Objective review of the US 2012 Presidential and Congressional general campaign

[Scarpia]

I think you have the wrong perspective if you expect to make a living from writing books. Except some really succesful ones no writer in the world today lives solely by their books.

Have you considered journalism? Or teaching creative writing? For someone with excellent writing skills like you these should be good options.

Is scherzando still around?  He makes a living writing, no?

[Todd]

The narrative that the banks were the victims of shrewd sub-prime mortgage holders is absurd.

I'm not sure where you're seeing the narrative you claim, but your suggested plan could never work.  Banks are not the owners of all the underwater mortgages.  Much of product was securitized, meaning there are many institutional investors, and through them, everyday investors, who have a stake in real estate.  Simply having the government force write downs would be a bad idea, and as far as I can tell, potentially illegal. 

There are (or were) two main ways to address the problem: 1.) reduce barriers to foreclosure, to clear the market faster, or 2.) taxpayer funded principal reductions.  Really, it would be a robust mix of the two.  (Too many foreclosures does nothing but create a glut of properties, which lowers real estate prices, which exacerbates the problem.)  It looks like we are at or near bottom in many markets, with some starting to see increases in prices.  That's the good news.  The bad news is we are still years, possibly many years, away from seeing significant appreciation of real estate prices in many markets. 

Incidentally, I'm not sure why you would think that only people and not investors and banks took losses.  There have been huge losses in the financial system.  What you propose would make the situation even worse, which would ultimately require taxpayer funds to be used again.  I guess the lesson is that taxpayer funds are going to be used in such a situation no matter what.

The CFPB comes on line in January, and they have a focus on loan origination and servicing practices.  They have released hundreds of pages of new rules and guidelines, and indeed, they have already started auditing the biggest firms in the space.  If the CFPB works properly, it is conceivable that the shoddy underwriting and gruesome products (eg, Option ARMs) don't reappear.  That would be great.  I have my doubts.  Of course, if a goal is to completely eliminate the risk of such a crisis again, then we should kill Fannie and Freddie, and possibly Ginnie and the FHA, and revert back to only privately funded mortgages with 10-15 years terms with large down payment requirements.  The system in place in the US now carries inherent risks. 

[Scarpia]

I'm under no illusion that the federal government has the authority to do what I suggested, but I guess I find myself in favor of taxpayer-financed principal reduction.  When the bubble popped, some people found themselves rich, others poor (depending on whether they had recently sold or bought real estate at bubble prices).   If those that profited did so by their wisdom I'd say they deserve their profits.  But my perception is that by and large, winners and losers were determined by luck.  Some people got huge windfalls, others had their personal finances wiped out, based on the timing of their housing transactions. 

The thing that makes no sense to me is the idea that the economy will recover after real-estate valuations recover.  The valuations before the crisis were absurd, and for them to "recover" amounts to re-inflating the bubble.

[Todd]

The thing that makes no sense to me is the idea that the economy will recover after real-estate valuations recover.  The valuations before the crisis were absurd, and for them to "recover" amounts to re-inflating the bubble.

I don't think anyone, or at least anyone who is sane, is saying that real estate prices need to reach the same level they were at in 2004-2007, but rather that they need to get back to the long term trend line.  Real estate prices in much of the US overshot on the downside in 2008-2011.  Having depressed real estate prices helps no one.  The bigger impediment to recovery has to do with overall private debt levels.  The US has gone a long way to reducing the private debt burden, but more needs to be done there.  Part of reducing the debt is allowing foreclosures and bankruptcies (personal and corporate) to proceed apace, but part of it may require more government action.  Of course, this is where policy options become more contentious.

On a somewhat related aside, it is interesting to see that some erstwhile Wall Street heavyweights are starting to call for a reinstatement of Glass-Steagall, or something like it, including Sandy Weill, the very same guy who, with John Reed, announced the deal to create Citigroup while it was still technically illegal.  Of course, Barney Frank (like him or not) pointed out that such a move in itself may not be sufficient since the new types of financial products used to market the loans didn't exist when Glass-Steagall was around.  Will any President or Treasury Secretary go down such a path?

[kishnevi]

I find it odd that you proudly claim to have no sympathy for people who made apparently wise, conservative financial decisions, but who have had their savings obliterated by a market bubble.  Perhaps you imagine a sub-prime mortgage customer who bought a house with a huge mortgage he or she couldn't afford and expects to be bailed out.  There were some of those, but that is not the typical victim today.  Those people are already foreclosed.  Imagine a person who got their first good job during the bubble, moved to a new city, and needed to find a place to live.  That person gets a sensible 20 year, fixed rate mortgage that they can afford to pay, and suddenly the value of the house drops 30% or more, so that they are paying a $500k mortgage on a property now worth $300k  Maybe that person keeps his or her job, but now has a net worth of negative $200k.  Maybe that person loses his or her job and has to move to take a new job.  That person has no choice but to sell and has a $200k mortgage, and no property.   You have no sympathy for that person?  The banks, on the other hand, deserve that $200k windfall, collecting a $500k mortgage on a $300k property.   After all, it was their bubble, don't they deserve to profit from it?

But in your case, your mother gave you a house, and that makes you more deserving than the person in the story.

These people in your example made a financially irresponsible decision because they are treating an inherently long term investment (reas estate) as a short term investment.   They bought high and now want to avoid the consequences--the risk they took materialized, and now they want to get out of the deal.   The person in your example (and I think there are not that many compared to people who simply bought high and now are whining) could rent out his current house and rent a place in his new place of employment.   

Real estate is a long term thing.  If you can't afford to keep it for 15 or 20 years, then you shouldn't buy it--or at least have the decency/intelligence to deal with consequences.

And many of the people complaining about being underwater are not actually in danger of being foreclosed,  or in need of moving because of important life changes, but simply upset that property values are lower.  They're just trying to get out of paying what they promised. 

And I'll thank you to not to sneer at my mother, who did things the honest and correct way.

[Scarpia]

And I'll thank you to not to sneer at my mother, who did things the honest and correct way.

I was not sneering at your mother, I was sneering at you. 

[ibanezmonster]

The common answer seems to be not suicide but to ignore foreclosure as long as possible, and then complaining how your life was ruined by that nasty bank.

Well, suicide isn't just related to people losing their homes- it affects many more people. Not only that, but homicide in some cases may be an indirect result of banks' greed. The guy in Orlando a couple of years ago and the guy today have the same story: being laid off and eventually accumulating enough anger to kill someone. Sure, you could argue it's their choice to kill, but the root cause of the problem is due to greedy banks. Therefore, would it be a stretch to hold the banks should be held accountable for these deaths? If not, then you might as well say that Hitler didn't kill anyone if he never killed them in person.

These aren't just "nasty" banks, but the people who decided to do this are simply pure evil in the lowest form and deserve nothing less than to be taken out and shot.

I don't have any sympathy for the banks,  but I don't have any sympathy for the "victims", many of whom are simply sorry they bought high in a market that is now considerabley lower and don't have the patience to  wait for the market to raise up to the level at which they bought (and it will, although it may take ten or even twenty years to do so).

From what you wrote, I'm not sure how to interpret it... did your mom by your house for you or have you been living it the whole time? Just curious...

My parents bought the house we live in now in 2007... man, you ever have a place nearby that reminds you of this stuff every single day? I go outside and there is a neighborhood right next to my that started construction late 2007, and by the time early 2008 came around, only about 1/4 of the neighborhood had been built, and construction halted immediately. Since then, only a couple of houses have been built in the last nearly 4 1/2 years. It looks like a ghost neighborhood or an abandoned town, since it's such a large area with so few houses. Now, I mainly go in that neighborhood to use the basketball court, since I know I'll never have to worry about anyone else using it.

[kishnevi]

Well, suicide isn't just related to people losing their homes- it affects many more people. Not only that, but homicide in some cases may be an indirect result of banks' greed. The guy in Orlando a couple of years ago and the guy today have the same story: being laid off and eventually accumulating enough anger to kill someone. Sure, you could argue it's their choice to kill, but the root cause of the problem is due to greedy banks. Therefore, would it be a stretch to hold the banks should be held accountable for these deaths? If not, then you might as well say that Hitler didn't kill anyone if he never killed them in person.

That's a Godwin right there.  At least until you can give me an actual example of bank staff ordering someone to go on a murderous rampage.

Banks are supposed to be greedy.  They're in the business of making money.  I don't particularly care for them, but I don't see why people who make dumb choices (such as buying into a bubble) deserve sympathy, much less a bailout. 

I suppose what I mean is that neither the banks nor the people being foreclosed on deserved a bailout.  If you want to blame anyone, blame the politicians and regulators who allowed the banks to get away with their schemes and then bailed them out with taxpayer money.

From what you wrote, I'm not sure how to interpret it... did your mom by your house for you or have you been living it the whole time? Just curious...

My mother bought this house (actually a townhouse in a townhouse development) back in 1981 and has lived here ever since.  I've lived with her for most of my adult life, more and more as caretaker.  She's now in her early 80s and apparently is getting into the later stages of Alzheimer's.  I prefer not to give details because I'm not in the mood for a good cry....The mortgage was paid off at least ten years ago,  and I now pay the utilities and association dues and insurance because I need to save all her money for the expenses associated with taking care of her (live in aide, etc.).  When the money runs out,  God only knows what will happen. (And I'm an only child, so I have no siblings to dump/share this with.)  But meanwhile the house is under her name, mortgage free, although I have a power of attorney so I can do whatever needs doing, and will officially inherit it when the end finally comes.

My parents bought the house we live in now in 2007... man, you ever have a place nearby that reminds you of this stuff every single day? I go outside and there is a neighborhood right next to my that started construction late 2007, and by the time early 2008 came around, only about 1/4 of the neighborhood had been built, and construction halted immediately. Since then, only a couple of houses have been built in the last nearly 4 1/2 years. It looks like a ghost neighborhood or an abandoned town, since it's such a large area with so few houses. Now, I mainly go in that neighborhood to use the basketball court, since I know I'll never have to worry about anyone else using it.

Don't have that, but do have several units in our development that have been foreclosed on and sitting empty for a couple of years now.  Being in Florida, a lot of the bubble and foreclosure crisis has happened more or less under my nose.

[ibanezmonster]

That's a Godwin right there.  At least until you can give me an actual example of bank staff ordering someone to go on a murderous rampage.

Banks are supposed to be greedy.  They're in the business of making money.  I don't particularly care for them, but I don't see why people who make dumb choices (such as buying into a bubble) deserve sympathy, much less a bailout. 

I suppose what I mean is that neither the banks nor the people being foreclosed on deserved a bailout.  If you want to blame anyone, blame the politicians and regulators who allowed the banks to get away with their schemes and then bailed them out with taxpayer money.

Good point.

My mother bought this house (actually a townhouse in a townhouse development) back in 1981 and has lived here ever since.  I've lived with her for most of my adult life, more and more as caretaker.  She's now in her early 80s and apparently is getting into the later stages of Alzheimer's.  I prefer not to give details because I'm not in the mood for a good cry....The mortgage was paid off at least ten years ago,  and I now pay the utilities and association dues and insurance because I need to save all her money for the expenses associated with taking care of her (live in aide, etc.).  When the money runs out,  God only knows what will happen. (And I'm an only child, so I have no siblings to dump/share this with.)  But meanwhile the house is under her name, mortgage free, although I have a power of attorney so I can do whatever needs doing, and will officially inherit it when the end finally comes.

The later stages of Alzheimer's... it really gets bizarre at times, after observing my grandma going through it. Sometimes we could actually joke around about it, other times not so much. It's a strange thing- hopefully we find out one day reliable things to do to prevent it from happening to us.

[Scarpia]

There are obviously many problems. For one, I clearly chose the wrong skillset. I am a writer, and an editor, and if it's not egotistical to say so, I am unusually good at both. My writing once got a praisequote from Joyce DiDonato. But America evidently doesn't need writers.

We're getting a bit off topic, but I read an article in the NY times about a guy who started a service for providing bogus glowing customer reviews for books, and found himself making $28,000 a month.  ($99 for a review, $499 for a package of 20 reviews, $999 for a package of glowing 5 star 50 reviews.)

http://www.nytimes.com/2012/08/26/business/book-reviewers-for-hire-meet-a-demand-for-online-raves.html?_r=1&hpw

Let's start small, I'll pay $0.05 per post agreeing with my extremely perceptive opinions on this site.   

[The new erato]

We're getting a bit off topic, but I read an article in the NY times about a guy who started a service for providing bogus glowing customer reviews for books, and found himself making $28,000 a month.  ($99 for a review, $499 for a package of 20 reviews, $999 for a package of glowing 5 star 50 reviews.)

http://www.nytimes.com/2012/08/26/business/book-reviewers-for-hire-meet-a-demand-for-online-raves.html?_r=1&hpw

Let's start small, I'll pay $0.05 per post agreeing with my extremely perceptive opinions on this site.   

I do agree. You should start small.

[ibanezmonster]

We're getting a bit off topic, but I read an article in the NY times about a guy who started a service for providing bogus glowing customer reviews for books, and found himself making $28,000 a month.  ($99 for a review, $499 for a package of 20 reviews, $999 for a package of glowing 5 star 50 reviews.)

http://www.nytimes.com/2012/08/26/business/book-reviewers-for-hire-meet-a-demand-for-online-raves.html?_r=1&hpw

Let's start small, I'll pay $0.05 per post agreeing with my extremely perceptive opinions on this site.   

Well, if the only way to earn a living now is through unethical (or illegal) means, go for it! You have to eat, after all.

[Scarpia]

Well, if the only way to earn a living now is through unethical (or illegal) means, go for it! You have to eat, after all.

I can't see that there is anything illegal about it. 

[Gurn Blanston]

I can't see that there is anything illegal about it.

Don't know if you're old enough to remember the 'payola' scandals where radio deejay's were taking money from record companies to play certain records (and more money yet to NOT play other records) to boost sales. They found out that it was illegal! Hard to see that this is different in principle. That said, this may not be illegal, but it is certainly unethical, and places like Amazon have been making an effort to remove this sort of review from their sites. Probably never completely succeed, but glad to see they are trying.

[Scarpia]

Don't know if you're old enough to remember the 'payola' scandals where radio deejay's were taking money from record companies to play certain records (and more money yet to NOT play other records) to boost sales. They found out that it was illegal! Hard to see that this is different in principle. That said, this may not be illegal, but it is certainly unethical, and places like Amazon have been making an effort to remove this sort of review from their sites. Probably never completely succeed, but glad to see they are trying.

I certainly remember the payola scandals (the 45 rpm disc came in a sleeve stuffed with bills, as I recall.)  In the case of the radio play, presumably the cash was pocketed by the DJ, who then used the radio station's facilities to publicize the record.  The DJ is effectively stealing from the radio station.  I can't see how it would be illegal if the record companies were paying the radio station itself.  That would just be marketing.  Food companies, for instance, pay supermarkets to display their produces on the shelves. 

But in this case I don't argue that it is ethical, but how is it illegal?  In the case of the paid reviews, the review writer is selling his own services.  He does, presumably, violate the terms of use for Amazon's user review system, but is that an enforceable contract?

It just generally confirms my view that the internet is mostly the world's biggest sewer pipe.

[Gurn Blanston]

I certainly remember the payola scandals (the 45 rpm disc came in a sleeve stuffed with bills, as I recall.)  In the case of the radio play, presumably the cash was pocketed by the DJ, who then used the radio station's facilities to publicize the record.  The DJ is effectively stealing from the radio station.  I can't see how it would be illegal if the record companies were paying the radio station itself.  That would just be marketing.  Food companies, for instance, pay supermarkets to display their produces on the shelves. 

But in this case I don't argue that it is ethical, but how is it illegal?  In the case of the paid reviews, the review writer is selling his own services.  He does, presumably, violate the terms of use for Amazon's user review system, but is that an enforceable contract?

It just generally confirms my view that the internet is mostly the world's biggest sewer pipe.

It's fraud. That's illegal, I think (although you would never know it these days!). Anyway, we can certainly agree about the Cloaca Maxima!.

[Scarpia]

It's fraud. That's illegal, I think (although you would never know it these days!). Anyway, we can certainly agree about the Cloaca Maxima!.

There's a fine line between fraud and marketing. 

Long story short, the guys business imploded when a prostitute who had self-published a memoir started giving his reviewing service bad reviews, and Amazon started deleting his reviews.   But he never got into any legal trouble.

http://www.nytimes.com/2012/08/26/business/book-reviewers-for-hire-meet-a-demand-for-online-raves.html?_r=2&hpw

[ibanezmonster]

But in this case I don't argue that it is ethical, but how is it illegal? 

It's unethical, but I'm not sure about it being illegal or not... the "illegal" part I added as a hint of broader things to come unrelated to that.

[Karl Henning]

This is exactly why Romney won't release the returns. He wants legal to be more germane than ethical.

[Karl Henning]

Not that smooching Trump is quite "ethical,' either.