Millennials, Mortgages and Government Grizzlies - The Libertarian
Institute

https://www.libertarianinstitute.org/blog/millennials-mortgages-government-grizzlies/

April 13, 2017 - By Mencken's Ghost

You may have heard that millennials aren't buying homes because they are
buried in tuition debt, due to the government driving up the cost of
college.

You also may have heard that Wells Fargo Bank was exposed and fined for
a scam of setting up accounts for customers without their knowledge, in
order to meet corporate goals.  And like other banks, it gave mortgages
to unqualified borrowers during the housing bubble, being encouraged to
do so by the government, resulting in a housing crash and a bailout for
banks.

Hold those facts for a moment as I relate a personal anecdote that, as
you will see, speaks volumes about the nation's economy and politics.

My 26-year-old son is a millennial but is so qualified to buy a home
that he could pay cash for one in his price range if he wanted to,
thanks to having no debt, substantial savings, a high FICO score, two
engineering degrees, a good job with a Fortune 50 manufacturing company,
and excellent career prospects.

Yet when he recently asked Wells Fargo to pre-qualify him for a 15-year
mortgage with a 30% down payment, they were reluctant to do so.

Why?

Well, according to the geniuses at Wells Fargo, he doesn't have enough
debt and monthly expenses.

I'm not kidding.

You see, he has only two recurring monthly expenses:  One, he pays off
the minor charges on his credit card each month so he doesn't accrue
interest charges; and two, he pays $400 a month to a coworker to live in
the coworker's house.  The frugal acorn didn't fall far from his nutty dad.

Wells Fargo told him that his chances of being pre-qualified would be
better if he had at least three recurring monthly expenses and higher
credit card bills.

In other words, if he'd spend more and save less, he'd be more qualified
for a mortgage.

It's the new American way.

It's not a good way.

Total credit card debt of all Americans just hit $1 trillion.  Auto loan
debt had hit the $1 trillion level earlier in the year, and so had
tuition loan debt. That makes $3 trillion of total consumer debt, or
$12,244 for each adult American, or $25,714 per household.

Economists say this is a good sign for the economy, as it shows that
consumers aren't afraid to spend.  Economists probably said the same
thing about indentured servitude in colonial times.

Our national government is a role model—a bad one.  The national debt is
$19.9 trillion. This comes to $77,551 for each American adult, or
$162,857 per household.  (The national debt does not include the $50
trillion or so in unfunded liabilities at the federal, state and local
levels.)

Interest payments on the national debt for the first six months of
fiscal 2017 were $152 billion and are expected to rise considerably in
coming years.

Taxes to pay for all of this government profligacy are the third largest
expense for households, coming after only expenses for housing and
cars.  The cost of medical care/insurance is several steps lower than
taxes, although you won't hear this from the propagandists in the
propaganda ministry of the media.

Most people don't realize how high taxes rank, due to the government
kiting scam known as withholding, in which taxes are taken from pay
before the pay is even given to employees.   A surefire way of reducing
taxes would be to stop the kiting and require people to write a check to
the government each month for their taxes, just like they do every month
for house payments, rent, utilities, and car payments.  Pitchfork sales
would skyrocket.

Of course neither Democrat nor Republican politicians would ever stop
the kiting.  They are part of the same predatory government that
established a consumer protection agency with unconstitutional powers to
supposedly protect consumers from financial predators.  That's like
establishing a federal oversight agency of hungry grizzly bears to
protect sheepherders from having their sheep devoured by wolves.

Those who make a living from wheeling and dealing in government and
consumer debt are doing great.  The indentured servants who are told
that it's their civic duty to spend and go into debt aren't doing so
great.

In 1962, the top 1% of income earners accounted for less than 13% of
total national income.  At the same time, the bottom 50% of income
earners accounted for about 19% of total national income.  Today, the
top 1% of income earners account for about 19% of total national income,
and the bottom 50% of wage earners account for about 13% of total
national income.

In short, the top 1% and bottom 50% have switched places in terms of
their respective shares of national income.

This switch is a reflection of the "financialization" of the economy.
That's a fancy word that means that those who move money around are
doing better than those who make stuff.

This is not a sustainable social arrangement.

Is it any wonder that working stiffs who aren't on the government dole
voted for Donald Trump?

Paradoxically, Trump has benefited personally from financialization.
Using borrowed money, he built casinos that took money from
working-class patrons and built swank condos and golf courses that
catered to plutocrats.

Meanwhile, the Democrat Party professes to care for working stiffs while
being in bed with Wall Street and doling out money to slackers who don't
work.

Working sheeple are being devoured by the very same grizzlies that they
elected to protect them.