Where's The Breaking Point?

Posted by Karl Denninger 

Where’s The Breaking Point?

This is a serious question to all readers of The Market Ticker.

Where is your personal breaking point?

No, I’m not asking how far you have to be pushed before you “go postal” and commit random acts of violence.  That’s not a question to ask in polite company, even though for virtually everyone, there is such a point.

No, I’m asking how much abuse you have to have personally served upon you by the banksters and other scam artists in this country before you have had enough, and start doing unto the other guy – because he has done you.

As an example:

Banks no longer even pretend

The one silver lining is that the public is finally seeing how devious and untrustworthy credit card lenders truly are. When issuers limited themselves to beating up on folks with bad credit, it was too easy for the rest of us to dismiss their foul tactics as business as usual. Now that the schoolyard bullies are going after everyone, the need for putting restraints on the industry is ever more obvious.


We tried asking the government – that is, the law – to intervene.  The Fed was supposed to be the guardian of the system, remember?  The government and Fed both refused, bowing instead to the den of vipers and thieves. 

It is therefore up to us as citizens to make a decision on our own as to whether we will allow such conduct to stand.

How many of you will, in response to “rate jack” letter announcing your credit card now carries a 29.9% interest rate, when you are not a deadbeat, choose to intentionally charge that card up to the rafters and then mail the bank a picture of your middle finger instead of a check?

How many of you will, when given a “trial” modification on your mortgage that the bank refuses to convert in good faith to a REAL modification plan, will simply stop paying entirely, but NOT leave the house – force ’em to file the foreclosure and eviction notice, and live for free in your home until they do?  You will probably be able to stay in your house FOR A YEAR OR MORE, since the bank doesn’t want to ADMIT to the extent of THEIR loss!

How many?

Is this sort of action, if you choose to engage in it, “honest and fair dealing”?  Hell no.  It might even expose you to a lawsuit, although it’s damn hard to get blood from a stone and when you’re unemployed exactly who do they think they’re trying to fool with their threats of suing to collect their debt?

Is rate-jacking millions of credit card customers in bad faith knowing full well that the law is changing in February “honest and fair dealing”?  No.

Is refusing to process your HAMP modification – and don’t tell me they lost your paperwork when it was disclosed yesterday that not one permanent modification has been completed – “honest and fair dealing”?  Hell no.

So explain this to me America. 

Why are you dealing in good faith – and honestly – with a group of thugs who have demonstrated time and time again that they will screw you at every opportunity?

Why should you act with honor and integrity when they will not?

This isn’t just my opinion.  It’s the opinion of a judge in NY too:

Inequitable.  Unconscionable. Vexatious. Opprobrious.

These are just a few of the choice words a New York state judge used to describe the behavior of Indymac in a decision in which he wiped out the $292,500 sub-prime mortgage owed by a homeowner to the bank. 

What are you afraid of? Being foreclosed on?  You’re already going to lose your house.  May as well make the best of it while you can – why give them what you can, when you know where it ends?  These people have proved they are dealing in bad faith to my satisfaction – have they not proved it to yours?

Yes, you should get accounting and legal advice before you do things like this.  There can be consequences, even if only a ruined credit rating and pestering phone calls.  In some cases, especially if you have lots of assets you haven’t and can’t shield, the risks could be material.  So get that advice and figure out exactly how far you can go and what the consequences might be for you, in your personal situation.

The fact is that I can no longer, with a straight face, tell people they should “live to their obligations if they are able.” 

Not any more.

That implied part of the social contract only works when both sides of the bargain are acting in good faith in the main, and it is the rare exception to the rule when someone is behaving badly.

When you have a group of corporate oligarchs that will bankrupt you with wild abandon, selling you whatever they can get you to buy even though they know you can’t possibly pay, then screw you in every possible way even when ordered not to by the government (while the government refuses to step up and start prosecuting these clowns, insisting instead that you just bend over and take it) it is my considered opinion that your obligation to behave honorably has been rendered void.

I’ll change my opinion when the bankster executives have their bonuses clawed back all the way to 2003, they are locked up, and their businesses have been dispersed and closed.

Some sins, such as Catholic Priests playing “hide the sausage” with little boys in the Rectory, are in my opinion unforgivable.

What has gone on over the last several years when it comes to consumer abuse by financial institutions, and their utter refusal to repent and stop it, places them in this category.

As such The Market Ticker will no longer advocate that you do the honorable thing, as there is no honor among thieves. 

It is my considered opinion from this day forward that you should therefore exploit every lawful and stretchy-lawful means at your disposal to screw any financial institution to the maximum lawful extent.

To do otherwise is to consent to their repetitive acts of violation, and I cannot call what I’ve seen over the last two years “financial sex”.

I am compelled to call it what it is: financial rape.