The Road to Serfdom 2.0

Serfdom--the socio-economic status of unfree peasants under feudalism. It is a condition of bondage or modified slavery which developed primarily during the High Middle Ages in Europe. Serfdom was the enforced labor of serfs on the fields of landowners, in return for protection and the right to work on their leased fields.

The "American Dream" has been reduced to nothing short of a nightmare ending in serfdom for those unfortunate souls who are buying the bs being sold to them by our government and it's propaganda machine, the media. Put on your thinking cap and consider what has happened in just the past 5 years and decide if this is hyperbole or a clear assessment of America as we enter 2010.

Everyone who could fog a mirror was given a mortgage during the run up to the real estate bubble bursting. The bubble, as they always do, looked to be a one way/can't lose bet luring more people to go into debt to purchase real estate than every before in the history of the world. Simple enough, sounds like a recipe for pain for all parties as the bubble bursts. Those that lent the money should be left with loans that don't perform and collateral that is worth much less than the debt associated with it. This should lead to bankruptcy for many of these lenders and massive losses for the rest. Those that borrowed should be left with properties that are underwater that they can no longer afford to keep. Pretty simple stuff, bubbles are nothing new.

Here's where the story gets interesting. Those lending the money are magically bailed out. Not only are they kept from feeling the pain, their smaller competitors are forced out of business, increasing their market share. These come to be known as "too big to fail" entities, which is literally true...they are so big that they own the politicians of America. These too big to fail entities now have been shielded from their side of the bad business decisions they made during the bubble.

These "too big to fail" entities, along with the politician's whom they own then magnanimously offer to extend underwater mortgages, adding more years to the term, or even charge lower interest rates to keep those on the other side of the bad decision in the property. Additionally they attempt to convince these debt holders that it is both a moral and patriotic duty to sacrifice their family's financial health and future to stay in the property.

The property is worth so much less than the debt on it that the "owner" of it will never have equity in it. Serfdom 2.0, millions of Americans living as sharecroppers or serfs maintaining the roof, the yard, paying the taxes, and assuming all the liability/expenses for properties that they never will own. While they could move across the street, rent a comparable house and save tens of thousands of dollars a year by doing so. Of course that would be immoral, unpatriotic, and more importantly would damage their credit score which would hinder their ability to increase their indebtedness even more.