A Letter to the Chairman of the Federal Reserve
By John Q. Public
August 7, 2007

Dear Santa… er, I mean, Mr. Bernanke,

Won't you please consider the old retailing trick of advertising Christmas in August, and give us our present early this year?

You see, I'm upside-down in a bunch of bad real estate deals and I could really use a rate cut to help me out.

It's not my fault, really. I attended a "No Money Down" real estate seminar a few years ago. I bought a truckload of tapes and books that all said, "You can't lose money in real estate." Sadly, I must be doing something wrong, because I'm down a bundle. (Although you don't really lose anything until you sell, right?)

I bought a few properties in California, some in Las Vegas, several in Miami, and a baker's dozen in Arizona. My thinking was that I would flip them real quick, take the profits, and buy a winery in Napa, a yacht to sail the world, a few diamond trinkets for my wife, and invest the rest in municipal bonds so I could retire and live off the interest forever.

But I must've done something wrong.

I bought the properties, applied for adjustable-rate loans that required no income verification (that's what the folks at the seminar told me to do), closed on the homes, and then put up the "For Sale" signs. Funny thing, though… No one showed up at the open houses.

So I decided to hang on to the properties a while longer. After all, no one loses money in real estate. They're not making any more of it, right?

I figured I'd rent them out. The folks at the seminar told me I could easily get 120%-150% of my monthly mortgage payment in rental income. But – funny thing – the rents I can get only cover about half my mortgage payments. So I took a second job delivering pizzas to make up the balance.

But my bank just told me the interest rate on my adjustable loan is going up next month. The new rate increases my payments by 33%… and that means I'll have to work three shifts at Domino's.

That's just not fair.

I know I'm not the only one in this situation. I'm just the little guy feeling the pain.

But there are bigger guys – guys like my mortgage broker, guys like that nice Mr. Spector who just resigned from Bear Stearns, and guys like Jim Cramer, who's Friday afternoon rant on CNBC was a lot like a baby who just dropped his pacifier – who are feeling the pain.

Please Santa, I mean, Mr. Bernanke, give us a rate cut on Tuesday.

I know the dollar is weak and a rate cut will make it even weaker. But it's really not my fault that I'm in the situation I'm in. And a rate cut will make it easier for me to unload my mistakes onto someone else.

A rate cut will help the housing market. It will help the stock market. And it will help all those nice folks on Wall Street that Mr. Cramer is so concerned about (after all, they only received the biggest bonuses in history last year – and that won't last forever).

If you can help me out of this situation, Mr. Bernanke, then I promise I'll take care of myself from now on. Well, at least until the next bubble bursts. But, if you do your job right, then there won't be another bubble to worry about.

Thank you so much for your consideration. I remain…

Sincerely yours,

John Q. Public