Last Week's Controversial Investing Blogs

Last week set a record for reader emails and feedback thanks to a handful of controversial blog posts (speaking of which - why do people email instead of just posting in the comments?), which I wrote quickly over a cup of coffee and a book.

The first was called An Interesting Fact About Wealth Creation in the United States.  It explained that despite all of our problems, under the founding fathers, 90% of wealth was inherited whereas today, 90% of wealth is first-generation made (no inheritance, middle class people who make it on their own).

Some people simply don't believe it.  They continue to blame China or India, their employers, the people on Wall Street, the wealthy, the poor, the educated, the non-educated ... it doesn't matter.  To them, it is never their fault they are struggling.  Fortunately, this was a very small minority of the emails (after all, you probably wouldn't be taking your valuable time to read an investing site unless you were the type that wanted to take control of your own life, meaning you are part of a higher quality, self-selected audience than the general public).

This was followed by a round of blog posts on my personal site, where friends and family keep in touch with me.  Starting with And You Want Me to Feel Sorry for You?  It's Your Own Damn Fault!, Would You Please Stop Blaming the Banks?, and The Housing Crisis Isn't All Bad, I pointed out several things:

• You cannot complain about your finances if you are broke, facing the prospect of eating cat food, have no savings, and choose to sign a lease on a Lexus!  I'm sorry, but that is idiotic.  That is not society's fault.  Everyone else has to be responsible, make sure food is on the table for their kids, and pay their bills.  You don't have a right to drive an $80,000 car. This was in response to an Associated Press article detailing how the middle class is getting squeezed out of existence, yet the anecdotes were all from families spending obscene amounts on luxuries and almost always doing it on credit.

• No one made homeowners take out mortgages they could not afford.  My personal value system is such that even though I recognize drug dealers and prostitutes are a problem, I believe the person who makes the choice to partake of their services is the one to blame because we are all ultimately responsible for our own lives.  Why would I treat banks differently?  If you sign a document for an adjustable rate mortgage, it is your responsibility to know what it means.  You cannot blame anyone but yourself, even if the bank was a crook.  Why?  Because you didn't have to take the pen and put your name on the paper.  You made a choice.

• As Warren Buffett recently pointed out, for every $1 lost in housing value for an older family, there is $1 gained in the form of a lower purchase price for new households forming, such as younger families, college graduates, married couples, etc.  The housing crisis represents a massive inter-generational transfer of wealth from those above 35 and above to those who are younger than 35 years old.

• Despite all of the cries of "socialism" by some, 90% to 95% of American households pay the lowest tax rates since Ronald Reagan was President thanks to changes in the tax law.  The top 1% of tax payers are only paying 35% compared to the 50% that was in place for a vast majority of Reagan's time in the oval office.  In 1987 when he cut rates on the wealthy, it fell to 38.6%, which is still substantially higher than today's rate.  Given that I don't believe Reagan was a socialist, I don't believe Obama is a socialist.  Even if rates on the wealthy were to go to 39%, which I would hate, it is still a far cry from the rates that have existed for a vast majority of the 20th century during the greatest economic expansion in the history of humanity.