The story of Jack and John

Jack Booket knows a get-rich scheme when he sees one, and he holds no grudge against John Paulson, the hedge-fund manager who made bets on his ability to pay his mortgage. Jack lost; John won. The story is in today's Wall Street Journal. Paulson did nothing to affect Booket's choices. Booket chose to refinance his mortgage in 2006 and a few months later was hit by a car on his motorcycle returning home from a "late-night party." It wasn't his first accident. The writers discreetly don't say alcohol was involved, but it usually is in the a.m. hours of vehicle accidents regardless of who is at fault. Two years later he stopped making payments on his $300,000+ refinanced mortgage. Jack Booket gambled and lost.

John Paulson also gambled, but with a little help. Those mortgages he bet on weren't drawn from a hat. They were matched with court records, foreclosure listings, title records and loan servicing reports. In other words, there was a pretty good chance even before his 2006 motorcycle accident that Jack was overstepping his reach. Paulson gambled that Jack would continue his prior behavior, and he won.

Let's move off the "evil" hedge fund manager who gambled and won, and instead look at the gamble our own government is making on housing, despite knowing what happened in 2007 with non-credit worthy home buyers, and speculators ready to pounce. Through the USDA rural home loans you can still get 100% financing, have a poor credit rating, pay no mortgage insurance, and get tax credits to help you pay the mortgage. I'm not sure you even need to be green, but you could probably qualify for more credits if you replaced a few appliances or windows. And it isn't just for single family homes--you could work up something really sweet with old uncle Sam, walk away if it doesn't work, and leave me with the bill! The only requirement I saw was that you have at least Internet Explorer 5 to fill out the application.