10:01 AM, Saturday, March 14th, 2009:
I tend to stick to all things "Journey" on here 'cause there's usually very little new I can offer. The one big exception was the politics last year - but even that had more to do with my own excitment rather than any real perspective. However this recent Stewart vs. Cramer debate has been fascinating to me and I really don't see anyone taking my view. As well, when I originally wrote about this 3 years ago I had to lock the entry because I completely bitch-slapped the mortgage company I worked for and unlocked it a year later when they went out of business. So several of you have never seen this video or what I had to say. The point of allllllllllllll of this is that Stewart is just as wrong as he is right and this issue is much more complicated than anyone is expressing (that I've seen/read/heard). So sit back and get your learn on. :-)
This video was done when I had just gotten the news about America's Got Talent, was finishing up "Let's Bomb Iran" and was losing it at work. I didn't belong there, I was no longer helping people - the market had shifted and I was at a shitty company that was clearly taking advantage of people and I simply, couldn't, do it. I actually love this video. Years later I look at it and I'm proud of my heart. That and the "Mother fucker we LIVE in an IGLOO" line was very well deliverd. :-) Anyway, what I wrote in the entry has recently been described as "hilariously accurate" and, man - I really did nail it years before all this shit came down. I lay it out so matter-of-factly, exactly what was happening and why the banks were doomed:
The leads are gathered by a telemarketing crew and it's actually the coolest part about the job. You get a packet on your desk of someone who has already been contacted and is presumably interested in refinancing. Like any leads there's good and bad - but that's a great start. Except for one thing: Every single lead refinanced in the past 3-4 months. Every one. They're subprime borrowers who are always in over their head and they get preyed upon by broker after broker and end up using every cent of equity they have in their house. The best call you could make to these people is to tell them to stop answering the fucking phone and get their shit together. And truth be told, I've made that call - several times. Some of the people are actually A-paper that just financed into a 30 year fixed and I'm supposed to give 'em a neg-am? LOL. And people are doin' it! A BUNCH. I just can't and won't do that.
The kicker in all this is that they try and brainwash the sales staff weekly about how to "Sell" which is literally how to "lie". For example. If a guy pays $400 a month for his car, $300 a month for his wife's car, has a minimum payment on 2 credit cards of $150 and $75 (but pays $400 on both to knock 'em down), and a 1st mortgage at $2400 - we're told to add that up to $3500 and get him to agree he pays $3500 just on loans. Then you give him a neg-am loan that rolls all the debt into one with a minimum payment of $1800. Then you tell him you save $1700 a month and you dont have any other payments! It's a no-brainer! Yeah it's a no-brainer alright. Especially considering you've just amortized 2 credit cards that may have only been $2000 total for 30 years. No brain needed for this deal. Then you throw in that you "get to skip your first payment! So you save $3500 immediately and $1700 each month thereafter!" Bullshit of course the first payment is just in the fucking loan amount. "Then you tell 'em what they can do with that extra money! Be sure to find out their hobbies so you can turn those savings into tangible things like a new car, or a trip to Hawaii!!!" And I actually believe a lot of the salespeople are so stupid they believe this - and speak with utmost sincerity when completely ripping these people off. It's like being in a cult.
All of this while charging a minimum...a minimum of 4 points. Sometimes the full limit of 5 points. 2 in the front 3 in the back. It's unREAL. And since we only make 25%, if you don't charge at least 4 points you're gonna be hard pressed to make much. But that's if you can even stomach thinking of yourself while you're putting these people so upside down (considering they refinanced THREE MONTHS AGO) that they will be butt-fucked when the market turns (it's gonna get ugly really soon 'round here). It's horrendous.
I've done 2 loans in the 2 months I've been here and I'm sure I won't do another one. I was a 8-10 guy at the first place (when I was actually helping people). The ones I've done here have been people that if they don't act quick they will lose everything. If they take my loan and CHILL ON THE CREDIT CARDS for a bit, they should be fine - but a quick scan of their credit report and you know that ain't happenin'. So although I'm technically helping them - in reality I'm just one more chunk away from their equity before the foreclosure. These stupid ass banks with their neg-am loans - this will bite them so hard. No way we're not in a full recession in 3 or 4 years. The government is oblivious to how bad this is.
And it actually bit them harder than even I thought. But I nailed the recession part. We are certainly in it full-bore.
Now we come to the Stewart vs. Cramer feud. I have to tell my biases up front. Love Stewart, hate Cramer. I think Mad Money is the most obnoxious program I've ever seen. I'm not even slightly exagerrating. That show makes me feel like I'm 68. Every second I've witnessed I'm literally thinking: "Why does it have to be so loud? Why are there so many graphics on the screen? Does he have to yell so much?" But whatever, it works for him. And The Daily Show, I mean come on... it's brilliant.
When Stewart first slammed CNBC I actually had mixed reactions. Santelli? Of course - that was a bullshit move he pulled on the floor of the stock exchange and completely hypocritical to whine about bailing out homeowners after the bank bailouts. I personally feel several homeowners DO need to lose their homes just as I feel several banks DO need to fail... but it's not a black and white issue and those acting like it is don't know what they're talking about. Again, I did some of these loans and trust me - these people knew what they were getting into. They were way too risky and they failed. That's a free market. I was responsible and paid a lot more for a 30 year fixed... and I'm sitting in my house right now.
My problem with Stewart's initial rant on CNBC was that it undermined just how difficult it was to forecast the Bear Stearns collapse. You highlight one call Cramer made out of thousands and it becomes his entire career as a pundit? It's a little nearsighted. No matter how annoying the man is, I don't believe he is inept. It was never his job to do investigative journalism... he's not a journalist. The CEOs lied, everyone got completely hoodwinked and he actually nailed it in Thursday's interview when Jon said "Why would you ever believe a 35-1 leverage would work out" (paraphrasing) and Cramer replied: "'Cause from 1999-2007 it did.". That was the system, the problem is the lack of oversight and complete eradication of regulations allowed those banks to hide a shiiiitload.
The point Stewart does have, in spades, is the lack of the business media's motivation to BE journalists. That is a gigantic issue. It might be the biggest loser with this whole shift to entertainment news. We can bitch all we want about the obvious bias of Fox News and MSNBC... but when those covering the business world are more concerned with making things "look good" we alllllllllllll suffer.
Then came the "Cramer Tape". Whew. The same day he is to appear on The Daily Show, a tape comes out of Cramer admitting that as a hedge fund manager he manipulated stock prices and that it's just part of the business. Suddenly Cramer is an insider who is thinking only of big business, not the little people. Believe it or not, I completely disagree - and you have to really take your emotion out of this to see why. If I'm gonna get advice about Wall Street, guess who I'm gonna talk to. The guy that understands how it works. The guy that was/is in it and can read what it means. I am not gonna sit here and say:  "How unfair! You're manipulating stock prices? You're using clout and power to change the market?" Who doesn't know that? When has it EVER been an even playing field? The rich and powerful stay rich and in power. I want to understand how it works. Which is what made him a good pundit... and which is why I believe him when he says the Bear Stearns collapse was a shock. What would his motivation possibly be to say BUY when 10 days later it goes from $60 to $1? It's his reputation on the line. Business is not a place to get caught up in "well, that's not fair". Its the government's job to set the rules and regulations... and then it's your job to find a way to meet your goals within that world. I want a guy managing MY shit who knows those rules and regulations and knows every possible way (within the law) to maximize my earnings. If you're gonna be angry at anyone... you get angry at a government that was in bed with big business to such a degree that it turned a blind eye to something as fucking obvious as repackaging and reselling mortgage loans as "A-Paper" when 30% of the package was neg-am loans. Fucking. Duh.
My biggest kudos to Stewart however is not just the balls to do it (no matter how simplistic he painted this incredibly complex issue to be) but the way he talks. Him saying: "This makes me fucking livid." is what we ALL want to say to these people but it's always "polite" when other broadcasters do it. Stewart is not polite... and it's incredibly refreshing. However, the whole "this is not about you..." line made me want to punch him. And I was so pissed Cramer didn't attack him back with: "You're slamming me, asking me to defend myself... and then when I DO you say it's not about me? Fuck you." It's a completely manipulative move and I've seen Stewart do that before. It's so disingenuous and faux "populist" and really, really upsets me.
And that's the thing... this is completely "gray". There are shades of white in this entire debate, but it gets so clouded by black bias it's hard to see. The more you learn about it, the more complicated it gets. Im happy Stewart brought the issue to the forefront but it's slightly akin to pointing at the weathermen for not forecasting 40 days and 40 nights of rain while Noah went a-sailing. At some point you need to realize that this is kind of a HUGE event and that it goes far deeper than weather patterns. Yes, CNBC has far more effect on the market than the Weather Channel does on weather patterns... but in the end - the blame lies with the corrupt CEOs and the inept government.
And finally, whether you like it or not Mr. Stewart... you've now entered an entirely different realm of TV. Gone are the excuses you had on Crossfire in '04 for why you gave Kerry a powder-puff interview. "We're preceeded by puppets making prank calls" is no longer gonna fly. You are capable, you just set the precedent, and you are gonna get RAILED if you don't continue. You've added an exponential amount of pressure to your show...
...and we all can't wait to watch it. :-)