You think you’ve got it bad?  You probably don’t but you know someone who does.  If there is one thing I’ve learned in my time at my bank, its that the wealthy are no better off than the rest of us.  Of course we know all the BS about having more money not making you happier.  Its true I’m sure.  But I find it hilarious that the wealthy fall for the same pitfalls the “riff-raff” does.  

Just because I have $13 million in the bank doesn’t mean I know how to use it.  When you have a banker, he’s going to tell you to get a loan for that house and invest the $13 million.  Being strapped for cash but not wanting to cash those investments out means you get a home equity loan too.  Once the market tanks and real estate falls with it, you’re screwed just like the rest of us.  Oh that banker?  He made money on the investments, the first loan, and the second loan.  You were probably better off to just buy the house outright, but then the banker wouldn’t get paid on anything.  Poor banker.

I’m exposed to the complicated relationships these bankers set up for their wealthy clients.  The client benefits but the relationships are designed to be so complicated the client will always go back to their banker for any needs.  But I digress.

My post today is about real estate.  The wealthy are in the perfect position to preserve their wealth and even grow it, mostly so they won’t get screwed when the money stops flowing.  If I make $50,000 a year, I might buy a $150,000 house.  Conservative maybe but if the cash flow runs dry I could be trouble.  Now if I made $500,000 a year, I could afford a $1.5 million house.  Or I could be smart and get something cheaper, say $750,000.  That way I know I can afford it and if the cash runs dry I’m not nearly in the same trouble as that loser that makes $50,000.  But since Americans are just as stupid in the upper class as they are down here in the poor house, they buy houses they can’t afford.

CNN Money put together a slide show of a few large house that have gone into foreclosure.  There are some selling for 40% less than they were valued for.  Silly rich people, foreclosure is for poor people.  

Slideshow

Related posts:

1. Death and Taxes?  Only if You’re Poor, The Rich Don’t Pay Taxes
2. Weakon 151: Banking Industry Explained, Part 2
3. Weaky #7: Extreme Makeover: Foreclosure Edition
4. Supplement to Weakon 231: What Went Wrong
5. Weaky #10: Neverland

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