TODAY'S CARPETBAGGERS

About 140 years ago, following the Civil War, Northern businessmen flocked to the South with carpetbags, prepared (so Southerners thought) to loot and plunder the defeated South -- to the victor belongs the spoils. These carpetbaggers bought up the land at huge discounts to the land's former value, and then expected to reap huge profits in cotton with the help of the former slaves, now free men. Most of these "businessmen" never developed a love for the land, like its previous owners had from birth, and subsequently hung on to the land just long enough to turn a nice profit. They took their quickly gotten gains and headed elsewhere, changing little, but upping the cost of business for everyone else who followed them.

Is this starting to sound familiar?

Today's carpetbaggers have not been trading in land. Today's "land" is now virtual real estate in the sense that what is being traded is not the physical property but the mortgage attached to the property - the financial instrument. Today's carpetbaggers went to Wall Street with bags full of mortgages all bundled together, and generated huge commissions based upon the cash flow assumed to be forthcoming from these mortgages. Where the banking community erred was in assuming that there would be an endless supply of able buyers supplying these cash flows. After all, during the period when all this creative financing was making lots of people millions of dollars, if a buyer had trouble meeting his payments he simply turned the property over to another buyer and more paper was created. This paper took the form of second and third mortgages and balloon payments, and a plethora of new and esoteric financial instruments, all based on a forever upward price spiral in real estate. After each "turnover" everyone involved helped themselves to profits and commissions, and even cash back to the purchaser on closing.

Where this ends up is where we are now. The carpetbaggers have sold their bundles of mortgages and moved on with their millions (billions), and the rest of us get left with their empty bag. It is too bad that the money these financial geniuses and masterminds made isn't as virtual as the financial house of cards they built and are selling to the taxpayer. What sickens me is the fact that all the phony profit these people made is being turned into real money as we speak, by the government. Private profits turned into public losses. For shame, for shame.