Today, here’s this from the San Francisco Fed:

In the long-run, however, consumption cannot grow faster than income because there is an upper limit to how much debt households can service, based on their incomes. For many U.S. households, current debt levels appear too high, as evidenced by the sharp rise in delinquencies and foreclosures in recent years. To achieve a sustainable level of debt relative to income, households may need to undergo a prolonged period of deleveraging, whereby debt is reduced and saving is increased.

Bingo.

On Zillow this morning there was a fathead complaining that one servicing lender was not modifying its mortgages in the way that suited him.  He wanted them to be modified according to the government’s Making Home Affordable plan, instead of the way the servicer preferred.  Leaving aside for a moment that he didn’t understand modification of any stripe, essentially he was complaining that a business was not voluntarily giving up enough money.

This is standard stuff, though.  Everyone is complaining right now, because everyone is a victim.  Boo hoo.  Woe is me.  It’s really quite difficult at the moment to find an adult to have a conversation with about mortgage finance.  I expect that.

But then, the fathead trotted out that mortgage lenders ought to be dragged through the courts like Bernie Madoff.  A week or so ago, a really smart financial planner decided to block me on Twitter because I asked her a tough question – specifically, isn’t it better for a family to have a shot at home ownership rather than being shut out of the process altogether?  Isn’t it better to have a home for a few years, even if that home ends in foreclosure, than never to have had a chance to own one at all?

Having previously rented a house for many years myself, I flatly reject the idea that my family would be better off if we had never gotten a 100% stated-income subprime loan, which is EXACTLY what we have now.  I reject the idea that we have been taken advantage of.  I cannot, in fact, see ANY POSSIBLE WAY that a sane person could contend that we are victims of something.

And here is this fathead arguing that the loan my family and I – and MILLIONS OF OTHER FAMILIES – consider a fantastic blessing is somehow a prosecutable offense.

Well, now I’m really angry.

I was a loan officer during the insane first two-thirds of this decade.  I personally made, and got for myself, 100% subprime loans.  I made option-ARM loans.  I made no-doc loans.  I participated in practically every part of the home financing extravaganza.  I was there, I did it all, and I don’t regret one second of it.   In the interest of full disclosure, I have now had three clients default on loans that were made to them, all of them for investment properties and all of them done, originally, AS investment property loans.  I still do not have a client that has lost his primary residence due to foreclosure.  My clients understood their loans, because I explained them in detail.  That’s what professionals do.

Regardless, even the BAD loan officers have something in common with the pros, and that is that the borrowers signed the bleeping documents.  With a few obvious and rare exceptions, every single person that is being foreclosed on right now knew in advance that he was betting heavily on a risky proposition.  There’s the celebrated NY Times financial columnist that is eight months delinquent on his house.  My heart breaks.  He’s still living in a very fancy house in a spectacular neighborhood.  How, exactly, has he been taken advantage of?

It’s like we have no ability to understand what hardship consists of.  Everything that doesn’t go exactly according to our most fevered dreams is somehow a tragedy?  Nobody’s life is “ruined” by getting to live in an unsustainably large house for two years until reality sets back in and we have to rent a condo.  But somehow, this is the end of all life on earth, to hear it told on the news.  Yes, there were people that were outright lied to.  This happens, and I fervently wish it did not.  But the overwhelming majority of people “caught in the subprime meltdown” got caught in the famous monkey trap, where they simply will not let go of the acorn so they can get their hand out.

This is now the lenders’ fault.  Never mind the pressure the lenders were under – don’t think I’ve forgotten this – to make sure everyone could participate in the American Dream.  Because, you know, it isn’t fair that some people can afford houses and some can’t.  So lenders came up with ways to extend credit even to people that had no business borrowing, because they knew they could lay off the risk, and besides, doesn’t real estate just go up and up in an ascending spiral forever?

Stupid, yes.  Evil, no.  Prosecutable, no.  Lots of people are hyperventilating about all this.  Just stop it.  You’re embarrassing yourselves.

You want someone to take responsibility?  Take it yourself.  Take responsibility for having too much debt.  Take responsibility for not having been conservative enough with your investments.  Take responsibility for signing loan documents you didn’t understand.  You’re trying to tell me you didn’t know that signing legal documents without a clear understanding of what is on them is stupid? Really?  You didn’t know?

Stop feeling sorry for people that lived in bigger houses than they could afford.  Here’s a tough question: would you rather live in a mud hut in the Andes or a 4200 sq ft house on half an acre in St Louis?  But wait! Before you answer, if you choose the house in St. Louis you’ll be foreclosed on after three years!

Sigh.

I don’t even feel sorry for our children.  I grant you that compounding the stupidity of saddling themselves with enormous debt, their parents are now electing politicians that think the best way to get rid of excess debt is to transfer it from those that incurred it to everyone altogether, sort of a tax on the sane (but then, that’s democracy, and that’s why it doesn’t work.  Ask the Athenians).  It’s okay.  Most of our children were in a fair way to being ruined by having everything they wanted whenever they wanted it, and they’ll grow up substantially improved by the idea that they might have to work really hard and save for a long time before they can have what they want most.  Hardship can be a blessing, if you handle it right.  I still have some confidence that kids will handle things right, even if their parents are, by and large, spoiled rotten.

This was going to be a short rant, and has turned into a long one.  I am not, really, depressed about our current situation.  I think we’re going to be fine, though admittedly my definition of fine is a bit different from that of most people.  But please, please, people.  Stop blaming the lenders.  Stop blaming the brokers.  Stop looking around for somewhere else to put the blame.

It belongs to all of us.