Michael Pento: Therefore, according to Maxine Waters, it would behoove all those who are current on their mortgage to stop paying

We have become a nation that punishes

success and responsibility and

rewards stupidity and failure.

Michael Pento

10/13/10

As the U.S. currency continues to crumble today and marches towards making a new low, Congresswomen Maxine Waters (D-CA) illustrated clearly today on CNBC why the country is swirling down the bowl. We have become a nation that punishes success and responsibility and rewards stupidity and failure.

The Liberal Congresswomen said in an interview today that there should be a halt to all foreclosures and that people who are in arrears on their mortgage should receive both interest and principal reductions before a bank is allowed to foreclose on a property. In her words, “It’s proven by the fact that you have millions of people who are in foreclosure who never should have been in foreclosure. This just didn’t happen because there were a lot of irresponsible people. Think about it. This is unprecedented, that this many people, all of a sudden, would be in foreclosure.

What went wrong?

What went wrong?” she asked CNBC anchor Mark Haines. “I’ll tell you what went wrong. These exotic products that were put on the market tricked people into mortgages they could not afford. They had mortgages that reset that they never anticipated would reset, where the interest rates were double, where their mortgage payments were double. They never anticipated that. They didn’t know what they were getting into. This is not just some irresponsible homeowner. This is massive fraud…On a macro level, policy for the whole country. I still don’t understand how you get around the moral hazard without just simply saying all of the contracts that are out there are not worth the paper they’re printed on.”

To that I say what moral hazard is she talking about? The moral hazard of rewarding people for buying more house than they could afford and for stretching their budget beyond their means…isn’t that what she should be talking about.

You can listen and watch all of her drivel HERE if you can stand it.

Therefore, according to Waters, it would behoove all those who are current on their mortgage to stop paying because there is the highly likely prospect of having a lower mortgage rate and lower outstanding balance if you do. And if you are foolish enough to keep paying, your reward will be a tax bill incurred from bailing out your indigent neighbor and irresponsible commercial bank.

Michael Pento, Senior Economist at Euro Pacific Capital is a well-established specialist in the “Austrian School” of economics. He is a regular guest on CNBC, Bloomberg, Fox Business, and other national media outlets and his market analysis can be read in most major financial publications, including the Wall Street Journal. Prior to joining Euro Pacific, Michael worked for a boutique investment advisory firm to create ETFs and UITs that were sold throughout Wall Street. Earlier in his career, he worked on the floor of the NYSE.