Bennigan's, Steak and Ale Bankruptcy Blowup

Using your house to buy a fried Monte Cristo sandwich can't be a good thing, can it? The illusion of wealth created by the mortgage debacle claims more victims.

By Horatio Whistleblower

Bank failure and the bankruptcy filing of a major restaurant chain may seem to be unrelated at first, but a closer look reveals a simple cause-and-effect relationship. And a much closer relationship than you might think.

The investment mindset in the world -- especially the United States -- has been based on a fanatical belief in continuous, never-ending growth. People planning for retirement have been duped into believing the stockbroker's promises of steady, consistent 12% returns, this even after the recent three-straight-years of losses. But the world doesn't always cooperate with the optimist, especially when the growth has been based on an illusion created out of thin air. 

First, there was the illusion of wealth created by the stock market. The late nineties saw millions of dollars created out of thin air and weak ideas. That bubble popped, so we had to come up with some way to keep the home fires burning.

I know, let's use our homes! Previously, buying a house with no-money-down entailed something called "creative financing." Then the mortgage industry jumped on the bandwagon and freely offered no-money-down loans using something that can only be called "creative underwriting" coupled with "creative appraising." People bought houses they couldn't afford at unrealistic prices that could only have been based on the "continuous, neverending growth" theory.

With more and more people owning what they thought were private ATM machines, the stock market recovered nicely. All those profits from the mortgage-backed securities and underwriting fees only added to the boom in the economy. People used the new illusion of wealth and 'free money' to buy the reality of a fried Monte Cristo sandwich at Bennigan's, or a 16 oz. T-Bone at Steak and Ale, along with a gas-slurping SUV and a flat-screen TV just a little bit bigger than their neighbor's.

The problem with illusions is that eventually you figure out they're not real. And when reality hits, it may not always be pretty. In fact, when it comes to illusions of wealth, it's usually horrendous. And when the real estate ATM runs out of cash, there's no more funny money to buy appetizers at Bennigan's. So the bank goes under, and then Bennigan's goes under.

It's time for a reality check, people. We've turned into a country that kills its grandchildren to feed ourselves. What can you do? Simple - stay in touch with reality.

• Don't finance Fried Monte Cristo sandwiches. If you can't pay cash, you can't have it now.
• Don't finance groceries. If you can't pay off the credit card at the end of the month, you're financing your groceries.
• Get your feet back on the ground. We have completely removed ourselves from the real source of what sustains us. The average item at the grocery store travels over 1,400 miles to get there. Put your hands in the dirt and grow something in your back yard, even if it's one tomato in a pot.
• Get an accurate idea of where you are financially. Not where the stockbroker says you'll be in 10 years if  you do exactly what he says, but get an accurate idea of where you really are.

Then, and only then, can you paint a realistic future for yourself, a future based in the reality of security and not the illusion of wealth.

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