Subprime With Good Credit, It’s Still Just Good Old-Fashioned Greed

Both my main man Barry Ritholtz and my Atlanta hero Trader Mike have linked to this Wall Street Journal Article about people with high credit scores getting into subprime loans.

The WSJ describes these Poor Victims as being “caught in the subprime trap.”

I call bullshit. These people are caught in the greedy yuppie peer pressure materialism, keep up with the Joneses, entitled but not responsible trap.

Easy credit opened the gap between what we could afford and what we could qualify for. Even easier credit expanded that gap. Zero interest for 60 months on that new car (go ahead and get the leather and navigation system now). Six percent for 360 months on the new house, or better yet, four percent interest-only with nothing down so you can get into a house you can’t afford. Whether someone takes the bait is their decision.

But the consequences are theirs also. Well, should be theirs. Actually, now they’re becoming mine. Those poor victims.

My credit score is over 800. The house I’m sitting in right now is cheap, and paid for. The house I bought in October cost less than I make in one year. I don’t have to rush as I remodel it. I plan to pay it off before most people would pay off a new car. And then, thanks to these “unforeseen” developments in real estate, I might just buy myself a larger house for half of what its previous owners mortgaged. Those poor victims.

I can grill ribeye steaks for my girls anytime they want, while my friends’ kids are home alone on MySpace chatting with a pedophile because their parents are working second jobs to make the note on the mansion, only to come home and eat Ramen noodles, or else eat out with the Joneses and put it all on the credit card. Those poor victims. (The kids, I mean).

A man is rich in proportion to the number of things he can let alone - HD Thoreau.

The American Dream has run amok. I wrote a post about that, and real estate, almost 2 years ago. But this is all a recent development, a surprise, right? Here’s that post.

We’re all grown up. People should make their grown-up decisions, and take the consequences. Or try to dump them on responsible dummies like me. Whatever. But Jesus, stop all this crying and whining- it’s pathetic.

And as for Alan Greenspan and John Maynard Keynes: Rappaccini! And is this the upshot of your experiment?


8 Comments

  1. Subprime With Good Credit, It’s Still Just Good Old-Fashioned Greed said,

    December 4, 2007 @ 6:40 pm

    […] Read the rest of this great post here […]

  2. QUIKTDR said,

    December 5, 2007 @ 11:33 am

    Greetings,

    I have been “playing” with Ameritrade’s Strategy Desk and I inputted your March, 2007 formula for R2 Strategy. When I look at various universes, e.g., DJ30 and NAZ100 results are all negative not big positive as you indicated.

    Is there a variable I may be omitting?

    Thank you in advance!

  3. Will said,

    December 5, 2007 @ 10:39 pm

    Hi QUIKTDR - As stated in my post that you refer to, and as stated by TradingMarkets in their article (which I also linked in that post), the “R2 Method” was developed for the S&P 500.

    To apply that method to the Nasdaq or other groups of stocks would be like putting mudgrips on a Ferrari. Doesn’t mean they’re bad tires, it’s just not the setting for which they were developed, and so they are very likely to underperform.

    Please consider the “R2″ method, as I said in the “Conclusions” section of that post, to be “an excellent starting point for experimentation” and not a ready-to-use system.

    As you may have read in my subsequent posts, I developed a personal system based on the RSI(4) over the ensuing months, and I now use it as one of my primary references for any trade. There is much to be gained from exploring short-period RSI patterns.

    Cheers, and thanks for the visit.

  4. ed said,

    December 6, 2007 @ 9:46 am

    Amen!

    During the period of 2002-2005 I kept noticing the number of BMWs, Range Rovers, Jags etc exploding. I kept wondering to myself how the hell are these people affording these cars. I was making $100K and I couldn’t afford a $75K car. And I know that my neighbors made nowhere near what I made. Yet here they were with new luxury cars, new boats, new RVs.

    The secret was the house as ATM. Get a HELOC, take out $50K and bam there is your new BMW. Works great if house prices keep rising forever. Now that has stopped and all these idiots are on the verge of losing their house.

    But not to worry Uncle Sam to the rescue. This bailout will once again reward bad behavior and punish good behavior. It is a disgrace to capitalism.

  5. QUIKTDR said,

    December 6, 2007 @ 9:06 pm

    Will,

    I appreciate your response and I continue to work with RSI2 and notice numerous signals on 15′ chart.

    The inherent problem I am now encountering is too many signals. Therefore, I am analyzing 30′ and 60′ which won’t pump out as many signals but will reflect longer trends.

    I am still working on a viable short-term trading strategy using a Volatile Stock list.

  6. lotsofpeoplereadyourblogkeeppostingplease said,

    December 6, 2007 @ 9:17 pm

    QUIKTDR
    I had great success backtesting the R2 using close of day for data. I am not sure it would work so well on a shorter time scale, but good luck!

  7. QUIKTDR said,

    December 7, 2007 @ 8:55 am

    lots… thank you for your input. Do you use it on stocks, indexes or sectors to achieve positive results?

    I use TC2007 and would like to try Ameritrade auto-trade on small scale.

    How does Strategy Formulae compare with TC2007 for ease of use and results?

    Have a great tdg day all !

  8. lotsofpeoplereadyourblogkeeppostingplease said,

    December 12, 2007 @ 12:20 am

    QUICKTDR,
    I used SPY. I dont think this will work well for individual stocks. Just play around with it and find something that works well for you. I only use Strategy Desk, so I cannot compare to TC2007. Best of luck to ya.

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