Archive for February 6th, 2008

The Walk-Away Society

I’ve seen several stories like this one over the past couple of weeks, about the number of people who are simply walking away from their home mortgages. Having signed on to variable-rate loans and extended themselves to and perhaps a bit beyond to manage the minimum payment, they find themselves in serious trouble when the rate goes up. Or the declining housing market has made their house suddenly worth less than the amount they owe. A lot of them, according to this article, were speculating, and got caught holding the hot potato when the game came to a halt.

This seems to be happening more and more, in all sorts of situations: people gamble, and then if they lose, they refuse to pay up. It isn’t only the borrowers in the housing situation, as I understand it. Lenders made bad loans to the tune of billions of dollars, other investors bought the loans knowing what they were getting, houses of cards were built, and now that they’ve come tumbling down nobody wants to be held accountable. CEOs, hired for millions per year which we’re told is justified because they will make their companies more profitable, make disastrously bad decisions or perhaps engage in actual fraud, and are sent on their way with an extra ten or twenty million in their pockets. You can multiply the examples plentifully, I’m sure.

Is it any wonder that we see it in private life as well? Girlfriend pregnant? Walk away. Ok, the girlfriend can’t walk away, but she can have an abortion. Marriage not what you hoped it would be? Walk away. Etc. Which came first, the private or the public behavior? I don’t know. One root of the syndrome, though, seems to be a belief that no obligation is really binding if it’s really inconvenient. And a sort of market-based individualism, which believes that in the end it owes nothing to anyone if it cannot make a profit on the deal.

Maclin Horton

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