Indeed, the modern reflex is to cringe back from anyone who says that we should scrutinize the private beliefs of a public person. And yet, are there exceptions? Are there times when it would be negligent - even stupid - not to take those beliefs into account? I suggest that such articles of faith have real - even profound - relevance, when they reflect upon a politician’s general view regarding the world, the value of his or her fellow citizens, and the prospect of applying those articles to guide actions in the temporal world. For example, specific dogmas are highly relevant:
1. When those beliefs cast Judgment (with a capital "J") on the fundamental worth and goodness of a majority of Americans. Or, indeed, any large and non-criminal minority of them.
2. When those beliefs implicitly or explicitly declare it acceptable, even glorious, that a majority (or large minority) of his or her fellow citizens are... or should be... consigned to eternal torment (in Hell) for holding differing beliefs.
3. When a candidate prays openly to hasten the day when her nation will end and democracy vanish, I have to assert that is pertinent to whether voters might want to democratically elect her to lead that nation.
4. Further, when he or she yearns openly for events to unfold that will purportedly “rain fire from the sky,” is that pertinent to our decision whether to assign such a person control over our nuclear tipped missiles?
I find these questions - entailing the potential survival of my children - to be entirely germane to making political choices as to whom I should entrust with our nation’s military, political and practical power. Moreover anyone who sneers that I am bigoted, merely for asking them, is no friend of the republic, of human civilization, or of me.
...and finally... I'll finish with a large except from a recent and powerful article about the roots of the financial crisis. I'll post the fist few paragraphs here... and then some more down below, under "Comments." It makes very clear to whom we owe the recent near-depression, that was spawned in an era when the Federal government's sole reason to exist seemed to be enabling vampires to run wild. And that is still the agenda of the party that got us into the mess.
Get out the vote.
===Predatory Lending==
Take a look at The Monster: How a Gang of Predatory Lenders and Wall Street Bankers Fleeced America and Spawned a Global Crisis, by Michael W. Hudson
A few weeks after he started working at Ameriquest Mortgage, Mark Glover looked up from his cubicle and saw a coworker do something odd. The guy stood at his desk on the twenty-third floor of downtown Los Angeles's Union Bank Building. He placed two sheets of paper against the window. Then he used the light streaming through the window to trace something from one piece of paper to another. Somebody's signature.Glover was new to the mortgage business. He was twenty-nine and hadn't held a steady job in years. But he wasn't stupid. He knew about financial sleight of hand—at that time, he had a check-fraud charge hanging over his head in the L.A. courthouse a few blocks away. Watching his coworker, Glover's first thought was: How can I get away with that? As a loan officer at Ameriquest, Glover worked on commission. He knew the only way to earn the six-figure income Ameriquest had promised him was to come up with tricks for pushing deals through the mortgage-financing pipeline that began with Ameriquest and extended through Wall Street's most respected investment houses.
Glover and the other twentysomethings who filled the sales force at the downtown L.A. branch worked the phones hour after hour, calling strangers and trying to talk them into refinancing their homes with high-priced "subprime" mortgages. It was 2003, subprime was on the rise, and Ameriquest was leading the way. The company's owner, Roland Arnall, had in many ways been the founding father of subprime, the business of lending money to home owners with modest incomes or blemished credit histories. He had pioneered this risky segment of the mortgage market amid the wreckage of the savings and loan disaster and helped transform his company's headquarters, Orange County, California, into the capital of the subprime industry. Now, with the housing market booming and Wall Street clamoring to invest in subprime, Ameriquest was growing with startling velocity.
Up and down the line, from loan officers to regional managers and vice presidents, Ameriquest's employees scrambled at the end of each month to push through as many loans as possible, to pad their monthly production numbers, boost their commissions, and meet Roland Arnall's expectations.
(...continued below, under Comments...)
==Rally for Fear==
I am supporting Stephen Colbert's Rally for Fear, for several reasons. First, my career lies in scaring people via vivid science fiction novels. (Sure, they also contain science, reason and confidence in a bold future... still, what would a plot be without pulse-pounding peril? Keep fear alive!!)
Second, I'm fuming with rage at Jon Stewart for blatantly stealing the title of my novel EARTH, for his merely-hilarious guidebook for aliens visiting this planet. Heck, I won't even tell you want it's called, so you can't order it, right away, and laugh yourself sick.(Mind you, one of my novels was a finalist for the Stephen Colbert Award for Literary Excellence! But I would never allow that to sway my judgment! (Guess which novel?))
All right, I admit that I kinda like "sanity" and share Stewart's overall worry about the plague of sanctimonious, self-righteous indignation that aging-sourpuss baby boomers are inflicting on this great land, from every political extreme. (I've even written about the scientific/biological aspects of this epidemic, and spoken about it at the National Institutes on Drugs and Addiction.) I'm glad the rallies on Saturday will be about restoring the calm spirit of negotiation that was the hallmark of the Greatest Generation... and that might return, after the bilious Boomers fade and our smarter kids take over!
Hence I'm pleased that (despite some overlap) this won't be a rally for the Democratic Party. Certainly, the left has some indignation jockeys of its own, who give Glen Beck a run for it. Oh, they aren't in the same league, when it comes to outright puppeteer-lying! But Keith Olbermann certainly matches Beck when it comes to choleric-polemic pyrotechnics!
Hence, I seldom link to Olbermann, even when I agree with him! We should all be tired of proof-by-loudly-delivered-anecdote... and his latest screed serves one gigantic helping of separate and questionably-linked anecdotes, about the truly "eccentric" gang of Tea Party candidates who are spearheading the Fox Crusade To Distract Populist Wrath Away From The Oligarchy And Instead Toward All the People Who Know Stuff.
Again, I find anecdotes less persuasive than sanity and facts. Still you have really got to watch this Olbermann rant! Endure the first few minutes for the sake of what follows -- a lengthy and scary list of maniacal quotations from the new Know Nothing Party that seeks to "march this nation as far backward as it can get... an attempted use of democracy to end this democracy..."
While I have you, here are items to show that "ostrich conservative" of yours, who dislikes the Bushites but who has so far convinced himself that "the alternative is marginally worse." Or who actually believes that his movement has not been hijacked by crazies. (There are millions of these poor, abandoned, Nice Conservatives. Help them!
A pair of older pieces I wrote in 2004, before things got THIS crazy...War in the 21st Century: Maturity vs. Neocon Panic and the True Role of Pax Americana
Neoconservatism, Islam and Ideology: The Real Culture War
And for your libertarian theoretician friend or brother - the under-achieving MENSA-member who goes on and on about Left, Right, and MODELS of government systems and Adam Smith and what keeps getting in the way of freedom and markets send him here for a wake-up.
Oh, Back to Jon Stewart... here's a chilling parallel! Stephan Richter writes “Jon Stewart is a powerful one-man version of all the Weimar cabarets. If the underlying causes of his rise were in any way a reflection of what ailed the Weimar Republic, that would be bad news indeed — not just for the US, but also the world as a whole.” I love it when someone makes me stop and go "huh!" Even when I'm not sure what his point is!
49 comments:
Let's see if blogger will let me post the rest down here...
Arnall was a man "obsessed with loan volume," former aides recalled, a mortgage entrepreneur who believed "volume solved all problems." Whenever an underling suggested a goal for loan production over a particular time span, Arnall's favorite reply was: "We can do twice that." Close to midnight Pacific time on the last business day of each month, the phone would ring at Arnall's home in Los Angeles's exclusive Holmby Hills neighborhood, a $30 million estate that once had been home to Sonny and Cher.On the other end of the telephone line, a vice president in Orange County would report the month's production numbers for his lending empire. Even as the totals grew to $3 billion or $6 billion o r $7 billion a month—figures never before imagined in the subprime business—Arnall wasn't satisfied. He wanted more. "He would just try to make you stretch beyond what you thought possible," one former Ameriquest executive recalled.
"Whatever you did, no matter how good you did, it wasn't good enough."
Inside Glover's branch, loan officers kept up with the demand to produce by guzzling Red Bull energy drinks, a favorite caffeine pick-me-up for hardworking salesmen throughout the mortgage industry. Government investigators would later joke that they could gauge how dirty a home-loan location was by the number of empty Red Bull cans in the Dumpster out back. Some of the crew in the L.A. branch, Glover said, also relied on cocaine to keep themselves going, snorting lines in washrooms and, on occasion, in their cubicles.
The wayward behavior didn't stop with drugs. Glover learned that his colleague's art work wasn't a matter of saving a borrower the hassle of coming in to supply a missed signature. The guy was forging borrowers' signatures on government-required disclosure forms, the ones that were supposed to help consumers understand how much cash they'd be getting out of the loan and how much they'd be paying in interest and fees. Ameriquest's deals were so overpriced and loaded with nasty surprises that getting customers to sign often required an elaborate web of psychological ploys, outright lies, and falsified papers.
"Every closing that we had really was a bait and switch," a loan officer who worked for Ameriquest in Tampa, Florida, recalled. " 'Cause you could never get them to the table if you were honest." At companywide gatherings, Ameriquest's managers and sales reps loosened up with free alcohol and swapped tips for fooling borrowers and cooking up phony paperwork. What if a customer insisted he wanted a fixed-rate loan, but you could make more money by selling him an adjustable-rate one? No problem. Many Ameriquest salespeople learned to position a few fixed-rate loan documents at the top of the stack of paperwork to be signed by the borrower. They buried the real documents—the ones indicating the loan had an adjustable rate that would rocket upward in two or three years—near the bottom of the pile. Then, after the borrower had flipped from signature line to signature line, scribbling his consent across the entire stack, and gone home, it was easy enough to peel the fixed-rate documents off the top and throw them in the trash.
At the downtown L.A. branch, some of Glover's coworkers had a flair for creative documentation. They used scissors, tape, Wite-Out, and a photocopier to fabricate W-2s, the tax forms that indicate how much a wage earner makes each year. It was easy: Paste the name of a low-earning borrower onto a W-2 belonging to a higher-earning borrower and, like magic, a bad loan prospect suddenly looked much better. Workers in the branch equipped the office's break room with all the tools they needed to manufacture and manipulate official documents. They dubbed it the "Art Department."
At first, Glover thought the branch might be a rogue office struggling to keep up with the goals set by Ameriquest's headquarters. He discovered that wasn't the case when he transferred to the company's Santa Monica branch. A few of his new colleagues invited him on a field trip to Staples, where everyone chipped in their own money to buy a state-of-the-art scanner-printer, a trusty piece of equipment that would allow them to do a better job of creating phony paperwork and trapping American home owners in a cycle of crushing debt.
Carolyn Pittman was an easy target. She'd dropped out of high school to go to work, and had never learned to read or write very well. She worked for decades as a nursing assistant. Her husband, Charlie, was a longshoreman.In 1993 she and Charlie borrowed $58,850 to buy a one-story, concrete block house on Irex Street in a working-class neighborhood of Atlantic Beach, a community of thirteen thousand near Jacksonville, Florida. Their mortgage was government-insured by the Federal Housing Administration, so they got a good deal on the loan. They paid about $500 a month on the FHA loan, including the money to cover their home insurance and property taxes.
Even after Charlie died in 1998, Pittman kept up with her house payments. But things were tough for her. Financial matters weren't something she knew much about. Charlie had always handled what little money they had. Her health wasn't good either. She had a heart attack in 2001, and was back and forth to hospitals with congestive heart failure and kidney problems.
Like many older black women who owned their homes but had modest incomes, Pittman was deluged almost every day, by mail and by phone, with sales pitches offering money to fix up her house or pay off her bills. A few months after her heart attack, a salesman from Ameriquest Mortgage's Coral Springs office caught her on the phone and assured her he could ease her worries. He said Ameriquest would help her out by lowering her interest rate and her monthly payments.
She signed the papers in August 2001. Only later did she discover that the loan wasn't what she'd been promised. Her interest rate jumped from a fixed 8.43 percent on the FHA loan to a variable rate that started at nearly 11 percent and could climb much higher. The loan was also packed with more than $7,000 in up-front fees, roughly 10 percent of the loan amount.
Pittman's mortgage payment climbed to $644 a month. Even worse, the new mortgage didn't include an escrow for real-estate taxes and insurance. Most mortgage agreements require home owners to pay a bit extra—often about $100 to $300 a month—which is set aside in an escrow account to cover these expenses. But many subprime lenders obscured the true costs of their loans by excluding the escrow from their deals, which made the monthly payments appear lower. Many borrowers didn't learn they had been tricked until they got a big bill for unpaid taxes or insurance a year down the road.
That was just the start of Pittman's mortgage problems. Her new mortgage was a matter of public record, and by taking out a loan from Ameriquest, she'd signaled to other subprime lenders that she was vulnerable—that she was financially unsophisticated and was struggling to pay an unaffordable loan. In 2003, she heard from one of Ameriquest's competitors, Long Beach Mortgage Company.
Pittman had no idea that Long Beach and Ameriquest shared the same corporate DNA. Roland Arnall's first subprime lender had been Long Beach Savings and Loan, a company he had morphed into Long Beach Mortgage. He had sold off most of Long Beach Mortgage in 1997, but hung on to a portion of the company that he rechristened Ameriquest. Though Long Beach and Ameriquest were no longer connected, both were still staffed with employees who had learned the business under Arnall.
A salesman from Long Beach Mortgage, Pittman said, told her that he could help her solve the problems created by her Ameriquest loan. Once again, she signed the papers. The new loan from Long Beach cost her thousands in up-front fees and boosted her mortgage payments to $672 a month.
Ameriquest reclaimed her as a customer less than a year later. A salesman from Ameriquest's Jacksonville branch got her on the phone in the spring of 2004. He promised, once again, that refinancing would lower her interest rate and her monthly payments. Pittman wasn't sure what to do. She knew she'd been burned before, but she desperately wanted to find a way to pay off the Long Beach loan and regain her financial bearings. She was still pondering whether to take the loan when two Ameriquest representatives appeared at the house on Irex Street. They brought a stack of documents with them. They told her, she later recalled, that it was preliminary paperwork, simply to get the process started. She could make up her mind later. The men said, "sign here," "sign here," "sign here," as they flipped through the stack. Pittman didn't understand these were final loan papers and her signatures were binding her to Ameriquest. "They just said sign some papers and we'll help you," she recalled.
To push the deal through and make it look better to investors on Wall Street, consumer attorneys later alleged, someone at Ameriquest falsified Pittman's income on the mortgage application. At best, she had an income of $1,600 a month—roughly $1,000 from Social Security and, when he could afford to pay, another $600 a month in rent from her son. Ameriquest's paperwork claimed she brought in more than twice that much—$3,700 a month.
....wish I could post the rest... Seriously, do you want the shills working for these vampires to get BACK into the driver's seat?
A brief carry-over from the previous thread: I wihs peopel would stop confusing Robert Samuelson, business journalist, with Paul Samuelson, Nobel laureate in Economics.
Robert Samuelson has every right to express his views about the likely costs of global warming mitigation.
However there's no real reason anyone should regard him as an expert in economics.
Paul Samuelson's career was build on developing the theory of public goods and demonstrating that the unregulated private market was incapable of delivering the optimal level of public goods - including environmental quality.
While I'm at it I thoroughly recommend this brief speech by Paul Samuelson.
http://www.spiegel.de/international/world/0,1518,590034,00.html
There's a lot of good stuff packed in a small space but I love his closing sentiment:
"I am not a centrist because I can’t make up my mind about the Right and the Left. It is because each of those has proved itself to be so non-optimal that rationality and experience move me toward the dynamic moving center."
"1. When those beliefs cast Judgment (with a capital "J") on the fundamental worth and goodness of a majority of Americans. Or, indeed, any large and non-criminal minority of them.
2. When those beliefs implicitly or explicitly declare it acceptable, even glorious, that a majority (or large minority) of his or her fellow citizens are... or should be... consigned to eternal torment (in Hell) for holding differing beliefs."
Wouldn't these two points have excluded most abolitionists prior to the civil war?
The beliefs Brin describes are those of the majority of Christians over the majority of American history.
That includes both abolitionists and apologists for slavery.
I guess it might be fair to say that they were responsible for the Civil War, and perhaps that the war was the beginning of the end of America as a "Christian Nation", slowly substituting government for personal moral responsibility.
One of the smugging-points of modern-day Sectarian-Americans is that our rights and freedoms come from God, and that the various Great Awakenings were responsible for all moral progress in America. You hear a lot of this specifically from Glenn Beck.
By co-incidence, I'm watching part two of the PBS's "God in America" mini-series. The part I paused to write this has religiously devout people of north and south both using scripture to defend and condemn slavery. And a hundred years later, the Bible was used to justify segregation.
'nersal': Heroic warrior of the Panglo saga.
RE the Vampires ariticle:
If you take Fox News as gospel, the housing crash was due to poor people aspiring to home ownership, taking on financial burdens they couldn't handle, and enabled and egged on by big-government programs like "Freddie" and "Fannie."
Which suggests that Republicans must have been fighting against overconfident borrowers and loose lending.
Ahem.
The following is from the 2004 Republican Party Platform:
"Homeownership is central to the American dream, and Republicans want to make it a reality for everyone. That starts with access to capital for entrepreneurs and access to credit for consumers. Both have improved immensely in the past four years, resulting in record levels of homeownership. For the first time, more than half of all minorities own their home.
We support the President's goal of increasing the number of minority homeowners by at least 5.5 million families by the end of the decade. Since President Bush announced his initiative in 2002, an additional 1.6 million minorities have become homeowners. The Self-Help Homeownership Opportunities Program helps low-income families purchase a home. The most significant barrier to homeownership is the down payment. We support efforts to reduce that barrier, like the American Dream Downpayment Act and Zero Downpayment Mortgages."
Heh, yeah, that worked out really well.
Ultimately, the choice sounds much as we had in Australia a few months ago. My conclusion? While not at all impressed with the Labor party (and seriously, the wheels had come off far more spectacularly than Obama's seem to have), there was absolutely no reason why I'd want to bring back the ones we got rid of in 2007, especially when they continued to spout the same philosophies that got them turfed out!
(btw ex-PM Malcolm Fraser is no longer a member: stating the Liberal Party is no longer liberal but conservative)
4. Further, when he or she yearns openly for events to unfold that will purportedly “rain fire from the sky,” is that pertinent to our decision whether to assign such a person control over our nuclear tipped missiles?
Llap-Goch is eerily reminscent of the 'Palin' doctrine:
It is an ANCIENT Welsh ART based on a BRILLIANTLY simple I-D-E-A, which is a SECRET. The best form of DEFENCE is ATTACK (Clausewitz) and the most VITAL element of ATTACK is SURPRISE (Oscar HAMMERstein). Therefore, the BEST way to protect yourself AGAINST any ASSAILANT is to ATTACK him before he attacks YOU... Or BETTER... BEFORE the THOUGHT of doing so has EVEN OCCURRED TO HIM!!! SO YOU MAY BE ABLE TO RENDER YOUR ASSAILANT UNCONSCIOUS BEFORE he is EVEN aware of your very existence!
catista: A Basque folk-dance involving felines.
"Wouldn't these two points have excluded most abolitionists prior to the civil war?"
All I said was that this is information pertinent to whether you'd want to vote for them. Indeed, not many slave-holding southerners DID vote for them.
"The beliefs Brin describes are those of the majority of Christians over the majority of American history."
We have lived in an era when religious differences were more polite than most eras and most Christians assumed that their neighbors were un-damned... somehow... despite scriptural differences. This is changing back to older - less forgiving - modes
Jeez Stefan. That was a potent hypocrisy exposure! You should post that to your own top page!
If you're in the mood for good news, Lauren Valle, the girl who got stomped by Rand Paul supporters, released a starting and inspiring letter in response to one of the criminal's demands that she apologize to him. It's really worth reading; it gives me hope for the future to see young kids like her write such stuff!
"As a member of a civilisation, I shall be civil."
"What of you?"
Lauren Valle's letter prompted one commenter to retort that it highlighted the weakness of the Obama administration: you can't be reasonable with bullying thugs.
But you can pitch such responses to the 'fourth wall'. While it would be gratifying to see the stomper respond in kind, the message to observers is "I'm thinking this through. What else do you expect me to do?"
And if the target audience are all thugs and bullies? It's worth thinking the consequences through before you go there!
Well, have a fun march and rally tomorrow.
Be reasonably afraid!
Ian:
Wouldn't these two points have excluded most abolitionists prior to the civil war?
Dr. Brin didn't say that a politician guided by religious belief was necessarily disqualified. He said that person's religious beliefs were relevant to the political debate.
I see no contradiction in applying that standard to abolitionists AND to saying that, after appraising those beliefs accordingly, I would have voted FOR them.
There were people on both sides of the aisle pushing for home ownership for the poor. It's a laudable goal, after. The implementation had problems, however.
The Bush Administration was sending out warning bells about Fannie and Freddie only to have them quashed by Barney Frank.
Both parties were culpable on this one. So were the Wall St. firms who bought this financial trash without due diligence.
----
This financial mess is somewhat like 9-11. Even with zero change in law, the disaster couldn't happen again. (Hijackers who attempted to repeat would have been tackled by passengers. Mortgage scammers would have been watched more carefully by those buying the paper.)
---
Deregulation must come with accountability. You cannot have deregulation and bail-outs. It's one or the other.
Carl M:
Both parties were culpable on this one. So were the Wall St. firms who bought this financial trash without due diligence.
Both parties had a hand in it, but the Republicans are running on an explicit platform of continuing (or going back to) the madness. And the Tea-Partiers who are angry about the bailouts and the foreclosures (and also the outsourcing--separate issue) are curiously expressing that anger by voting for Republicans who make no bones about their support for all of those things.
Deregulation must come with accountability. You cannot have deregulation and bail-outs. It's one or the other.
I can see a one-time deal. "We THOUGHT we didn't need regulation. We were wrong. Now, there's a crisis that requires a bailout so as not to crash the world's economy. After that, we promise to play by better rules and never be so fucking arrogant again."
But instead, we're getting "Now tht you suckers have bailed us out, we're going back to business as usual, secure in the knowledge that you'll bail us out again whenever it goes south, but in the meantime, you have no business interfering with how we manage OUR OWN money, which would be evil socialism."
My reaction to that is the same as yours. However, I'm afraid that we WILL get deregulation and bailouts, whether or not we should.
Dr Brin, regarding your instinct or lack thereof for self-preservation: I'm reminded of a scene way back in Spider-Man #10 (1964 or so) where Peter Parker has been spreading the word around school that he knows the identity of the masked crime boss called The Big Man. None other than Peter's worst enemy, Flash Thompson, pulls him aside warning him to keep his big mouth shut before harm comes to him.
Which is what I was kinda doing (kidding on the square) yesterday.
'Course, Peter (who is Spider-Man) was TRYING to get himself taken to the Big Man's headquarters in order to defeat him. Which is what I hope...but I've now said way too much already.
Stupid system isn't accepting my Google Account info any longer. Ah well. Rob Howard here... logging on via my Livejournal account, thus the odd name.
Looking back at your previous posting about science fiction, Dr. Brin, (seeing that I was on a mountainside in the Raggeds in Colorado when you posted it) I have to say that while I hesitate to call Anne McCaffery a science fiction writer (half the time she's a romance writer that wraps her characters in a light veneer of scifi clothing), I do agree that science fiction is about "what-if" scenarios. Traditional Fantasy often is more epic storytelling than actual examinations of sociopolitical situations through the colored lenses of storytelling; thus it often is of great conflicts that bring out the best (and worse) of mankind. When science fiction pulls out an epic conflict, you often can find a historical counterpart (such as the TV series Space: Above and Beyond, which was a retelling of World War II with other sociopolitical aspects tossed into the mix) and often the war itself is used as the backdrop for a greater story.
Heck, my own science fiction universe for the "Wolf PACT" stories started as a "what-if" scenario altering the very fabric of American society (with the Christmas Plague and the loss of 20-25% of the American populace) as a background for the characters themselves. (By the way, the prologue of the story is currently up, with illustrations provided by Emily Brady of the fantasy webcomic Footloose.)
------------
(To be continued)
-----------
Looking at your posting of the "vampire" loan officers, I'm reminded of a discussion I had with my father as we were driving back from Colorado the last couple of days; he mentioned how the banking industry has had, for the past half century, profited from poor people getting loans, then making sure they lose their loans, repossessing the property, and then flipping it back onto the market. Back then there was even a safety net put in place by the Johnson Administration: Welfare. A poor black or white family would go through a divorce or have a significant illness resulting in the inability to pay for the mortgage, the family would be tossed out, the government would put those "poor unfortunates" in tenement housing, and the bank would (after a little work) put the house back on the market and sell to another poor slob.
In fact, this whole outcry against "toxic assets" is utter bullshit. Think about it: the only way a bank truly loses money on a property is if they cannot sell the property for the value of the mortgage, MINUS WHAT WAS ALREADY PAID ON THE PREVIOUS MORTGAGE. Thus you have a property owned by a bankrupt business. It's worth, say, $10 million. The business actually paid $3 million of the mortgage on that property before going belly up. Thus the bank only loses money if the property cannot be sold for above $7 million.
Banks are being greedy. They want the full amount that they feel they were entitled to through their deceptive practices. And they are whining that they aren't getting what their original profit was supposed to be, even though they could still manage to break even by selling the property for a lesser amount... factoring in what was previously paid for on the property.
Or to put it another way: should a bank be given a full $250,000 for a "toxic asset" of a house they seized where the homeowner managed to pay $150,000 of the mortgage before getting into trouble? If you give them the "full value" of the house, then they're pocketing an extra $150,000 and whistling happily to themselves having screwed the American people out of even more money.
I also have to wonder: how many of these repossessed homes will be returned to people if it is discovered the homeowners were defrauded and that forgeries and the like were used? I'm willing to bet that the vast majority will be told to go screw themselves by the upcoming Republican majorities in Congress. And to like it.
Robert A. Howard, Tangents Reviews
I watched the first few minutes of Olbermann at the link you provided. The opening was a bit much, but there is something akin to the "Know Nothing" Party of the 1850s going on with the Republican Party these days.
Also, I'm still wondering what facts Olbermann's gotten wrong when he cites the various right wing yutzim who are running this year as Republican candidates for office. Certainly, the violence they've engendered on their campaign trails is noteworthy, too.
Also, the violent rhetoric that comes out of the mouth of Glenn Beck is of a different level than anything I've heard Olbermann say.
I know you agree there is something more dangerous about the Right in America these days. However, let's not be too critical of Olbermann.
Ol;bermann was brilliantly satirized by Stewart today. Stewart ingeniously had ZERO LIBERAL TILT in any of the rally, start to finish. 100% balance.
And he used the TRAFFIC METAPHOR! I thought I was the only one who did that! For Americans treating each other decently in traffic, so why not politics?
Look about five paras down at:
http://www.davidbrin.com/disputation.htm
How come he gets to say it to ten million people?
Hi Tangent,
Wellllll it is really more complicated than that.
The bank loaned you money to buy a house expecting a return. That is why the interest rates are as low as they are in the US - they expect to be paid back thus justifying the perceived low risk of handing you a pile o' money. It was a safe bet, or so it seemed.
Consider: you want to buy a $300,000 house and let's say you put it all on a mortgage. The bank gives you 5% interest, everything is signed and you get to live in a house you could not have purchased on your own while paying $1342.05 per month. (Calculator here: http://www.mortgagecalculator.org/ )
The bank is loaning you the money not to get paid back, but to get paid back with interest, otherwise they will choose to loan that money to someone or something else. Over the next 30 years, you are going to pay them $483,139.46.
Now at some point it was probably not even a bank that you are paying - it is probably some investor or group of investors that were looking for a safe long-term investment who have bought a package with your loan in it. You keep paying the bank, but the asset (your house) is actually owned in bits and pieces by other entities, and the loan is just serviced by the bank.
This investor might have just paid $20,000 last week for a piece of the pie, so if you default next week, they are out of all of their $20,000.
Further, if it gets to foreclosure, they get the property (or a piece of it, or they get in line for a piece of it), which they don't want, so what seemed like a good bet to them is now tying up their money to where they can't use it. To get their money back the property needs to be sold, which they have no interest or expertise in, they don't even own the whole thing, so it is unclear just who does the selling, and with the housing market, it may be a loooong time before they get their money to invest again, if ever.
That $20,000 the investor plonked down (maybe my father-in-law looking for retirement income, maybe a dot-com millionaire) could have invested in some other venture - maybe a business' stock, maybe they could have bought a boat and have helped save some boat-makers' jobs, whatever. That wealth is now tied up in limbo and lost to the economic system.
Actually, it is FAR more complicated than that. Planet Money over at NPR has done a really phenomenal job of explaining the financial crisis - Google "Giant Pool of Money."
The point is, the crash was a HUGE threat (and in some ways still is) to a really large amount of wealth that could have been driving the recovery, but is instead stuck. The crash was a "paper" crash in that there was no physical infrastructural damage to cause it - no lack of demand or supply - BUT if you tie down a large chunk of your GNP so it can't (or won't) move, very bad things happen all across the economy, so it is no less real. That is a contributing reason to why the recovery is slow, and to my understanding, it is a tribute to US monetary policy that there is even growth so quickly after this. (Perhaps with a dose of, "Lalalala I am pretending all is well!" too).
So no, your scenario doesn't pan out. It is not that banks are being greedy - they probably have already made their money from the mortgage by selling it. The investors have money that could be going towards fueling a recovery one way or another, but is stuck in limbo, and even if the house sells, most of those investors will have lost money - the money will have evaporated without doing any economic work. Both more dangerous and less easily attributable to greed than you might have thought...
Hi Tangent,
Wellllll it is really more complicated than that.
The bank loaned you money to buy a house expecting a return. That is why the interest rates are as low as they are in the US - they expect to be paid back thus justifying the perceived low risk of handing you a pile o' money. It was a safe bet, or so it seemed.
Consider: you want to buy a $300,000 house and let's say you put it all on a mortgage. The bank gives you 5% interest, everything is signed and you get to live in a house you could not have purchased on your own while paying $1342.05 per month. (Calculator here: http://www.mortgagecalculator.org/ )
The bank is loaning you the money not to get paid back, but to get paid back with interest, otherwise they will choose to loan that money to someone or something else. Over the next 30 years, you are going to pay them $483,139.46.
Now at some point it was probably not even a bank that you are paying - it is probably some investor or group of investors that were looking for a safe long-term investment who have bought a package with your loan in it. You keep paying the bank, but the asset (your house) is actually owned in bits and pieces by other entities, and the loan is just serviced by the bank.
This investor might have just paid $20,000 last week for a piece of the pie, so if you default next week, they are out of all of their $20,000.
Further, if it gets to foreclosure, they get the property (or a piece of it, or they get in line for a piece of it), which they don't want, so what seemed like a good bet to them is now tying up their money to where they can't use it. To get their money back the property needs to be sold, which they have no interest or expertise in, they don't even own the whole thing, so it is unclear just who does the selling, and with the housing market, it may be a loooong time before they get their money to invest again, if ever.
That $20,000 the investor plonked down (maybe my father-in-law looking for retirement income, maybe a dot-com millionaire) could have invested in some other venture - maybe a business' stock, maybe they could have bought a boat and have helped save some boat-makers' jobs, whatever. That wealth is now tied up in limbo and lost to the economic system.
Actually, it is FAR more complicated than that. Planet Money over at NPR has done a really phenomenal job of explaining the financial crisis - Google "Giant Pool of Money."
The point is, the crash was a HUGE threat (and in some ways still is) to a really large amount of wealth that could have been driving the recovery, but is instead stuck. The crash was a "paper" crash in that there was no physical infrastructural damage to cause it - no lack of demand or supply - BUT if you tie down a large chunk of your GNP so it can't (or won't) move, very bad things happen all across the economy, so it is no less real. That is a contributing reason to why the recovery is slow, and to my understanding, it is a tribute to US monetary policy that there is even growth so quickly after this. (Perhaps with a dose of, "Lalalala I am pretending all is well!" too).
So no, your scenario doesn't pan out. It is not that banks are being greedy - they probably have already made their money from the mortgage by selling it. The investors have money that could be going towards fueling a recovery one way or another, but is stuck in limbo, and even if the house sells, most of those investors will have lost money - the money will have evaporated without doing any economic work. Both more dangerous and less easily attributable to greed than you might have thought...
Hi Tangent,
Wellllll it is really more complicated than that.
The bank loaned you money to buy a house expecting a return. That is why the interest rates are as low as they are in the US - they expect to be paid back thus justifying the perceived low risk of handing you a pile o' money. It was a safe bet, or so it seemed.
Consider: you want to buy a $300,000 house and let's say you put it all on a mortgage. The bank gives you 5% interest, everything is signed and you get to live in a house you could not have purchased on your own while paying $1342.05 per month. (Calculator here: http://www.mortgagecalculator.org/ )
The bank is loaning you the money not to get paid back, but to get paid back with interest, otherwise they will choose to loan that money to someone or something else. Over the next 30 years, you are going to pay them $483,139.46.
Now at some point it was probably not even a bank that you are paying - it is probably some investor or group of investors that were looking for a safe long-term investment who have bought a package with your loan in it. You keep paying the bank, but the asset (your house) is actually owned in bits and pieces by other entities, and the loan is just serviced by the bank.
This investor might have just paid $20,000 last week for a piece of the pie, so if you default next week, they are out of all of their $20,000.
Further, if it gets to foreclosure, they get the property (or a piece of it, or they get in line for a piece of it), which they don't want, so what seemed like a good bet to them is now tying up their money to where they can't use it. To get their money back the property needs to be sold, which they have no interest or expertise in, they don't even own the whole thing, so it is unclear just who does the selling, and with the housing market, it may be a loooong time before they get their money to invest again, if ever. (cont..)
That $20,000 the investor plonked down (maybe my father-in-law looking for retirement income, maybe a dot-com millionaire) could have invested in some other venture - maybe a business' stock, maybe they could have bought a boat and have helped save some boat-makers' jobs, whatever. That wealth is now tied up in limbo and lost to the economic system.
Actually, it is FAR more complicated than that. Planet Money over at NPR has done a really phenomenal job of explaining the financial crisis - Google "Giant Pool of Money."
The point is, the crash was a HUGE threat (and in some ways still is) to a really large amount of wealth that could have been driving the recovery, but is instead stuck. The crash was a "paper" crash in that there was no physical infrastructural damage to cause it - no lack of demand or supply - BUT if you tie down a large chunk of your GNP so it can't (or won't) move, very bad things happen all across the economy, so it is no less real. That is a contributing reason to why the recovery is slow, and to my understanding, it is a tribute to US monetary policy that there is even growth so quickly after this. (Perhaps with a dose of, "Lalalala I am pretending all is well!" too).
So no, your scenario doesn't pan out. It is not that banks are being greedy - they probably have already made their money from the mortgage by selling it. The investors have money that could be going towards fueling a recovery one way or another, but is stuck in limbo, and even if the house sells, most of those investors will have lost money - the money will have evaporated without doing any economic work. Both more dangerous and less easily attributable to greed than you might have thought...
"The Bush Administration was sending out warning bells about Fannie and Freddie only to have them quashed by Barney Frank..."
Please cite one fact showing how a member of the minority party in the House kept the majority from doing what it wanted.
In a sense, the answer doesn't matter, because we are in the situation that we are in no matter WHO is to "blame". But in another sense, it is more important than ever to insist upon a factual basis for claims.
Today's "Rally for Sanity" could mark a nice reset point; I won't bring up the past if you don't, so long as going forward we engage in honest, fact-based conversation.
It could happen.
Ooog sorry about the multiple posts - Blogger told me it was rejecting it for being too long......
How come he gets to say it to ten million people?
'Cause he's funnier.
I thought Colbert's bit about the fear award to the seven year old girl, accepting on behalf of news networks avoiding the rally, was hilarious.
Interesting comment on the rally here:
http://scienceblogs.com/pharyngula/2010/10/the_rally_for_tone.php
Not sure I completely agree with Dr. Myers (Or anyone else ;>.), a spiral of malice can get pretty ugly.
David,
Can you provide a link for the Ameriquest story?
I'll fourth the recommendation for the "Giant Pool of Money" series, and all the other great shows put together by the Planet money team:
http://www.npr.org/blogs/money/
It is really refreshing to hear economic analysis that doesn't end by blaming it all on one Designated Hate Politician.
'vollyt': Popular brand of canned lutefisk.
@David Brin:
"Seriously, do you want the shills working for these vampires to get BACK into the driver's seat?"
They're in the driver's seat right now. This very minute.
Carl M. mentioned Barney Frank. Let's not forget Senators Chris Dodd and Kent Conrad and Countrywide.
AmeriQuest gave an enormous amount to Republicans, but they gave an enormous amount to Democrats, too.
Deval Patrick was even on their board. Should he be anywhere close to the driver's seat? I don't think so.
Nice to see this issue is being brought up.
Here's how the rally was reported on ABC Australia
@RandyB and @CarlM
There is no fact-based evidence that Barney Frank caused the mortgage crisis.
Frank was a memory of the MINORITY PARTY when the bubble formed. If it were true that the Bush White House sought to defuse the problem, there was nothing Frank could do to quash their efforts. Conceivably Dodd could've filibustered in the Senate but there is no factual basis to suggest that such happened. Repeating this sort of claim without even an attempt to back it up with facts is at best not persuasive and therefore a waste of time.
The problem is systemic; while the deregulation of the finance industry was through the hands of Senators corrupted by money and ideology, it's hard to see how that corruption could be avoided when there's so much money floating around. A solution requires a mature and fact-based analysis (the "Giant Pool of Money" is a good start).
It is completely irrational to think that a solution will be found from any organization whose announced policy is to reverse even the weak reforms.
@Rewinn
There's a brief recap on Barney Frank's response to the Bush administration's reform proposals here.
It's true that Frank was only one member of the minority party, but as the link says, he would claim Republicans were trying to limit affordable housing for the poor.
It's also true that they're always saying stuff like that, and people should have been smart enough to see through it by that time. But Democrats still use that kind of talk today.
They can always get a few other weak-kneed politicians (Republicans and Democrats) to back down when they hear it, and that's usually enough to prevent a majority.
Not sure why this didn't occur to me before, but a comment on Dick Kay's radio show in Chicago made the point that Rand Paul specifically accused the Obama Administration of "putting its boot on the upturned neck of BP" back during the Gulf oil spill.
And then it's HIS supporters who literally put a boot on an upturned head at his rally.
Another case of "I know you are, but what am I?"
According to CBS, restoring sanity gets 215,000, and restoring honor 85,000. Of course there will be counter-claims, and as someone rightly said, the real poll is next week.
I'm going to paraphrase Stewart, because it's funny how tweaking somebody else's words around can bring out things you hadn't thought of before
We don't live in end times: that's what's hard.
(Besides, a lot of the day's fun seems to have been derived from this activity: 'Defend the right to arm bears' indeed!)
suing: an act of fear
This youtube video impressed me.
http://www.youtube.com/watch?v=nnUfPQVOqpw&feature=player_embedded
"There ain't no such thing as a free lunch."
Truer words were never spoken. Unfortunately, human industrial civilization has been enjoying a free lunch from nature to the tune of $33 TRILLION per year.
http://www.wri.org/publication/content/8381
Nobody has had to pay a dime for any ecosystem service so far. But as we said, no lunch is really for free.
Not putting a price tag on those services is engendering a massive tragedy of the commons, of which AGW is the pinnacle (the atmosphere being the ultimate common).
@Hypnos
We've paid plenty. You might say that about China, and much of the rest of the world, but we've got enviromental regulations here.
Someone in the pro-high-reg camp in the previous thread even made the point that companies always complain that "doom domestic production of XXX and will cause the price to skyrocket!" His contention being that we've absorbed the costs just fine.
When making the cost argument, I've said that clean air has value that must be taken into consideration.
But I like your point that it has a price tag. My point is that we should see it before deciding whether or not we buy.
@Randy - the content of your own citation proves my point. Nothing in it demonstrates that Barney Frank is responsible for the problem, as you have alleged.
I could go on and talk about the actual facts of unregulated lenders, CDOs etc but since those have been amply alluded to and ignored, I shan't bother.
At some point, it will be noted by newcomers that this blog is fact-oriented. Recycling fact-free talking points will persuade no-one and is the fastest route to being ignored.
And - to reflect on the practical aspect - even if Barney Frank were a Duke of Hell seeking to pollute the Precious Bodily Fluids of America's Housing Market AND Our Money Supply by overwhelming the Republican-controlled House, Senate, White House and Supreme Court by his SHEER DEMONIC FORCE of Doing Nothing .... it matters naught. All of history supports the concept that the solution to a market bubble is not to let the market continue with no anti-bubble regulation.
I am coming around to the concept that, with respect to America's economy (and its concomitant ability to influence other nations), there may be something to the concept "Once may be happenstance, twice may be coincidence, but thrice is enemy action." However, in self-defense, I hasten to supplement such a disloyal thought (and I urge Doctor Brin to do the same) with a hearty "Oceania has always been at war with EastAsia! I love Big Brother! No rats please!"
@Rewinn,
So, what you're saying is that Barney Frank opposed reforms that would have alleviated the bubble, but he's not to blame because the Republicans could have gotten the legislation (through the House, anyway) if only they could have held together in a big partisan vote.
It's funny to think how many Obama-supporters would be screaming today about the "partisan Republican attacks" on (in Barney Frank's view) "affordable housing."
"I love Big Brother" is probably the last thing you want to say. Or it will be in any case. In the interest of spoiler-avoidance, I trust you get my point.
I think my biggest point to Dr Brin is--if he IS correct about the problem, what solution does that suggest? In "1984", the point of the book was that there WAS no way out. Understanding the problem didn't get you any closer to changing anything.
That may suggest why so few are willing to go there. Not much different from proving scientifically that we're about to be wiped out by an asteroid. You might as well pretend it's NOT happening, because if it IS, all is lost anyway.
Of course, that's the extreme pessimistic view. My own hope is that (changing literary references on the fly here) the Inclosure can be broken if Siwenna rebels behind the lines. Perhaps if some of the powerful among the Nativist true-believers in American Exceptinalism on the conservative side wake up in time to recognize the danger (to THEM) posed by the corporatists and fascists among them.
Hey, now that the fall of the Empire in "Foundation" seems torn from today's headlines, how much longer before "The Postman" seems like a documentary?
Randy, the number one agenda of the Bushites was to cripple the US Civil Service and prevent it from doing its jobs. The results still spoil the Gulf waters and sent 3 Trillion dollars of investor value down the toilet.
The list of SEC investigations that were CANCELLED by order of the White House is endless... while the Middle Class was crushed and wealth disparities skyrocketed back past those of 1890.
WHile guys like YOU wallow in the Fox-propelled notion that there never was, and never will be any danger to capitalism, freedom, democracy, or competitive markets, from a conniving oligarchy.
Funny how the founder of capitalism, Adam Smith disagrees. So does EVERY historian. Name a continent and decade, across 4,000 years chosen randomly, and tell me the oppressors weren't the oligarchs.
Is there ANY level of disparity that you would finally call a threat to freedom? Any level of collusive crony-boy manipulation at the top, that you'd find bothersome? ANY sized flood of secret rich-boy money into campaigns that would make you say "wait a minute???!"
Fact is, freedom has enemies in ALL directions. I have proved repeatedly that I am capable of casting a wary eye in every direction. But you cannot.
This from Adam Smith... (reelevant to how the right currently screeches about unions, which have been declining in power and influence for 40 years, but always ignore the oligarchy.)
“We rarely hear, it has been said, of the combinations of masters [cartels]; though frequently of those of workmen. But whoever imagines, upon this account, that masters rarely combine, is as ignorant of the world as of the subject. Masters are always and everywhere in a sort of tacit, but constant and uniform combination..."
Yes, Adam Smith would know who the enemy of freedom and markets is, today.
Citizen James;
Your links worked just fine, by the way. Excellent, as it made it easy to determine the study you spoke of hasn't even been through the peer-review process yet. Another example of "Science by press release" perhaps? And just in time for the election. Bravo.
I must say though, that the abstract didn't seem to sound nearly as negative, nor have quite the same ad hominem writ large properties as your "...discussed the moral underpinnings of self-identified libertarians (and, possibly by extension, tea party types)...measured relatively low on measures of empathy, identification as part of a group/civilization (on local, national, and global scales), and generalized love for others..."
Well played, and bonus points for the tea party connection. Does wonders for the process of encouraging bridge building and communication, I must say.
Seriously though, this kind of stuff is just character assassination with a shotgun. Prone to be depicted and assessed based on the prejudices of the author(s), with little to counterbalance it.
In fact, my personal experience has been (and I've long suspected this may be the weakest link in the libertarian chain) that many libertarians fail to see much need for strong external structure precisely because their internal structure, order and sense of personal morality tends to be so robust they see that strong external structure as not only restrictive, but unnecessary.
Are there cold, calculating, uncaring, unfeeling and unsympathetic libertarians? Sure. And liberals, conservatives, apathetics and oligarchs.
My apologies to the room for taking this personally. I've just heard this particular smear a few too many times.
-- Brian
@ RandyB
Not living in the US I may be mistaken, but I thought the move to remove government control over appointments to Frannie & Freddie was part of their plan to privatise them. Am I wrong?
Not only that. But have you seen how much US seniors would have lost, if the GOP had been allowed to privatize social security, just before the crash?
Oh, how I wish the Republicans had been allowed to have their way. The GOP would be extinct and decent conservatives would be forced to rebuild their party from scratch... no longer a tool of oligarchs and fools.
Accepting the false (and stubbornly evidence-free) premise that "... Barney Frank opposed reforms that would have alleviated the bubble" ...
... it follows logically that financial reforms should be strengthened, not weakened, to prevent the next bubble.
I welcome the support of Barney-Frank haters!
onward....
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