The bursting of the housing bubble has not only hurt middle-class and semi-affluent Americans (who thought they were more affluent than they were!), but also the rich and famous. Everyone has heard about Ed McMahon’s troubles – his wife sharing how she’s been so degraded that she now shops at (gasp!) Target of all places – but he’s not the only one. Here are some other celebrities who got over their heads amid the Federal Reserve’s latest flood of monetary liquidity:

Latrell Sprewell

Sports fans remember crazy Latrell, who was banned from the NBA for one full year after choking his coach in practice. Later, he infamously said he “had to feed his family” when rebuffing a multi-million dollar contract that apparently wasn’t rich enough to do so.

Sprewell’s last season in the NBA was 2004-05, when he averaged over 30 minutes a game for the Minnesota Timberloves, scoring 12.8 points and grabbing 3.2 rebounds – not all-star numbers, but certainly worthy of a spot in almost any NBA starting lineup. But Sprewell’s attitude kept him from signing a contract for less than he felt could “feed his family,” and two full seasons later, he’s yet to lace up his sneakers for an NBA squad again.

No matter, really. After all, Sprewell earned over $96 million over the course of his 13 years in the NBA – it’s not like he could be hard up for money, right?

Wrong.

This past May, Sprewell’s River Hills, Wisconsin home went into foreclosure. The home’s value was assessed at a mere $668,000 – a nice house to be sure, but pretty pedestrian for a millionaire nearly 100 times over like Sprewell.

Other Athletes

Sprewell isn’t the only professional jock to go the route of MC Hammer, albeit in delayed fashion. Evander Holyfield – who infamously said after defeating Mike Tyson that it proved his (Holyfield’s) religion was the true religion; and who piously moralized while fathering a nation of children out of wedlock – will have his $10 million home auctioned off later this month.

Jose Canseco shouldn’t be too hard up for money with the success of his truth-telling steroids expose, Juiced. But he is walking away from his $2.5 million Encino, California home, saying it just doesn’t make sense to keep making payments on it as its value has plummeted since the burst of the bubble. This could be an entirely rational decision.

Mo-Town Legends

Michael Jackson has moved to Bahrain and left his infamous Neverland Ranch behind. He apparently also stopped making payments on the mortgage, as it was days away from being auctioned off when a real-estate investment firm purchased the loan. Presumably, “Wacko Jacko” is making good on the payments again, at least for now.

Aretha Franklin, on the other hand, did lose her home in suburban Detroit. The Queen of Soul apparently felt it beneath her highness to pay property taxes, and thus her home was sold in order to satisfy the government’s lien. While I am sympathetic to people taking principled stands against coercive taxation, Ms. Franklin repeatedly said she would pay the back taxes, and in the end, lost her $700,000 home over less than $20,000 in back taxes.

Conclusion

The housing bubble and its subsequent burst were caused by the Federal Reserve’s fiat-money central banking. On the one hand, people such as McMahon, Sprewell, and Franklin should be held responsible for the bad financial decisions they’ve made — just as the heads of all of the middle- and lower-income families have been. But on the other hand, whether it’s Michael Jackson or my parents (who lost their home of nearly 30 years), it must be recognized that the Federal Reserve System obfuscates and sends false signals to market participants. When politicians talk about “helping” the people under the distress of a housing market turned upside down, they cannot be taken seriously unless they first recognize the entity that causes booms and busts: The Federal Reserve.

Related posts:

1. The Foreclosure Crisis and the Elusive Silver Bullet
2. Mortgage and Foreclosure Fraud Mushroom in the Wake of Housing Bubble
3. Foreclosure Rates Continue Steady Decline
4. New Hope for Homeowners Facing Foreclosure
5. America’s Most Effective Weapon Against the Rich