrealized dreams.