Thomas Franks takes a whack at the latest meme:
There is no way to measure the number of people who took out mortgages they knew they couldn’t afford, of course, but for what it’s worth, a 2007 report by the Mortgage Bankers Association reports that the FBI estimates “80 percent of all reported fraud losses arise from fraud for profit schemes that involve industry insiders.” That means the lenders, not the borrowers.
Just imagine the flights of fancy that the theory of borrower malevolence and Wall Street victimization requires conservatives to take: All these no-account folks, you see, got together and forced investment banks to engineer subprime mortgages into highly leveraged securities. Then they tricked all manner of hedge funds and pension funds and financial institutions into buying these lousy products. Just for good measure, these struggling homeowners then persuaded bond-rating agencies to misrepresent the risk associated with these securities.
Now imagine what such a fantastic scheme, if true, would mean for capitalism itself. This economic system, glorified by all, dominates the globe today, bidding prices up and down, forcing entire nations to change their ways to better suit its needs, and yet it is so fragile that when challenged by the weakest members of society and a handful of community organizers it simply crumbles. Thank goodness the Soviets never figured this out.
That is worth a heh, indeed, if I do say so myself.
Noah
New nickame for Sarah Palin! It has to do with dinosaurs!
MattF
Knew a woman some years ago who had a fainting couch. Very entertaining, under the right circumstances. Looks like Capitalism needs one now.
aimai
So, I take it the right wing thinks that the economic crash is the result of the kind of mass community action that radical leftists like Saul Alinsky recommended when they suggested everyone flush their toilets at the same time? Alinsky (and don’t quote me on this because I don’t have my copy in front of me) recommended a “poop in” as a kind of attentat. Did we have a “tricky no doc loan mortgage-in” by wiley property owning sans culottes?
aimai
SGEW
How do you know they didn’t?
The current financial crisis was caused by the U.S.S.R.! As Putin rears his head over Alaska! Only Gov. Palin can save us now!
“Must . . . Destroy . . . Capitalism!”
PC
Someone should donate that to the House Republicans.
Not My Fault
Tell me that Hot Air is wrong.
Please tell me that.
The senate democrats seem to have lifted Obama on their shoulders and are running for the cliff.
I have no idea whether the bailout is a good idea or not, but if it really our only hope, then the democrats need to man up and do it despite the republicans.
This “We’ll give you what you want, and then to get you to agree we’ll give you some more, and yeah, we know you won’t respect us in the morning, but that’s OK too” is bullshit
ElBlot
Amen.
Most people I argue about this with can’t get their heads passed the “why should I pay for someone else’s bad borrowing decision” stage.
Axe Diesel Palin
Everyone should listen to “This American Life”‘s episode “The Giant Pool of Money” – http://thislife.org/Radio_Episode.aspx?sched=1242
Interesting, they talk to players at every level of the train wreck, from borrowers to bundlers.
Another thing to think about is at the end of the bubble, there was actually a significant number of people who defaulted on their first mortgage payment. Imagine how messed up that is. How did a borrower benefit from a mortgage that they weren’t able to make one payment on????
aimai
Yes, thank you Axe Diesel Palin, that was an incredible piece of reporting. It totally framed this entire event for me. I wish they would figure out how to describe and present the current branch of the crisis.
aimai
Blue Neponset
Often times, the best way to argue with a wingnut is to accept their stupid premise, and examine how impossible it is. This works well with their brain addled in-person voter fraud arguments.
Comrade Incertus
If we did, then I didn’t get the memo. Hell, I’d have loved having a chance at living in obscene luxury in a house I couldn’t afford knowing all the while I’m doing my part to destroy the capitalist system. How did I not get on that listserv?
reid
Kudlow and Buchanan were on MSNBC grilling an Obama campaign guy. Now they’re “grilling” a McCain campaign guy. Curse you, liberal media! I rarely watch the finance shows, so I’m not used to Turdlow. He actually tried to tie Obama’s support for the bailout to Bush, calling his term Bush 3. Combined with his Palin-slobbering, I hope he slinks back to his Wall St. spider hole, never to pundit again.
Joshua Norton
There is a chance that market forces probably could take care of all investment problems when they are left alone. However, they are never left alone.
They are always accompanied by human beings – greedy humans, gullible humans, overly hopeful humans, weak, frail humans. With such companionship, the forces then always seem to make the greedy very rich, the others very poor. The people with no spare investment money – or who stay out of the market – are left holding a bailout bill.
If anyone in the future mentions “market forces” without in the same breath mentioning “market regulations,” check their background immediately. They are either grossly undereducated or have already been in, or belong in prison for fraud.
Comrade Tax Analyst
Well, not to say these borrower’s had any intent of doing this, but if they made no down payment (Which I understand was not all that uncommon with these gimmicky loans), then they probably got to live rent/mortgage payment free for several months while the foreclosure and eviction process worked it’s way through the legal system. But I’m having a hard time believing anyone INTENTIONALLY set out to do this before walking into some mortgage broker’s office. That is about the only benefit they might have gotten, as far as I can see, and it’s really not that much fun to have default notices and process servers showing up on a continual basis for several months.
Jay B.
yet it is so fragile that when challenged by the weakest members of society and a handful of community organizers it simply crumbles
Are you fucking kidding me? That’s exactly what they are afraid of. I mean, of course, Franks is right: conservatives, in addition to being mendacious, fearful, not very bright and casually racist, have ZERO understanding of capitalism. At best, they are liars. And most who spout the normal GOP line are liars and idiots.
But this is exactly what Republicans believe: that the rabble should never be able to game the system or even take advantage of it. This kind of meltdown is exactly, in their small minds, what would happen if they did. Left unspoken is that they think only the wealthy should be able to take advantage of capitalism.
That’s why they hate Unions. Because that’s what happens when the people organize. They, Republicans are told from birth, are horrid. That’s why they hate transparency, because when normal people look at something, they can see for themselves the lies and fraud the elite have perpetrated on the average schmoes out there. That’s why they can’t deal honestly with the real problems we as a nation — and an economy — face, because there’s no fucking way they can blame those at the lower rungs for the smoking crater where their 401(k) once gained equity.
They sincerely believe the shit that Franks can’t believe they believe. Because what is difficult for normal people to understand is that there are people that stupid, blind and easily manipulated by endless propaganda against poor people. Hell, it speaks directly to why most of them don’t think THEY belong in that group: because the Manipulative Poor are so unrecognizable as to be a different species entirely.
tBone
Graeme Frost took the last available opening on the listserv. Sorry.
Dennis - SGMM
There’s no way that could happen. That would be as stupid as a state awash with oil money receiving twice as much in federal funds per capita than any other state in the union – or the citizens of a small town in that state receiving four times as much.
KCinDC
This line of attack is reminiscent of the Republicans’ “voter fraud” theme, saying that the problems with our election system come not from faulty (or rigged), unauditable voting machines, or from election officials who are members of campaigns and implement purges of voter rolls and ID requirements, or from misallocation of machines causing people in the cities to have to wait many hours in line to vote — no, the real threat is that ACORN is getting nonwhite people registered.
jrg
This is common sense. The borrowers did not draft the contracts… In fact, they paid mortgage brokers to represent them in explaining the mortgage, and to make sure they were purchasing the right product.
All of the blame in this clusterf*ck lies at the feet of the mortgage industry. All of it.
gex
Sully’s been prattling on about the people at the bottom who deserved this comeuppance. I started to email him and mention stagnant wages, rising costs of everything, unequal distribution of wealth, credit systems designed to keep you in debt, etc. But then I realized there was no fucking point. That some people decided houses were things to invest in and make great profit from, thus accelerating the bubble, made it such that ANYONE buying a house had to overpay. Andrew, of course, blames them.
slip
For what it’s worth, the FBI seems to be the only one interested in actually going after the real criminals in this whole deal.
FinalArbiterOnEverySubject
Okay, then it’s minority lenders, and Democrats, who are to blame.
In any case, good news for McCain.
Liz
Anyone see this yet?
“I’m not saying this is the perfect answer. If I were dictator, which I always aspire to be, I would write it a little bit differently.”
Sooooo….yeah. Look forward to the spin on this puppy…
Joshua Norton
A lot of buyers never intended to pay off the entire mortgage. They’d buy a house, throw a coats of paint on it and maybe some new cupboard doors and flip it for a few hundred thousand more. The prices kept going up so high that a lot of people could not follow the usual process of 20% down and a 30 year mortgage.
So the brokers got creative with no money down and big bubble payments down the road when people assumed they would be earning more. But it never works out that way. The only people to make a buck are the speculators and “flippers”.
Liz
Hrm, my post seems to have vanished into the ether…
New and interesting quote from McWhatthefuck:
I’m not saying this is the perfect answer. If I were dictator, which I always aspire to be, I would write it a little bit differently. I would increase the FDIC insured deposits and done some other things..
Jimmy Jazz
While it is absurd to blame the CRA (!) and non-fradulent home buyers for this mess, critics of Fannie and Freddie, and their Democratic enablers, actually do have a lot of ammunition. Since lenders were able to kick all the risk off their balance sheets through securitization, and were rolling in fees by the bucket, underwriting went out the window. I say this as a strong Obama supporter and partisan Democrat, but don’t believe for a minute that Barney Frank and others aren’t blameless in all this. They were riding the gravy train.
vaux-rien
Gee Emperor, you seem to have had a change of heart since leveraging yourself to the hilt trying to corner the rice market and losing all your real estate; still a little bitter about that?
comrade scott
I’m guessing this was bin Laden’s plan all along. I mean he’s forced “us” to take away our freedoms. Then “we” have caused our own economic meltdown.
Looks like the turr’sts have won. Let’s all go home now.
Common Sense
Bill Clinton is putting the “secretly rootin for Johnie” meme to rest right now. To paraphrase:
D. Mason
That’s bullshit. I’m all for putting the blame where it lies and most of it definitely lies with the shady lenders. That being said, all of these people who bought these houses with mortgages from shady ass companies were shown a number at some point and told that’s what your first monthly payment will be. Some of them thought they could make it and were wrong or weren’t prepared for the ballooning interest rate, it happens. Some of them knew they couldn’t make it but just didn’t care or thought they could flip the house for a profit before the foreclosure went through and they’re to blame as well.
Punchy
This is just unfuckingbelievable. I’ve never seen such waste of perfectly-good shit in my life.
Jesus, it almost made me tear up. I’m just stupefied by the whole thing.
(h/t Calculatedrisk)
cleek
you should always assume it is.
for example, see the bottom of their third update.
Dennis - SGMM
The only group of people who haven’t been blamed for the mess are NASCAR fans. May we blame them next?
The Other Steve
When has Hot Air ever been right?
DougJ
A friend sent this picture (my first time with the new image feature here so let’s see if it works.)
DSB
“I have no idea whether the bailout is a good idea or not, but if it really our only hope, then the democrats need to man up and do it despite the republicans.”
It’s not Obi-Wan by any means, but with the current crop of corporate Dems, it’s the only plan they can seem to muster.
DougJ
I guess it didn’t work. What did I do wrong?
Here’s the link.
Jon H
Remember the Bush interview where he mocked a woman on death row? “Please don’t kill me”
I’d love to see a skit where someone turns it on its head and mocks Bush in the same way. “Please help my rich friends”
Jon H
“This is just unfuckingbelievable. I’ve never seen such waste of perfectly-good shit in my life”
And just think of the carbon generated in producing all that crap and the homes themselves.
TheFountainHead
Yeah. It’s pretty awful, but that’s what happens when you fuck the middle class in the ass for eight years. You get a lot of brown lawns.
Dennis - SGMM
Just guessing here but I suspect that the George W. Bush Presidential Library Committee has had to scrap plans for that double-wide.
Punchy
How does one generate carbon? Who’s fusing atoms at the moment?
Marshall
I would not be so harsh. People tend to have a rosy view of the future, particularly their own future. If you go to a large number of people and said, here is this huge boon, a large, desireable, house, which you can afford right now, but may not be able to afford in the future, many, many people will take that offer. They will think, “I may get a promotion, interest rates may drop, I can flip the house or redo my mortgage,” etc. etc. And, for a while, they could. It is very hard to be safe and virtuous when people around you are getting a nice house and you are not. Yes, it was a house of cards that seemed likely to collapse, but who can blame people taking advantages of the deals being offered them. ?
Blaming the people offering those deals, however, is another matter.
DougJ
Who’s fusing atoms at the moment?
Chinese prisoners, most likely.
Mike
The writer’s name is Thomas Frank.
Thomas Franks is another guy entirely.
Comrade Grumpy Code Monkey
Someone mentioned this in another thread:
Instead of writing image url , you need to write & lt ; img & gt ; image url & lt ; /img & gt ;, except without any spaces between the ampersand, lt and gt, and semicolons.
HTML tags do not survive the preview process. They get evaluated by the preview pane, so they are not submitted as part of the post (what you see in the preview pane is what gets submitted to the server). This is also why I could never get bulleted lists to display properly; the ul and li tags were eaten by the preview pane to create the bullets, so what gets submitted is the tag-free text.
So, for example, here’s a bulleted list that looks fine in the preview, but should look like crap when submitted:
item 1
item 2
item 3
Now here’s a bulleted list that should show the HTML tags in the preview, but look good after submission:
(Ed. – removed bullets to preserve comment number count)
item 1
item 2
item 3
In the second case, I replaced the angle brackets with the entity codes for them (ampersand-lt-semicolon, ampersand-gt-semicolon, or < and >)
So, in summation, if you don’t see the img HTML tags in the preview, then you won’t see the actual image in the submitted post.
Comrade Grumpy Code Monkey
Goddammit, I used ol when I meant ul. That should have been
(Ed. – removed these as well)
item 1
item 2
item 3
Comrade Grumpy Code Monkey
Okay, no, the ul tag is not being interpreted properly.
HAH! I BROKE THE COMMENT NUMBERING! COOL!!!!
cleek
<script language=’javascript’>
var d = document.getElementById(‘respond’);
if (d) d.innerText = “Cleek Was Here”;
</script>
… testing
TheFountainHead
Cooler! Thirty days!
CD Junior
When you leave the Republicans in office too long this is what happens. Luckily, McCain is on the way to clear them all out.
cleek
<script language="javascript">var d = document.getElementById("respond");if (d) d.innerText = "Cleek Was Here";</script>
more testing :)
libarbarian
http://www.zombietime.com/zomblog/?p=60
There was a time when I would have honestly said that I never expected to see the day where “conservatives” excused self-destructive behavior on account of peer-pressure …. but that time was long ago.
NonyNony
Okay, fine. I will grant you that this is the case in some instances. However – and I’m going out on a limb here – shouldn’t the idiots who where falling all over themselves to loan out the money have done a fucking better job of knowing whether they were going to get paid back before they handed that money over to a con artist?
Seriously – even with the scenario you paint here I can only give the industry a very tiny amount of sympathy. If they’d insisted on good lending practices and not arranged weird kick-back deals with “brokers” who had no incentive to actually, you know, make good loans, then they wouldn’t be in nearly as much pain as they’re in right now.
I feel bad when an individual gets screwed over by a shady con artist because individuals don’t usually have much in the way of resources. These lenders had legions of accountants, actuaries, lawyers, and other highly paid professionals at their disposal to be able to tell who was a good loan candidate and who was a con artist looking to bilk them on a bad loan. I’m not buying it – they KNEW that a certain percentage of these loans were going to go to con artists and they figured it was just a “cost of doing business”. Now they’re trying to offload the blame because their whole business model has turned out to be nothing but an endless well of crap.
(And don’t even get me started on these “derivates” that they created that basically manufactured money out of pure air. The con artists are the ones on the Street – and the guys on the Hill who have been feeding us deregulation crap for 30 years and telling us that it’s marshmallow creme.)
libarbarian
http://www.zombietime.com/zomblog/?p=60
There was a time when I would have honestly said that I never expected to see the day where “conservatives” excused self-destructive behavior on account of peer-pressure …. but that time was long ago.
libarbarian
WTF is wrong with blockquote?
So the question is: Why? Why did banks start making countless risky untenable loans to unqualified customers?
And the answer is: Because they were afraid of being called racists by the legal bullies at the Greenlining Institute and other similar “community organizers.”
libarbarian
arghh, none of them work/
Comrade Mary, Would-Be Minion Of Bad Horse
John? Annette? We obviously love our new coding tricks, but can we get a little testing thread to try out code and coach each other?
As the site gets tested and redesigned, and as things settle down, that thread (with final, complete instructions and dire warnings in the post itself) could be linked from the commenting area. But for now, can we get just the testing thread as we continue to figure this stuff out?
burnspbesq
Bailout 2, the Sequel, has no better chance of passing the House than bailout 1.
Reason: the Senate loaded it up with the tax extenders legislation (including but not limited to the annual AMT fix), and there is a fundamental difference between the House and Senate on whether that shit should be made revenue-neutral. Pelosi is going to lose the rest of the Blue Dogs and Boehner won’t be able to deliver the deficit hawks.
cleek
when housing prices were rising, the value of the underlying asset (the house) was going up all the time, and there was always someone else out there who would buy it. a foreclosure wasn’t the worst thing in the world. now, with housing prices falling, your bank reallly doesn’t want the house… if it forecloses on a house now, it might not even break even on the principle.
Comrade Mary, Would-Be Minion Of Bad Horse
libarbarian, the blockquote tag is buggy in this new install. If you want to use multiple paragraphs in one quote, there are three solutions.
1. Easiest: Use a separate set of blockquotes for each paragraph.
2. Easy: Create your blockquote as you used to, with 2 or more paragraphs separated by an extra empty line, but don’t let the line stay empty. Use three periods (not one, not two — trust me) as the sole content of that formerly empty line.
3. Learn something new: Use the HTML code for a non-breaking space, shown below, instead of the three periods on what used to be an empty line between your paragraphs. NOTE: This example has an extra space after the & — remove that space after you copy and paste the code.
& nbsp;
Punchy
The only
thing that I can see
here
is a lot of
fail from Palin.
Punchy
Lettuce
see
twat
these
udder
buttons dew.. Most
boringlibarbarian
test
libarbarian
VICTORY IS MINE!!!!!!!!!!!!!
jake
Didn’t you know? Us brown folks are dumb as dirt, except when it comes to criminal enterprises that hurt whitey!
D. Mason
That’s rather curious to me. Two groups of people, both taking advantage of a broken system to get something they didn’t earn, but one group gets the benefit of the doubt and not the other.
Joshau Norton
They didn’t care. The whole problem right now is that they sold the risky paper to third parties who were looking for investments. They didn’t take any risk at all. They’ve been paid for the toxic paper up front. Then third parties stopped buying the paper when the first defaults came in and the investment banks were caught with their pants down. A lot of people are left holding a lot of crap they were hoping to foist off on other people.
Things have bought and resold so many times that no one knows who’s holding what right now. If the original lender was responsible for maintaining the original loans, things would have been very different.
Dennis - SGMM
Aha! So Michelle Obama’s “Whitey” remark was actually “Get Whitey to write you a mortgage.” It’s all starting to make sense.
wingnuts to iraq
fun image
p.a.
No persuasion needed. They used their devious minority-liberal mind control powers to accomplish the whole thing. Too bad for Wall St. the tinfoil hat fashion trend never spread from the conservative base up to the elite!
tBone
And multi-generational schemes to install stealth jihadists at the highest levels of US government. Don’t forget about that.
Really, though, it might not be so bad when the Hussein Obama administration rounds up all of the paleskins and throws us into cracker camps – at least then we wouldn’t have to worry about paying a mortgage, or where our next squirrel-and-Alpo sandwich is coming from.
libarbarian
HEY wingnuts to iraq:
Thanks. I loved that pic.
Comrade Incertus
I’d forgotten about that. Isn’t it about time we start fucking with the Flowbee again over that video? I mean, it’s October now and Obama’s up ten in some polls. If we’re going to get a surprise, it better get here quick.
Calliope
And one group gets stuck with the impossible to pay mortgage, and the other group walks away with billions in fees. Of course it’s the first group’s fault!
The guys walking away with billions in fees, they were just taken advantage of!
Makes me want to puke.
Calliope
Arrgghh. I hate block quote. Trying again without block quote.
D. Mason @67 wrote:
“That’s rather curious to me. Two groups of people, both taking advantage of a broken system to get something they didn’t earn, but one group gets the benefit of the doubt and not the other.”
And one group gets stuck with the impossible to pay mortgage, and the other group walks away with billions in fees. Of course it’s the first group’s fault!
The guys walking away with billions in fees, they were just taken advantage of!
Makes me want to puke.
D. Mason
Woah Woah Woah. Back the trolley horse up a bit. I never suggested any sympathy for the industry, they deserve none. My post was directed at someone up-thread who suggest that none of the blame lies with the people taking out the bad loans. My only point was that there is plenty of blame to go around and some of it belongs to careless consumers.
NonyNony
True. This is what they thought. Which means that they didn’t care if they got taken by a con artist or not because they’d just take the house which OF COURSE was going to be worth more than it was when they gave out the loan. Lookee – win win for the banks! The banks didn’t have incentive to make sure that the people they were giving loans out to could actually pay them back – in fact, they had a strong incentive to just give money to anybody. If they paid it back with interest, great. If not, the banks would have a house that was worth at least as much if not more than the value of the loan.
Again – I can’t feel too sorry for the banks here. First of all, they bought into this idea that there exists an asset that always appreciates in value. Dumb. I don’t care if the asset has never gone down in value before – the very idea that a market could exist such that it can’t be saturated is silly. Second of all, they built a system where they thought they were taking zero risks and then got screwed. But it was their system – they made the rules, they gave out the loans – even to people that they knew (or at least strongly suspected) couldn’t pay them back, and they even got Congress to change the rules to make it harder for people to declare bankruptcy and get out of the loans they were under. The advantages in the system were entirely skewed towards the “house”. They were the ones running the damn con, and they screwed it up. I don’t have any sympathy at all for these bozos, even if they did get taken by a few people who decided to game the system to their own advantage. The vast majority of their losses are not coming from con artists at all but from their own idiocy. I’d say screw ’em and let them clean up their messes themselves, if it weren’t for the fact that our entire economy could completely grind to a halt if these guys fail completely. Idiots.
Svensker
The Soviets had a huge advantage over us. They didn’t have liberal mind-control peeps forcing their bankers to give crappy loans to Negroes. Otherwise, their system would have collapsed back in the 50s! I’m sure MM and Bob Owens would absolutely agree.
D. Mason
Yeah, because if you make $2000/month before taxes and take out an $1800/month mortgage you must have been totally taken advantage of by a predatory lender. Give me a break. The only innocents in this big pile of shit are the people who didn’t participate at all and they will be punished the hardest because they made sound choices. I know there were borrowers with good intentions out there but I also know there were borrowers who knew they were gambling. The numbers in the first sentence weren’t just pulled from thin air, I know a guy who did this so he could flip the house he couldn’t afford to get a nice down-payment on one he could afford. It worked out good for him as he made just shy of $20k but he knew he was gambling and his solution for what would happen if he couldn’t flip the house was bankruptcy. He was completely reckless and I’m not stupid enough to think he was alone.
Pretending that this is all the fault of predatory lenders and irresponsible bankers is just as idiotic as the right wingers acting like it’s all the fault of minority borrowers. There was a gravy train rolling through town and lot’s of people jumped on it, they’re all to blame.
Scrutinizer
Sure. And then the Repubs win the down-ticket elections running against “the ebil Bush-Democrat bailout plan which rewards the rich and steals from the taxpayer.”
Pelosi needs a bipartisan vote on any bill to give us political cover so that we can make the Democratic margin in the House bigger—it doesn’t do us any good to have Obama win the election and flip the House to the Repubs. That means we have accept a not-so-good bill that handles the immediate problem so that we can go after more comprehensive regulatory reform in January.
Honestly, don’t you think about the political implications of what you write?
Scrutinizer
Not to mention the balloons they stockpiled so that they could float in over Alaska.
Comrade Incertus
Sorry D. Mason, but there was no fucking reason that a bank should have given your friend a loan in the first place. That’s their job–to tell unqualified people “no–you can’t have the money.”
Martin
There is an individual component to this, but it’s no the one that the wingnuts are bitching about. Poor people that default are clearly worse off then before. However, rich people can get ahead:
Now, this is where I live. These cases are common. I’m surrounded by these people. But these aren’t poor people. One neighbor bought a $900K home with $0 down, to keep their assets invested in other things, and expected to sell at $1.1M or $1.2M, pocket the quarter mil or so in equity gains while still making money off of their other investments. In the end they sold for $775K and owed the bank a big pile of cash – but at least they had it to pay and had the income to cover it. A lot of them don’t. We know people with 4 investment homes, using the income off of them and HELOCs to qualify for new homes. I haven’t heard from them in a while, so my guess is they’re fucked, but a lot of these people siphoned off hundreds of thousands of dollars so that even if they declare bankruptcy, if they’ve protected that money, they’ll bounce back just fine. They can always buy some cheap house out in the sticks cash and be fine.
Poor people have nothing to gain by being caught in a bankruptcy. The don’t have an incentive to get into a scheme like that. They do, however, get preyed upon to get into a mortgage they can’t afford, the lender falsifies the paperwork to look as though it’s a very secure loan, the broker earns a nice commission, the lender insures it for cheap (because it looks like a good loan) sometimes with multiple backers, and then when it defaults, because it surely will, the lender collects more than they paid out. They do this for a while and then bail out with their riches before anyone catches on. Works great in high-growth areas like SoCal, BayArea and so on. There are thousands of mortgage brokers that have gone under the last 2 years after the executives cleaned the place out and left.
And here’s were CA will see the employment crunch. CA has 3% to 4% of the workforce in real-estate above and beyond what the state can normally support. These people have been fueling and profiting from this bubble, and those jobs are all getting lost. I don’t know how many will find other work, but throw another 1% to 2% on those numbers just due to the market slumping so badly. So, CA might see unemployment rates go up as much as 4% to 6% points above the current rate just due to lost real-estate and finance jobs.
srv
That’s why we have to make examples of them. They need to spend some time as poor people.
p.a.
No guessing needed, comrade; he said that before 9/11. He wanted to goad us into a war in the Arab world to bankrupt us. MISSION ACCOMPLISHED! Don’t forget, the 9/11 attacks were a desperation throw by al Qaeda. Afghanistan was a decent place for training camps- out of the way, under the radar- but not great for running a terrorist organization- too out of the way, too poor, not even Arab. Except for some support in Saudi Arabia and cells in the US and Europe, al Qaeda was moribund in the Muslim world. Hell, bin Laden had so little support he had even been tossed out of Sudan. George Bush and the Republican base (crush! kill! destroy! the darkies)are the best things that ever happened to al Qaeda.
Товарищ НеинтереснаяСобака
Never go to Detroit. Seriously. I don’t think you could handle Brush Park.
Kamishna ya Watu Xenos
Trying to make sure I understand this newfangled WP business
Martin
Correct. And a lot of these people had the plan that once they got into trouble or the market looked soft, they’d sell and take their profits. Problem was, that only works for half the market – the first half. The 2nd half are too late. They’ve missed the peak, the market is soft and prices are falling. But everyone planned to be in the first half.
But none of these people were poor minorities. They are ALL middle or upper-middle class and educated.
Kamishna ya Watu Xenos
Fail
Not fail?
Stevenovitch
Sorry, but this is sort of bullshit. While I really dislike the actions of people who take opportunistic reckless gambles with loans, if our society operated on people having good judgment we’d still be living in caves.
If we were to remove laws requiring people to have a license to practice medicine. Sure, you’d have a case against the assholes who did it without knowing what they’re doing but you’d still blame the idiot who removed the law for the overall systemic failure.
People who got screwed over for their reckless actions are getting what they deserve. The fact that the entire system has collapsed is entirely the fault of the people who should have been watching this shit.
Punchy
Teenage mutant NINJA loaners.
D. Mason
Well, obviously I agree, I was acting responsible during all of this and I resent being expected to pay for it. I still don’t believe it was all the banks fault. He wasn’t honest about his income of course. He claimed non-existent bonuses and side income to represent his income at almost 5k/month. With the climbing home values I’m sure the loan looked reasonable and the bank didn’t know the extent to which their money was being gambled.
Look, I’m not trying to let the shitty bankers off the hook, my only point here is that not all of these people are innocents who were taken advantage of. People making that claim look exactly the same to me as the right wingers who say it’s all the fault of low-income borrowers.
Calliope
D.Mason,
I have no sympathy with the speculators, many of whom, it’s worth noting, were also real estate brokers. But lets face it folks, the American public was sold a bill of goods on the real estate market.
This IS the Bush boom: take out the housing bubble, and the subsequent derivatives bubble in Financials, and Commander Codpiece has got nothing. For years, nearly every financial authority urged people to buy! buy! buy! Buy now or forever be shut out of the market! Housing prices never go down! Take out too big of a loan. Heloc your house to the gills! Your house will increase in price to cover it. We PROMISE to refy your loan later! Nothing can go wrong! Housing never goes down!
Alan Fucking Greenspan, when he was still head of the Fed, urged America to get out of their dull, stupid, low interest, fixed rate loans, and into those smart new Option-ARM loans.
That was the prevailing financial wisdom. Skeptics like Krugman, Barry Ritholz, and Nouriel Roubini were mocked. Krugman’s just a liberal partisan, don’t you know! And of course, Greenspan kept interest rates artifically low, so that even huge loans had fairly small payments. And people were taught, by their bankers and brokers to ONLY consider the monthly payment, not the actually total cost of the loan.
Most people do not have the financial knowledge to know when to question this stuff. Hell, even people who had the financial education to know better got sucked into this. It was a perfect storm of bullshit. And all around, people were, indeed, raking in fortunes. Most of whom would lose them, later, but hey, at the time, everything looked great!
I got into an argument with a good friend of mine, a very successful retail executive, MBA, who was getting ready to jump into the housing market at the very top of the bubble last summer. He wanted to get into flipping. I tried to talk him out it, and literally got “Housing prices never go down!” as an answer.
That was from an MBA, folks, and a very sharp cookie normally. It’s very hard for people to swim against the crowd, and this wasn’t a tide, it was a fucking flood of people to swim against. How is Joe Sixpack going to question the financial professionals?
Also, let’s not forget massive amounts of fraud. Many brokers flat out lied to their customers about what the cost would be. Documents were altered after signing, the whole fraudulent magilla.
Look, no customer forced banks to create idiocies like No Doc loans, and NINJA loans. Back when I was a credit reference investigator in the 80’s, this kind of shit loan was illegal, and for good reason. The banks created these crap loans and begged people to take them. In some cases of fraud, they were rounding up homeless people and paying them to apply. Because they wanted their damn commissions.
But by all means, let’s apportion the guilt equally. It’s only fair, right?
Martin
I don’t think anyone is suggesting that. In case you hadn’t noticed, there are plenty of calls for higher taxes for high income and people doing a lot of investing. I don’t think anyone is expecting the tab for this to be paid by the bottom 50% – well, except for the GOP, who thinks that poor black people are to blame for all of it.
Calliope
Martin @95:
I was specifically responding to D.Mason, who also said this:
“The only innocents in this big pile of shit are the people who didn’t participate at all and they will be punished the hardest because they made sound choices.”
And that’s just horseshit.
tBone
Not to interrupt the blame-game here, but Rolling Stone has a must-read on the McMaverick. They absolutely eviscerate him.
… and that’s just the first page.
D. Mason
Hmmm let’s see, I suggest that the bankers don’t deserve 100% of the blame and this is the mis-characterization you come up with? Nice try.
You will never convince me that people weren’t knowingly taking big risks because I saw it happen. I even cited the most illustrative example I could think of. I also know very well that lenders did not act right here as I saw examples of that too.
It’s simple really, I believe in looking at reality, right wingers pretend it’s all the consumers fault and left wingers pretend it’s all the bankers fault. Your mis-characterization of my statement is kind of revealing.
Bill Arnold
There were two components to the GWBush experiment in an alternative method of recovery from recession:
(1) Tax cuts for the rich.
(2) A Real Estate bubble for everyone, enabled by very low interest rates (Greenspan was in the tank for the Republicans.), and lack of regulatory foresightedness.
GWBush still has (1).
libarbarian
I’m sorry but I think this attitude sucks and is the source of massive problems in our government.
gbear
Wow. Someone broke the thread but good. All the graphics and formatting are gone in my view.
Comrade Fedorovich Stuck
Adjustable APR mortgages are pure evil.
As are all APR loans IMO. A few years ago, I got caught up in the credit card ream scheme after going a few dollars, and I mean a few dollars, over limit, then having the interest jacked to 29 %, and increased on other cards. I summarily tore the fuckers up and settled the accounts over the next few months. I paid off my truck in full and will only rent for living space. The system is so fucked up, I just won’t deal with it, although I realize many people have no choice. I have no loans and no money borrowed for any reason whatsoever. If I can’t pay cash for something I want or even need, it doesn’t get purchased. I don’t say this is a noble way to live, but recent events lend credence to the idea it’s the best these days.
This whole mess is a failure of leadership at every level of government, whatever blame their is for ordinary people getting sucked up in this race to the bottom could be fit in a medium size thimble. Most of the blame goes to the wingnut ideology with dems not far behind in letting them get away with it. I’m listening to the wingnuts Coburn and the moron from SC (not Graham, the other moron) saying this on the Senate floor and find myself agreeing. Up is down, left is right and nothing makes sense right now. I just hope the Bill that ends up passing, and one will, will actually work, absent of a massive effort to reform the system.
PaulB
Who had the real power in that deal? The borrowers or the lenders? And who, in theory, had the financial expertise in that deal? The borrowers or the lenders?
And yes, those were rhetorical questions. Since the answer in both cases is the lenders, why is it not appropriate to give one group the benefit of a doubt and not the other?
Scrutinizer
It’s not about attitude, it’s about politics. Or do you think that the Dems can just shove through a bailout plan loaded with progressive reform a month before the election and not pay an electoral price in November, particularly when the electorate is unhappy about doing any bailout, even if it’s necessary? To effect change, we have to be in power. What with no real majority in the Senate, and our majority in the House crippled by Blue Dogs, we have to gain real control of those two Houses to make change happen.
Pastafarian
A few days (weeks?) ago, John noted this whole election is driving Larison off the deep end. Now he’s getting even snarkier:
phobos
That was an interesting thread over there. Mike Volpe is calling bullshit on the CRA meme, and the Air Heads are getting all butthurt over losing a talking point.
Calliope
D.Mason @98:
“It’s simple really, I believe in looking at reality, right wingers pretend it’s all the consumers fault and left wingers pretend it’s all the bankers fault. Your mis-characterization of my statement is kind of revealing.”
And your ignoring my exception of speculators is also quite revealing.
Of course everyone was taking tremendous risks. My point is that, by far, most of the people caught up in this mess had no way of honestly judging that risk. They were sold a bill of goods.
And this statement of yours is self-pitying crap: “The only innocents in this big pile of shit are the people who didn’t participate at all and they will be punished the hardest because they made sound choices.”
Punished the hardest? Really? Are you going to spend the rest of your life paying hundreds of thousands of dollars more in mortgage than your house is worth? A house that you can’t sell because the bank won’t accept that large of a short sale? And you can’t move to take that better job offer, because your chained to your damn house?
Were you one of the “lucky” ones who managed avoid foreclosure and arranged a short sale on your house, so that now you still owe hundreds of thousands of dollars on a house you’ll never live in? Have fun paying that off! Good luck ever owning property again!
Are you bankrupt? Did you lose your house and all your possessions? Seriously, are you homeless? Are you living in a tent city? They’re springing up in cities in the mid-west.
Is your credit rating ruined? You do understand that employers check credit ratings, and a poor rating makes you a risk? How’s the job hunt going?
Of course, bankrupt people and people underwater on their mortgages, etc, all still have to pay taxes, and live through the current recession/possible depression, and get screwed by this bailout just like the rest of us.
Punished the hardest my ass. Look, if you didn’t get caught up in this, if you kept your head when all about you were losing theirs, pat yourself on the back for being a smart guy. Be grateful for your home and your savings, and get the fuck over it.
Svensker
Obama’s speech in the Senate on the need for the bailout was good. It’s the speech Dubya should have delivered…if Dubya knew how to act like a Prez’nit, instead of a Nit’wit. The GOS has full text.
Comrade Fedorovich Stuck
I agree with this and may have been a bit overharsh on dems, at least for the past 8 years they haven’t had any real power. But their actions even with a a slim congressional majority doesn’t fill me with hope that they’ll do things different when they do get more power. I really really hope I’m wrong in that assessment.
PaulB
The trouble is that your example didn’t really show what you wanted it to show. What it showed was that a responsible lender would never have made the loan. Since the loan was, in fact, made, that pretty clearly shows that the lender is at fault.
Look, I can walk into a bank today and ask for a million dollars. If they are foolish enough to give it to me, without seeking adequate collateral or corroboration, why is that *not* their fault?
t jasper parnell
t jasper parnell
Well, that didn’t work. A flip flop we can believe in.
oh really
There’s trouble in Paradise. Over at RedState they’re up in arms over yet another conservative’s call for Miss Aerial Wolf Hunter to step aside.
It seems that Culture 11 has published a brief opinion piece ( by someone named Conor Friedersdorf) for Palin to go. That spurred a response from Joe Carter, managing editor of Culture 11. (I’d never heard of Culture 11 until RS’s chief resident moron Erick Erickson mentioned it. Apparently, Culture 11 is the combined effort of former near presidential nominee Steve Forbes (giggle) and conservative Maverick (in the James Garner/gambler sense of the word) Bill Bennett.)
RedStaters in their normal mindless way are outraged. When things like this happen, it gives the Wingers an opportunity to show just what kind of quality human beings they are. Man, I’d love to see a constitution and bill of rights written by those fascists.
Long-time RedState POS “TBone” (one of the vilest creatures currently walking the Earth) has this to say about the subject:
Many of TBone’s inestimable qualities are on display in this little example of the inner workings of his brain stem. Based on his stated opinion of Kathleen Parker, I think it is fair to assume that TBone is a huge hit with the ladies.
Is there anything funnier than watching these cretins go at it among themselves?
DougJ
New Palin video drops any minute now.
Normal Jane Jug-Wine American
Test
w vincentz
First they called it a “bail out”. It needed rethinking.
So, they renamed it a “rescue”. Looks like this is what they’re sticking with.
However, many in the “WE the People” group have another name for it….”RIP OFF!”
Comrade Fwiffo
Hey John, I just saw Bob Shrum steal your Chauncey Gardener reference on MSNBC.
oh really
Sorry, it appears some HTML got lost. That’s weird because it appeared correct in the preview.
TBone’s “opinion” ends with Envisioning when all that is Left is the Right. (A result, one assumes, TBone hopes to achieve through a network of concentration and extermination camps).
Brachiator
A piece in the Hartford Courant dramatically shows the degree to which all those no-account borrowers, many of them probably illegal aliens, have damaged America’s fragile upper classes:
Oh,the horror!
We all owe it to wealthy U.S. Americans to urge Congress to pass this bailout plan, and any others to come. Perhaps we should each adopt a Forgotten Wealthy person. If a young plutocrat cannot buy a fancy car or a large boat, well, then, the terrorists will have truly won.
Normal Jane Jug-Wine American (aka LauraW)
test again
Glenn
The rich can’t eat em, can’t afford em!
JL
She’s on CBS… Is anyone watching?? She’s very strange.. Biden and Palin are asked the same questions with very different answers.
Normal Jane Jug-Wine American
“Can you think of any examples, Honey?”
Katie is killing me here. What a nice Mommy she is.
I was just surfing and read someone saying one of Sarah Honey’s biggest issues is that she never stops rambling and blathering. How will she fill up 90 seconds? HYSTERICALLY, is my bet.
I’m making my drinking game list.
All I have so far is $25 to Obama if “pig” or “lipstick” is said by anyone.
I can’t pay $50 if both are used together, unfortunately, but I aim to come up with some $5 gems.
I don’t suppose there’s any chance she’ll say HOLLERIN’?
A girl can dream.
Martin
Who are ‘they’?
I think the first ‘they’ is the media or the media/bloggers. The 2nd ‘they’ is probably Congress on both sides, because 100 trillion people sent them emails thinking that we were going to hand cash out to executives, just for the hell of it, because Paulson did such a piss-poor job of presenting this thing, and Bush let him.
Here’s another question – how would people feel if accompanying the $700B was $700B in tax increases for the top 5% and for investors, so it would be revenue neutral (worst case) for anyone under $250K or so and who aren’t day-traders? Would everyone still be up in arms?
LiberalTarian
Heh. What’s funny is that the two-headed, bi-polar bear that is the modern Republican party just noticed it has two poles. The uber-wealthy and stupid, and the poor and stupid. Funny stuff watching them fight over who actually owns the body.
Calliope
PaulB @109:
“Look, I can walk into a bank today and ask for a million dollars. If they are foolish enough to give it to me, without seeking adequate collateral or corroboration, why is that not their fault?”
Exactly! Exactly! The bank has a core fiduciary responsibility to both its depositors and its shareholders to protect them from fraud.
The reason I’m so wrought up about this is I used to do this for a living. In the early 80’s it was federal law that, not only did the bank have to verify salary, all other income, address, credit history, criminal history, outstanding liens and judgements, etc, but they also had to hire an outside agency to do an independent double check of all of that — purely to protect the depositors and shareholders from fraudulent collusion between the bank’s mortgage broker, (working on commission) and the applicant. I worked at that outside agency.
You would be amazed how many times I would call a broker with bad news: the application was completely false, the guy didn’t even live at the address listed, hell, he didn’t really exist. Not once was a banker happy that I had just saved his institution hundreds of thousands of dollars. Instead I got sworn at, and ordered to change my report. Fat chance! And yes, in this case, the applicant was a criminal. But so was the banker!
Sometime after I left that job, the rules were changed so that bankers didn’t have to have an outside double check of their verifications. It was just too onerous and pointless! (HA!) Yes, it was one of those awful regulations that held the banking industry back.
Imagine my horror when they were allowed to institute No Doc and NINJA loans. No job, no income, no assets? Who the fuck loans any money under those circumstances, much less hundreds of thousands of dollars?! It was a total and complete abdication by the banks of their core fiduciary responsibility.
They threw open the doors and said, please, come steal from me.
And they did that because they needed loans, any loans, good, bad, indifferent, to throw into the derivatives market. The housing market is small potatoes: the real money is in the derivatives created off of those loans. The derivatives market was completely deregulated in 2000. Since then the banks have created over 500 Trillion dollars in derivatives. To contrast, world GDP is only about 60 Trillion dollars. All of the real estate in the world is worth about a hundred trillion.
There’s an excellent article on derivatives, “The Black Box Economy” at the Boston Globe. http://tinyurl.com/yr37hs.
Any discussion of the housing market and the bailout that doesn’t include derivatives is missing the point.
JL
Well at least Sarah said that the right to privacy is found in the Constitution. How many crazy whackos threw something at the TV.. Guess Roe and Griswold are safe for now.
Martin
There goes Scalia…
This is just awesome. Why watch reality TV when you have this?
Calliope
Trying this again. I hope it doesn’t double post.
PaulB @109:
“Look, I can walk into a bank today and ask for a million dollars. If they are foolish enough to give it to me, without seeking adequate collateral or corroboration, why is that not their fault?”
Exactly! Exactly! The bank has a core fiduciary responsibility to both its depositors and its shareholders to protect them from fraud.
The reason I’m so wrought up about this is I used to do this for a living. In the early 80’s it was federal law that, not only did the bank have to verify salary, all other income, address, credit history, criminal history, outstanding liens and judgments, etc, but they also had to hire an outside agency to do an independent double check of all of that — purely to protect the depositors and shareholders from fraudulent collusion between the bank’s mortgage broker, (working on commission) and the applicant. I worked at that outside agency.
You would be amazed how many times I would call a broker with bad news: the application was completely false, the guy didn’t even live at the address listed, hell, he didn’t really exist. Not once was a banker happy that I had just saved his institution hundreds of thousands of dollars. Instead I got sworn at, and ordered to change my report. Fat chance! And yes, in this case, the applicant was a criminal. But so was the banker!
Sometime after I left that job, the rules were changed so that bankers didn’t have to have an outside double check of their verifications. It was just too onerous and pointless! (HA!) Yes, it was one of those awful regulations that held the banking industry back.
Imagine my horror when they were allowed to institute No Doc and NINJA loans. No job, no income, no assets? Who the fuck loans any money under those circumstances, much less hundreds of thousands of dollars?! It was a total and complete abdication by the banks of their core fiduciary responsibility. There was nothing stopping the banks from verifying income, and making good loans. Most credit unions are not in trouble because they stuck to old time lending standards.
The banks threw open the doors and said, please, come steal from me.
And they did that because they needed loans, any loans, good, bad, indifferent, to throw into the derivatives market. The housing market is small potatoes: the real money is in the derivatives created off of those loans. The derivatives market was completely deregulated in 2000. Since then the banks have created over 500 Trillion dollars in derivatives. To contrast, world GDP is only about 60 Trillion dollars. All of the real estate in the world is worth about a hundred trillion.
There’s an excellent article on derivatives, “The Black Box Economy” at the Boston.com
Any discussion of the housing market and the bailout that doesn’t include derivatives is missing the point.
Comrade Fedorovich Stuck
She will be burned in effigy at the Freeperville public square over that one.
w vincentz
@ Martin,
“They” refers to those that named this “rescue”. Paulson and Barnenke were the first ones to call it a “bailout”. The chimp also, but he embelished it with “panic”. He’s good at fear mongering doncha know?
“Bailout” didn’t play well with the people that made lots of phone calls. Congress retitled it “rescue”.
So…rather than rename a pig covered in lipstick, let’s just call it for what it is…
a RIPOFF.
Any more questions?
LanceThruster
Unfortunately I hear far too many people laying the blame at the feet of minority borrowers that the poor old lenders were forced to give mortgages to. Nothing is said about the push to make as many usurious loans as possible to be able to bundle and offload elsewhere.
Lying bastards!
JL
Who would have thought that the blacks and the latinos could take down AIG, Bear Sterns, Lehman’s, Merrill Lynch, WaMu, Wachovia etc., etc… By the way how big were the golden parachutes for the minorities?
Greg D
The problem with capitalism began when we gave companies the right to incorporate and essentially become individuals. All that these people on wall street have to do is to create and Inc. and then go about business in the way of the capitalist…trying to make money. So when you hear people talk about how the market will take care of things, that is a bunch of bullshit. There have been references by wall street liars that we have to allow the market to perform the way the South Korean market has..cleaning itself out (1997)…if you know anything about the way SK business works…the most crooked bunch of fucks in Asia, you would never want the market to work that way!
JL
Here’s Palin’s answere to Roe.
Martin
Actually there was one tucked at the end. If this could be guaranteed revenue neutral, would you still oppose it?
Calliope
Martin @135:
“Actually there was one tucked at the end. If this could be guaranteed revenue neutral, would you still oppose it?”
As a stop-gap measure, I would not oppose it. If there wasn’t a crisis before, Dubya and Paulsen sure sparked one when they got up and started screaming “Panic!, Panic! Shit yourselves, America!”
(Could he be less Presidential? Less of a leader?)
So the credit markets are locked up, and banks are failing around the world. Something needs to be done: I just wish I was more sure that this particular bailout/rescue/whatever was going to actually work. Will it free up the credit markets? That’s my main concern. But something has to be done to alleviate the panic the Current Occupant has caused.
(To clarify: I believe the economy is, and was then, trembling on the brink of disaster. I also think that Bush’s incitement to panic made everything happen much faster than it would have otherwise.)
But this mess is going to unwind, no matter what.
gwangung
Then they don’t know arithmetic and have pretty much demonstrated they can’t get 4 from 2 + 2.
Wilson Heath
But doesn’t Franks think that Main Street should at least pay for their own rape kits?
tripletee (formerly tBone)
Fuck it, I’m changing my handle. I always knew the capital-T Tbone was a huge douchenozzle, but with that post he raised the bar on douchenozzleiness. I can’t share a nick with somebody who uses phrases like “a literate vagina.”
Linda in Oregon
I have a “mortgage” question – Doesn’t anyone remember Bush touting his “ownership society”? In those days, it was cool that anyone could own their own home – The President said so! How ’bout we find some tape of that? Goes a long way toward explaining how we got in this mess. Coulda seen it comin’.
Chuck Butcher
Linda in OR
Yeah, the goddam answer is don’t buy at any price just because some people are being stupid. People bought into the idea that housing never goes down (despite historical examples) and the stock market is a magic money machine that never goes down. If it can go up it can go down and if it’s been screaming up – down is inevitible. People owning homes is a good thing if it is reasonable for them, more owning will put upward pressure on the market, but reasonable. But as soon as housing becomes an investment vehicle rather than a home and long range investment it becomes a mistake and if ordinary buyers don’t pay attention they can easily lose.
Comrade grumpy realist
Ha. I realized that Greenspan was a total nut when he went running around spouting how much better it was to be in an ARM (when the rates were <5%).
The FT had a good article on the whole derivative/black-box finance economy and how it will probably end up regulated. The libertarian types who kept insisting self-regulation was “fine!” are now chastened and muttering “well, maybe….”
Also expect Europe to come down like a load of rectangular things on this. Germany has always hated hedge funds and now they have the political clout to shove more oversight (at least in the EU) through.
w vincentz
@ Martin,
Yes, I’m in favor of stopping the bleeding (first aid), however, it seems to me that the 5% that you speak about will not be willing to pay for the surgery that is required of the patient (US economy). My guess is that they’ve already bought the best politicians their money can buy to protect their interests. Why else would they be requiring the 95% to shoulder the burden of their excesses?
Therein the RIP OFF.