More Baseball Stuff: Steroids & Subprime.

by Chris Johnson

Instigator, anthill kicker.

Author website

In 2003-05, we had the boom.   We all know that now, and it basically is what it is.   The picture links to the (in)famous TIME magazine cover story “Home Sweet Home,” where the ‘boom was on,’ and the whole of the market was talked about.   There was a little bit of a caveat in that piece but not much.  The message was: thank God for Housing, because without it, the Bush recession would be a reality.   Lenders, Lend, Realtors Sell, and everyone take advantage and drink from the neverending fountain of wealth.

The bubbletalk had been swept under the rug, and we ALL were selling and we ALL were happy about some good news to take place of the dot com bear market that we’d experienced.   We had a sacred duty to produce and keep spending, and encourage everyone to do the same thing.  We were honored as post 9/11 patriots.  .  Everyone loves a winner, and this industry was winning.   Nevermind the fact that anyone who took up space could get a great rate on their mortgage—Realtors were actually gaining in esteem.

The 100% investment loan was available to anyone with a 620 credit score.  And Barry Bonds hit 73 home runs.

Everyone looked the other way and pretended the future wasn’t coming. 

We’ve talked a little about baseball lately, let’s turn the WayBack Machine to 1998.  Remember when Barry, Sammy and Mark were heroes?   Mark and Sammy saved us all from the strike, and made baseball fun again.   We got to watch everyone send 500 foot moonshots off of expansion diluted middle relief pitching, and it was good.

The thrill of that summer is still unforgettable, when BOTH Sammy and Mark broke Marris’s longstanding record and were briefly tied with 62 home runs, we were all enthralled.  The very Ruthian nature of their achievement made it a joy to resume our love affair with baseball.  Mark and Sammy hit 70 and 66 home runs that year.  Ken Griffey Junior’s 56 was an afterthought.   

Ten years ago, these achievements were real.  Now?  Steroids were to blame, the hits weren’t real, the fun didn’t really happen.  The memories of Sammy’s blown kisses are bittersweet now.  HOW DARE THEY FOOL US ALL?  I still remember waking up every day in June to see that Sammy had launched another home run.  And that memory is as fictional as the wealth that we earned in the good years.

Barry Bonds was the coda.  The 100% LTV investor loan that was came late to the party, and made us all realize that something was indeed rotten in Denmark. That was the signal that everything that had happened before was a sham.   That every record should be called into question.  His 73 home runs a year later let us all know that we were in a bubble economy.   

Still, the owners took the money with greedy, giddy fingers.  And they had to know.

The Moral Outrage:

Right now our industry has everyone clucking and wagging their finger at us.  We held up the economy and we were heroes.  But when the economy went south, how DARE we try to produce?  How DARE WE MAKE a living?   We are criminals, right?  Predators, even.  Our industry’s achievements from 03-06 were HURTING our country.  We should all be ashamed!  (This is what many would have us believe).

Every time you make a buck in this industry, the presumption is some poor sap has been sucked into a subprime-adjustable-option arm. 

I knew—from living in Ohio, a market that never really boomed or busted  that hard—that the bust was coming.  I think a lot of mortgage lenders did.   When a stack of wholesale reps 4 deep were fighting to lend money to a 570 borrower that was 19 months out of an FHA foreclosure, you had to see that this wasn’t sustainable.   A tiny price slowdown becomes a big drop.   The appreciation that saved people in California and Flordia didn’t happen in study Ohio, so we had our peak foreclosure years early, maybe even kicking off the scrutiny that slowed everything down. 

Because lenders pushed Ohio off the teet a year early, Ohioans had to adapt survival skills to make a living in this market.

What should we have done differently?  A baseball player says, hey, if they’re gonna juice the balls, and put clubhouse trainers that are connected to BALCO in every dugout, why not swing for the fences and see how far we can take this thing.  Is it intellectually honest to have moral outrage when people succeed in the environment that has been set up and play by the rules that exist?   If there was tacit approval of steroids, and maybe even encouragement, is making Mark McGuire the fall guy really going to help anything?  

I’m not sayin’, I’m just sayin’.

(Now’s where everyone misunderstands the post.)