The Big Apple mag takes a shot at purveyors of “balefully misguided progressive discourse,” i.e. me and a few others who cheered the GameStop rally. A note in reply
Matt- stay strong. Fuck the phony bullshit elitists and their cute little MFA essays. Stay close to the real people on the street. That’s where real life exists.
The sub prime meatloaf bundling great loans with redline crapola was made to solely to pass the reqs of Fanny Mae and Freddie Mac. If those quasi governmental entities were not legally required to accept that shitloaf none of that would have happened. Gov't pressure for "geenlining" is the direct cause.
File under "true but will absolutely be called 'racist'".
One of my son's black friends was mystified when a (Countrywide) mortgage agent tried to sell him a 400k house with a variable (on his $30k income) by showing him a chart of home prices over a decade and a half and telling him "Look, if you're not making more money in five years, just sell and pocket the equity from the price increase! Easy money!"
He'd made his peace with being relatively poor and carved out an enjoyable life. He smelled scam and noped out. But it was an interesting data point a year or two later when it all hit the fan.
As I read this something occurred to me. Maybe the Covid hysteria would have been less had the government NOT intervened. So many people have been hypnotized by stimulus and clickbait crack because that very stimulus allowed that to happen.
I’m still appalled by the fact my grandchildren’s tax dollars will be servicing debt we issued to prop up Carnival cruise lines, who basically uses serfs as their staff and registers there ships in far flung spots around the globe to avoid American labor laws. American Airlines is another one that should’ve been allowed to die. It all disgusts me. The truly poor haven’t been helped as is evidenced by the homelessness epidemic in many major cities.
This morning I walked around in a building on a lake in Southern Oklahoma that was built by the WPA and CCC back in the 30s. Almost 100 years old and these things are still standing - to me a testament to what true government “aid” should look like. These jack wagons in DC keep printing money to keep the oligarchy rich and the lobbyists keep feeding them more dough, and the cycle continues.
Instead our tax dollars go to help a few kids get wealthy, a few billionaires to have a few less billions, and will still leave us morally and spiritually bankrupt...and about the same as we were before economically. What a farce!
COVID hysteria began when Wuhan supply chain interruptions led to razor thin leveraged margins “eroding”. That meant bailout or ruin. This is the start of corporate media whores whipping up a panic. $$$
Then after Trump stumbles into a trap its seen as a way to undo him - it worked.
COVID restrictions are also a good way to prevent free assembly, and the hated religious worship.
COVID crushes small businessmen- who just might support the GOP.
COVID destroys your enemies politically, disenfranchises their voters, lets you take trillions, enriched connected Tech Lords individually by billions each, and a year later we’re living in Communist Eastern Europe 1980s in terms of political rights with the social safety net of Brazil’s Favelas.
COVID is Annus Mirables for the Elites, and Annus Horribles for the rest.
Agreed, the 2 party system is currently a mirage. The party in control is the Uniparty where the labels D and R no longer have any meaning as they both draw from the top end of the enormous trough. Its One big club. Whatever R or D in "in power" no longer has any meaning, they all feast just as succulently. They are on the same side and work together because they suckle from the same teat of the entrenched bureaucracy. They know the FIB and MSM control the elections. Enjoy your Red White and Blue Banana republic with Dominion certainty of electoral results.
But what if Trump can claw to actual leadership of the R party? Push aside the obvious grifters, and joe public knows who they are. Only then will we have a real 2 party system again. From my POV this is the only salvation for a USA as founded. It is that serious.
Agreed! Lockdown (lots of studies of the damage) show an exponential growth of health stress due to job loss, family separation and isolation. Think of all the money Pharma will make treating all the depression and stress as a result. Then add all the experimental " vaccine" money and the drugs they will provide people who have experienced side effects (Bells Palsy, fertility issues, heart issues etc.)
As far as I know cruise lines didn't get any money or loans from the stimulus packages thus far. Neither has Boeing although they came close and many people believe and claim they did . Airlines did get 15 bil
Look up "Strength Through Joy", a Nazi program (yes, I know, I just Godwinned this, but it is relevant). It shows how cruise ships might just have some importance to a totalitarian overlord.
Spot on! I recounted my own story on the other Game Stop post, so I'll just say here that the part about the shame was very, very real. I was 40+ years old when we defaulted on our mortgage. Prior to that, we had platinum credit. And our mortgage was not an ARM- didn't matter- the value of our home depreciated about 45%. It was beyond embarrassing not to be able to pay our bills, and even friends and family insinuated or said outright that we homeowners were to blame. And yes, unlike this past year where people have been able to dip into their retirement accounts without a tax penalty, we paid the hefty penalty as we drained our accounts to try to stay afloat. There was also no moratorium on evictions or foreclosures. I know there are many readers of this blog who (rightly) criticize Democrats for their many failures during the 2008 crisis. I remember also, though, a Mitt Romney statement that was roughly, "Don't fight the foreclosure on your home. Let the VCs come in and buy up the properties." Democrats are very weak on these matters, for sure, but Republicans will also leave you high and dry with not so much as a "by your leave."
Whoa Nellie! There are so many comments here, I'll just reply to the original post. I had posted elsewhere that my husband lost his job, which was 2/3 our income, and then was diagnosed with Parkinson's and could not get another job, which was what made it impossible to pay the mortgage. Had this unfortunate event happened without a drop in the housing prices, we would have just sold our property and moved and downsized to my income level. It was the trifecta of loss of job, health crisis and plummeting housing market- all of it continuing for years that made our situation impossible to sustain.
I'm not looking for anything here other than to say that sometimes, even responsible people can get their boat swamped. Not asking anyone to feel sorry for me. Just saying that my family, like a lot of other families, got hit hard by a macro economic downturn that was not entirely under our control.
Your loss of short term liquidity due to the drop in housing prices was unfortunate. By rights, you should have been able to sell the house for a value approximating the mortgage. It is not typical of the things that were going on in 2008. Most people were using the house as a piggybank, and refinancing to get more money out of it to live large. Alternatively, people were flipping houses and expecting that the game of musical chairs would never end. It always does, though.
«I was 40+ years old when we defaulted on our mortgage. Prior to that, we had platinum credit. And our mortgage was not an ARM- didn't matter- the value of our home depreciated about 45%. It was beyond embarrassing not to be able to pay our bills, and even friends and family insinuated or said outright that we homeowners were to blame.»
And indeed you were to blame: whoever signed up for a loan on 10-20 times leverage on an asset that can go down in price should be blamed if that asset goes down in price.
If you could not afford the risk of a 45% loss on a leveraged speculation you should have been a renter. Do you think that you are entitled to own real estate, and risk-free too? Your implication that you were not to blame can only be justified if someone had formally guaranteed that the price of your house would never fall that much. You may have been deluded that it was a one-way bet, but turns out nobody guaranteed that to you.
Sure you are bitter that most people who owned real estate before you did get away with the risks of highly leveraged borrowing over a volatile asset, but eventually someone eventually will be burned (not Wall Street of course) by that volatility.
Also: a 45% drop? Only highly speculative real estate close to the "beachfront lot in Arizona" type had a fall that huge.
How does one go from being able to afford a payment on a home when it is worth $500,000 (for example) to not being able to make the exact same payment on the same home now worth $300,000? The payment is based on the loan, not the value. The only real "cost" is being unable to sell at will.
* Many if not most of them though they would have to make the payment on the $500,000 mortgage only for a short period, and then flip the house for a big cash profit.
* Some lost their jobs in the recession and they had never expected to have at the same time the downside of a crash in house price and a loss of their salary, because they thought that cannot happen, must not happen, to middle class people, only to lower class "losers".
«Jillian is not responsible for her house valuation halving in a year»
But was she responsible for exposing herself to that risk or not?
Was she forced to buy or did you and her have the option of renting? I know a number of people who starting in 2005 decided that the risk was too big and sold to people like you and Jill and switched to renting to minimize the risk.
How do you become risk adverse to corruption and fraud? how do you forecast for that? What a ridiculous suggestion. You know it was fraudulent criminal behaviour right?
Something very missing in this is that buying in say 2005 yielded access to what one couldnt afford.
I bought a home in 2005 and sold in 2011 losing 16%. BUT my alternative rental i could afford without a loan from loose banks was a much lamer condo that would have gotten me 80% less interest from the opposite sex. And the parties we had in the house, OMG.
When the banks are loose and end up losers, you can lose money too but you are gaining something otherwise unattainable. In the end, my total costs on a monthly basis were what it would have cost to rent the house the whole time, but a landlord wouldnt have done that deal based on my income. the banks did and I'm eternally grateful.
sorry about to hear about your experience but fluctuating value of the house is not correlated to one's ability to come up with a set monthly payment anymore than a 500 per month you pay in car payments is correlated to the fact that in 4 years the car going to be worth 40% less.
Most people who buy houses - and who were foreclosed on during the crash - bought those houses to LIVE in. Not as speculation, nor particularly as investment. Simply to have a place to live and raise their kids and maybe retire.
When you pay rent, at the end of the deal, you walk away with nothing - no principal at all. When you buy a house, you pay the mortgage for 20 years, or 25 or 30 - and then you own it. No more monthly payments.
And I'm not sure what part of the country you live in, but in California, in many markets it's actually more expensive to rent than to pay off a mortgage.
We bought our home to raise our kids in, and to spend the rest of our lives in. (Having written about music for the better part of 30 years, I've accumulated thousands of LPs - to the point that I told my wife that our last move was MY last move - my back has no more moves left in it. You move vinyl enough times, it wears on you. Next time I move out, it will be feet-first. And my kids can argue over the records.)
«Most people who buy houses - and who were foreclosed on during the crash - bought those houses to LIVE in.«
That's just handwaving...
«Not as speculation, nor particularly as investment. Simply to have a place to live and raise their kids and maybe retire.»
I have heard this ridiculous claim so many times and I always ask: so you would agree that there should be a law that homes should always be sold for the same amount they were bought for, if the goal of owning them is just to live in them without considering the speculative upside.
Somehow I think that many if not most people would not buy if they had to sell for the same price they had paid. The "certainty" of a big fat tax-free, work-free upside is pretty common as a motivation for buying vs. renting, and for buying as big as possible, with the highest leverage achievable, to get the maximum speculative profit possible.
«When you pay rent, at the end of the deal, you walk away with nothing - no principal at all.»
That is usually wrong: if you pay rent, you still got the money that would have gone into paying interest on the mortgage, which is usually over half the mortgage. Many have computed that if real estate prices were not ballooning it would be cheaper to rent and put the capital into securities. Putting the money into real estate rather than securities means that one expects real estate to balloon in price faster than securities.
«in many markets it's actually more expensive to rent than to pay off a mortgage»
That only happens if interest rates are low, that is if real estate prices are growing fast. And it does not take into account the risk that the price of the real estate could fall below the amount of the mortgage, while rents have neither upside nor downside.
In the end the only reason to buy vs. rent+stocks is the expectation that capital gains on real estate will be bigger than dividends or capital gains than on stock, that is that highly leveraged speculation will win.
Accordingly quite realistically BusinessWeek wrote recently:
“From the minute the average couple busy a home they're constantly calculating how much they'll make when they sell it, and most won't sell for much less once that day comes.n
“ if you pay rent, you still got the money that would have gone into paying interest on the mortgage” Just how fucking out of touch are you, actually? If you rent (like I have my entire adult life until a few years ago), it’s because you don’t make enough money or have a steady-enough job to feel comfortable buying. I wasn’t saving any money when I rented; I was spending that money on my rent!
“Most people who buy houses buy them to to LIVE in” is just “hand waving”? Why? Because it doesn’t help the lame-ass point you’re trying to make? Most people DO buy houses to live in, asshole. Is it also an investment? Sure. Especially in places like here in CA, where, like Jim said, it’s cheaper to buy than to rent. It just makes sense to buy, if you can (I can’t, but my girlfriend can). But we LIVE in these houses, dick.
This sounds like it was a budget issue ..maybe from loss of a job or other income source? A drop in the value of a home doesn't effect the mortgage payment on a fixed rate loan. It sucks if you need to relocate and have to sell at a loss or if a better rate is available and you can't refinance because of LTV requirements. It sounds like terrible timing if you weren't able to take advantage of the short sale options many people used post crash
Some one got adjusted out of their house? Or adjusted THEMSELVES out of their house? A shark sold someone a mortgage loan they can’t afford? Who borrows tens of thousands of dollars without a lawyer to review things, especially when they know what they don’t know?
Now don’t get me wrong. There were plenty of crooks in the housing bubble on Wall Street and in the mortgage brokering business. They should all be in jail. On the other hand, there were loads of people who knowingly took out liar loans and they should be in jail too. You never hear that though. Every borrower was a victim. Not true. It took two to tango. Three in this case - greedy Wall Street bankers, deceptive and dishonest brokers and lying or stupid borrowers.
None should be let off the hook and none should be pitied.
Who borrows thousands of dollars without a lawyer? EVERYBODY. I have purchased a dozen homes in my life and never, not once, has a lawyer talked to me about the type of financial vehicle financing the property.
«Who borrows thousands of dollars without a lawyer? EVERYBODY.»
Only the people who expect that the price of the collateral will balloon, so any problems will be paid for by the next buyer. If they are sure that the price will double in 10-15 years, why worry about the terms and conditions...
No, but I could have gotten any of my lawyers to weigh in on how I was financing. Of course, I never did anything but a bog simple 30y fixed, so...not much to say.
The average house price in the US in May 2020 was 284,600. Nearly 50% of home loans "use" PMI (as of 8/19 - it fluctuates, that's the latest I've seen).
No matter how cheap a lawyer is (or how good of an idea it is to run a serious contract like a note by one) - you can't honestly believe someone borrowing $250k, and unable to scrape together 50k for a down payment, is willingly going to spend $500/$1000 extra?
This isn't a comment on whether they SHOULD or not - just on actual behavior.
A number of states, like NY, Mass, NC, De. and others literally require that a buyer be represented by an attorney. Quite a large number of mortgage lenders insist on it even in states where it is not required.
Do you talk to lawyers before buying insurance? No you talk to an insurance broker. How about investments? A Stock Broker. Same with Mortgages, you talk to a Mortgage broker, they explain it. But they arent lawyers.
Elizabeth Warren on credit card agreements: "I taught contract law at Harvard University and I can't figure out some of the stuff that's in these agreements - and you expect a mother with 2 kids and an Associate's Degree to understand what it's all about?"
This bullshit of blaming the victim with the "they knew what they were getting into," or my personal favorite, "Hey, nobody forced them to sign that contract!" is tiresome.
This isn't fair. People understand the cost of credit. They just get in situations where they feel they need it or worse so many businesses require a credit card to do anything. It's "not a mother with two kids and an associate's degree" that can't figure it out. That is a disparagement.
This is true. If you do not have a credit card/functional credit you will truly get raked over the coals. I’ll defend the payday loan places-you have to pay for convenience, but Rent to Own places would make a Jersey loan shark blanch in shame with their rates.
Doodybag? Finance got $29 Trillion from the Fed in 2009, add a few trillion in QE, and another $9.7 T this year.
Why can’t the commons get enough love to live indoors and eat regularly?
I’m so Right Wing I’m flossing with steel wire, and paid my way my whole life. I also understand these people are criminally insane, and need to answer for it. If you invited these Financial Wizards to Dinner you’d have to count the spoons after...some WILL be missing.
Adverse outcomes?
Adversity and outcomes “on the way”...as we say in my trade.
Tell me how much the government lost...or earned...on bailouts to financial companies. We know that they lost money bailing out decrepit car companies in favor of the unions whose unsecured c,aims were elevated above secured claims.
No, what's really tiresome is that hose that complain loudest about "everyone with adverse outcomes in life" are the ones that benefit the most when government steps in to hold the doodybag.
No really. I agree with everything Matt said. There were also plenty of folks flipping houses and building decks, etc with easy money. Until there weren’t.
But they are stupid and/or foolish to trust strangers. It isn't hard to find out the kind of loan you're signing up for. Sorry if you don't like that, but it's obviously true.
Yes, some people knowingly took out "liar loans," probably as a result of lying to themselves, or being convinced that real estate would keep on going up. We were offered one and turned it down. But you're ignoring most of the stories, people who were lied to, getting an ARM when they thought it was a normal mortgage (who can afford a lawyer in such a deal? Bit of privilege showing through, there.) Or who had an affordable mortgage until the whole economy was ripped out from under them - by Wall St., who suffered very little.
In 2008, Wall St., collectively, and a bunch of idiotic economists drove the economy into the ditch. They should all have been left to wait tables for a living, or worse. Some should be inn prison - still. but no, they were bailed out, which was hugely, passionately unpopular at the time. That was one of the big sources of the Tea Parties, for one example. So the whole thing was an exercise in corruption - by Obama's government.
Why is it that so many people ignore the genesis of the housing bubble came from governmental requirements that loans be made to people who couldn’t afford them under penalty of law? The banks who were threatened thst they could open new branches or acquire other banks unless they paid off liberal community organizers? The requirement that Fannie and Freddie make bad loans? The Congressmen who got sweet deals on their own loans to protect predatory lenders?
And if you can’t afford to buy a house without basic advice from a lawyer you probably can’t afford the house anyway. But you WANT it. I want a lot of things - when I was young I wanted to be a MLB right fielder. No one gave it to me. Is it unfair that I couldn’t get my desired occupation? Was I discriminated against?
The most important transaction in your life any some of you demand that a person be justified in relying upon a person on the other side of a commercial deal? Have you lost your minds? Should they be accompanied by the store manager of a grocery to ensure they buy the best deals on offer? Shall we hold McDonalds liable when fools eat their crap twice a day and get diabetes and heart disease?
When are people supposed to stand on their own feet and realize hat they are in over their heads in in such a fundamentally critical financial and life decision??
Here it is people, the most shopworn trope in the post 2008 conservative playbook: the poor widdle wenders were forced -- forced I tell you -- to throw away their underwriting standards and approve those loans, and even resort to fraud. They HAD to lend to the unworthy, or face jail! Because we all know that it's Congress who tells the financial services industry what to do and not the other way around...
I do not understand why you think the bankers tell the regulators what to do.
I work in the DoD and I know about regulatory capture, and the impact of bought congresspeople, but that isn't the same as a regulated industry telling the regulators to shove it and do what they want.
Let's say it were, though. Why are you so insistent on letting the politicians off here? They are certainly culpable.
Why is it that people think everything is an apples to apples comparison-- all neat and linear? Nothing about human behaviour is--ever. As a medical professional it is mind blowing that you think that there is a direct correlation between eating McDonalds and heart disease/diabetes. I have patients that eat similar diets and have none of those illnesses-- must be something else could cause those illnesses right?
You can't compare that to the fraud and corruption done by unregulated practices by banks and their "salespeople" who promise you will get "more cash flow", better rates etc. to unsophisticated buyers aided by levels of govt who ignore (or remove it - Glass Stegal) and look the other way not to jeopardize funding during election time. It is not even remotely comparative.
Thank god I live in a country where there are rules (and recourse for the home owner) about this kind of predatory "salesmanship". And yes we have real bank regulations as well. Banks are not total crap tables here. FYI-- Canadian real estate didn't implode, no bank failures and no bank bailouts-- all due to very basic regulations (Canadian banks do very well--$ billions well all around the world)
Funny my husband the fraud lawyer is dealing with a case where a big company is suing an insurance company for not providing Ponzi scheme insurance thought -- seriously -- and they are "sophisticated buyers" but lost millions of dollars so they get opportunity to get it back. Not the unsophisticated home owners who were lied to, not provided basic information about what they were buying and yet the "company" gets recourse. Nice system!
Your " boot strap" comparison is eye-rolling. The world and especially human behaviour is not that linear and direct --ever.
Well then, let’s get everyone assigned a government monitor to make sure that everything they thing they bargained for or are entitled to is delivered. But query, do the monitors get monitors?
I believe almost all mortgages made in Canada are "recourse" yes? That is the fundamental reason there wasn't a housing meltdown in Canada. Simply doing the same here in the states would end the threat of a repeat and take bad actors in the mortgage origination process and ignorant consumers off the table.
In the past, and theoretically still, bankers and other corporate lenders were required, under penalty of law, to deal honestly, precisely because otherwise they had a license to steal. Which they now have, because they've bought off the cops.
Otherwise, ordinary people couldn't buy houses, or even cars, at all.
«Why is it that so many people ignore the genesis of the housing bubble came from governmental requirements that loans be made to people who couldn’t afford them under penalty of law? The banks who were threatened thst they could open new branches or acquire other banks unless they paid off liberal community organizers?»
Can you quote the word of any federal law as to that? The CRA as the name says requires nothing like that:
* examines state member banks to evaluate and rate their performance under the CRA;
* considers banks' CRA performance in context with other supervisory information when analyzing applications for mergers, acquisitions, and branch openings;»
I cannot see any requirement or threat there, never mind related to pay off "liberal community organizers". Is the Federal Reserve a far-left propaganda organization?
«The requirement that Fannie and Freddie make bad loans?»
Can you quote the text of any law that allows Fannie and Freddie to make loans to people, never mind bad ones? AFAIK Fannie and Freddie can only *buy* loans already made by banks and other mortgage lenders. It is up to the banks to make good or bad loans. The banks have however paid Congress to ensure that Fannie and Freddie and the Fed bail them out by buying the bad loans they made, and indeed the Fed has bought trillions of dollars of bad loans ("toxic assets") at "special friends of Congress" prices from the banks.
A 2010 WSJ article which speaks to HUD secretary requiring the two GSEs to hike Their purchase of subprime loans to 50% of the total. And forcing them to degrade lending standards.
Also REGULATORS, whose approval for mergers and branch openings were withheld unless they followed preferred lending guidelines, controlled that process. You want a law - look at other enabling statutes giving them broad authority to regulate mergers and branch openings.
You see, to love the regulatory state. Why demand specific statutes when broad grants of authority work like a charm?
If John Doe or Juan Perez or Laqueesha Brown or Hmong Tet etc can lose their house, then the Hedge funds, CITI and AIG can lose theirs. Paul Krugman can take his Nobel to the pawn shop, and the ratings agencies can go to jail. So can whoever blew it at the SEC.
The problem wasn't adverse outcomes, the problem is the adverse outcomes were 'unequal'. The criminal masterminds can go to jail, certainly mr. mozillo at Countrywide.
Now in truth history suggests that having avoided Jail, they'll now ride the Trumbrels.
Which explains the panic, stealing the election and all the rest.
You are not looking at a government of genuine thugs taking power, no.
We'd be better off under genuine thugs, they understand consequences.
You are looking at spoiled and usually old, privileged all their life over-promoted bourgeois criminals who are terrified, and every response and action, word demonstrates their terror.
They were of course never afraid of Trump, they were afraid of his voters, of a nation that would go against the elites.
How many years is Trump going to be the whipping boy of the unprincipled left? Let me remind you that some moron named Obama was President for 8 years and his “wingman” didn’t prosecute anyone. Bang on him for that. As to Wall Street, they heavily backed both Hillary and Biden over Trump. Hmmm. Wonder why Obama and a holder didn’t go after them?
Rick I was talking about 2008 in the first two paragraphs.
After that I talk about the present govt, Biden's.
The link between 2008 and 2021 being;
"Now in truth history suggests that having avoided Jail, they'll now ride the Trumbrels. Which explains the panic, stealing the election and all the rest."
I'm not leftist, as explained earlier I'm so right wing I floss with steel wire.
Trump was not blamed above by me.
He's gone, he tried, he failed. This govt can't be reformed.
These elites are quite beyond saving.
My only mention of Trump being they're afraid of the voters, and the nation.
I'm not principled at all about politics now, the Constitution is destroyed by counter-party treachery - I hold my Oath...abrogated by counterparty.
Now we can live in a country with oh..a few million, and a few million more like me...noticing the Capitol only stands because of Troops! Whee.
Actually...my Oath nullified... I'm FREE!! NIHLISM HERE WE COME !!
If you don't like government by train wreck neurotic criminals, lets try government by Condottieri ! WHEE !!
1. You need to know you should have a lawyer and then you need to be able to afford one.
2. Mortgages should NOT be so complex you need a lawyer.
3. Part of the problem here is that at the same time this crap was going on the same Wall Street firms were pushing for whole industries to be pushed overseas to China wiping out jobs.
4. The 30 yr mortgage as it is built today is a disaster waiting to happen. The days of working steadily for one or two firms for 30 yrs are gone. People today are going to have ups and downs in income and stretches of months without work as automation takes over. Even lawyers and doctors are soon going to be finding themselves at risk. Already seen a large loss of autonomy and drops in relative income for those professions and it is just going to get worse.
5. It took 2 to tango but the only ones left to suffer were the borrowers. The finance guys were too big to fail or jail as Holder told us. SO, half the dance pair got screwed while the other got richer. We could have just as easily given the money to the borrowers so they could then pay the banks. Oh....THAT would be a moral hazard.
Bottom line, with what is coming, the old way of thinking about the economy is gonna have to change. The reliance on stable incomes and economic growth to solve the issues of sheltering, feeding, educating and providing healthcare to a national population is just going to have to be rethought and that is going to have to include how we view the possession and application of capital. Aging populations. Gig work. Offshoring. Large scale automation whether in the form of robotic process automation or production automation, the decimation of brick and mortar for the internet, expert systems to replace lawyers and doctors, all these are going to massively disrupt the old order and make it much much harder to point to people and say that their circumstances are their own fault when in fact the environment they are coming out into has made their very existence unnecessary.
In our system, people are "human capital stock" or "consumers" or "taxpayers" but never citizens anymore. They are inputs to the economy, not valued simply for being human.
The point of all of our systems, government, law, capitalism etc. is to provide for the most number of people possible the best possible life. BUT..the system is broken and antiquated and it is failing to provide what it did in a different, less technologically advanced, time.
BUT..ultimately the PEOPLE are the WHOLE point. Capitalism for its own sake is a waste. Democracy for its own sake is useless. Democratic Capitalism that fails to provide for the needs of the nation is a failure.
If you can’t afford a lawyer, you can’t afford a house.
Mortgages need to be complex for lots of reasons. There are legal consequences to borrowing so much money on a recourse basis secured by your hime. This isn’t a simple process like most other purchases and moreover it represents the largest investment most people will make in life. Most people aren’t financially sophisticated. And loan products have gone from conforming loans to all sorts of options that are highly complex. You can’t simply outlaw all but confirming loans,
Outsourcing is not just a product of evil corporations outsourcing manufacture. It is also a product of government policy. China, the biggest beneficiary uses the equivalent of slave labor salaries to reduce costs. India too. And both countries pollute up the yang yang, but Obama and Biden foolishly allowed them to continue to,do,so,in the Paris accords. That’s just stupid and it reduces loads of costs.
On the other hand American companies are subject to huge and costly regulation, much of which are politically driven rather than otherwise. The left’s alliance with labor unions prevented them from aligning labor costs with competition, to a large degree. Here’s an interesting story - Pittsburgh Plate Glass (PPG) sought to keep their labor costs for legacy employees whole while creating a new tier for new hires. That resulted in a bitter 5 month strike thst still didn’t resolve the issue. Ultimately, the company thst invented modern plate glass and safety glass for cars exited the glass business, selling it to a Mexican company that was free of this kind of nonsense and hyper regulation. Now PLG Imdistriesmsells paints and costings instead.
The US under Clinton responded by granting China MFN status instead of hitting them with equalizing tariffs that would have kept the jobs here. Oh, and they also welcomed them into the WTO. Primarily fo dirty campaign contributions.
And they did that knowing that China was an economic bandit. Clinton had to know what the natural consequences of doing all this was, but he wanted the dirty money. And presidents come and go, but guys like Xi stay for decades. The first guy to call China out and impose realistic policies were banged by domestic political opponents because they want power - regardless of the effect upon the citizens.
And you wonder why any company would not export jobs to the lowest cost provider??
Heel we all do it ourselves. Why do you think that Walmart and then Amazon succeeded? Selling low cost Chinese goods for less, putting small business out of business. Walmart has 265 million people shop in their stores for a reason - Americans want lower costs, just like manufacturers. Amazon has 150 million shoppers and 100 million prime customers for a reason.
The result is while outsourcing labor hurts jobs, shoppers don’t give a shit because they shop on price just like manufacturers.
And how many people say, I’m buying American cars? I walked my dog today for two miles and counted the cars. 184 foreign cars, 71 US cars. Not so long ago, foreign cars were novel in the US. You’d see the VW bug a lot and a few other cars. Repair shops advertised “foreign cars” as a specialty. The first Honda in the early 70s was a shitty little tiny car a bit larger than the crazy Smart car. They and others grew massively. Why? Because they were cheaper at first. Quality came later. But you don’t hear about how the people buying these cars were hollowing out the US manufacturing base and causing massive job exporting.
Because the little guy is always a victim, he can’t be part of the problem,.....
The highs and lows that individuals may experience is a product of many things. But what would you do with mortgages to accommodate that? As a lender, I’d look at a person’s likelihood of job stability and decline offering mortgages to people most likely to have variable and unstable income. Thst is only business sense 101. But if they did thst, something tells me there’d be demonstrations in the streets.
And why is it the government’s job to provide food, healthcare, shelter, etc.? Why isn’t it a person’s individual responsibility to confirm their consumption to their reliable means? The central government was intended to be one of limited powers. And before the middle of last century, none of these things you see, to think are national responsibilities were performed by the Federal government. The growth of these federal programs created more need than they satisfied by telling people that they didn’t have to be primarily responsible for themselves. Now you have people who do the math and determine whether they get more pocket money from handout programs then by working. We have less needy people and more wanty people. And let’s not even get into the resulting devastation to the nuclear family unit thst these programs produced.
The people have become what they want to be. They want equity enforced regardless of effort. You are absolutely correct that the system is broken, but at the end of the day the citizens broke it. DeToquville said that America would lose its character when the citizens realized that they can be bribed by the government.
Now you have inter generational dependency. Not an accident - the left realized that if they are perceived as providing people with their needs and wants, they’ll get their votes. So they’ve kept millions captive in a soft form of slavery, dependent upon them for life’s essentials, trapping them in broken communities filled with violence, drugs and a low interest in education which would allow them to keep up with our changing technological economy and society. Funny how these technological ply challenged people all know how to use their smartphones and organized for more more more that they don’t earn.
Capitalism works when people don’t have socialist infrastructure to cripple them into dependents.
rick.. were you born retarded, or was it all that rotgut whisky and prozac? or are you just a psyop professional, gracing us all with your broken propaganda and anxious, buns up and kneeling, neoliberal boot licking?
Its it so sad-- you see it everywhere-- usually with virtue signalling and self righteous commentary. " I am doing well so I can kick those that didn't do what I did" " I am in the group I don't want this person in, because I won't be special (ie house owner)anymore" Cringe worthy. Standard insecurity and what fuels xenophobia.
It is the worst human trait. I want everyone to do well. I believe everyone deserves opportunity and equal access. What I don't believe in is predatory "salesman" taking advantage of people -- that is where some minimal regulations can come in-- like a cool off period etc . So that 79 yr olds don't get burned, so that undereducated dont get burned.
Rick does have a point, though. The 2008 crisis was exasperated in the legislature where regulations were modified or amended. Many of the loan agents were performing clerical duties, ignorant of the dire consequences. Yes, there were also those that knew it would end up badly for some, but the real culprits were on Wall Street where the risky loans were packaged in derivatives and CDSs and sold to the nearest sucker. The Tarp agreement ensured that the taxpayers bailed them out while the financial executives issued themselves obscene bonuses to add insult to injury. The Obama administration effectively endorsed the agreement by failing to go after the culprits even though Senator Carl Levin's subcommittee on investigations had uncovered considerable evidence toward indictments. https://www.hsgac.senate.gov/imo/media/doc/Financial_Crisis/FinancialCrisisReport.pdf
Actually, as I've read more of Rick's posts, I can see he does NOT hold the lenders, and their governmental non-regulators blameless. He just points out that a LOT of the people who got "hurt" could have seen this was bullshit and avoided their exposure to greater risk than they could afford.
I have posted one anecdotal case where a young black guy called bullshit on a Countrywide offer ON GENERAL PRINCIPLES. And lo, he was not harmed by the crash.
That said, I also see your compassion for those victimized. You guys are both saying "It's not a binary situation!" and then kind of pretending the other is saying that it is. It IS possible for people to be partially blameless and partially responsible for their own bad outcomes. It IS possible that financial institutions were presented with bad incentives by government. It IS possible that politicians looked at positive (for them) outcomes of actions that were going to cause disaster.
I can see both of your rhetorical 'houses', and I'm looking for some pox.
Just look at it pragmatically, though. From the point of view of the new home buyer, even fully assuming that the bank is totally greedy and self serving, why would they approve a loan that they expect to default? They want to make money, so giving a loan to someone who can't afford it would make no sense.
What these home buyers were missing, is that the people making the loans were handing them off as quickly as possible, so they wouldn't be left holding the bag. They repackaged all of these loans into CDOs and sold them off to other suckers. They got their profits and got out before the loans blew up. I suspect that if the people who made the loans had been forced to hold onto them, this whole thing would have looked very different.
It doesn’t take a lot of losses in a financial crisis to sink a lender. Look at JP Morgan Chase. Their tier 1 capital is 11%. That’s much higher than typical capital ratios were in 2008. This, it doesn’t take a very high percentage of loan losses to sink a bank.
That’s why I get a kick out of only 6% of loans were CRA loans. That’s more than enough to sink a bank. Private label mortgage CDOs didn’t start out as subprime generators. They were just competition for Fannie and Freddie. They used the Fannie Freddie lending standards - hence the term “conforming loans”. That made them marketable and fairly highly rated by credit agencies.
The politicians led the race to the bottom by mandating Fannie and Freddie take huge amounts of crappy loans.
Between 2005 and 2007, they acquired few conventional, fixed-interest loans with 20% down. They loaded up on subprime, interest-only, or negative amortization mortgages—loans more typical of banks and unregulated mortgage brokers.
Fannie and Freddie made things worse by their use of derivatives to hedge the interest-rate risk of their portfolios. But as private-sector companies with shareholders to please, they were doing this to remain competitive with other banks. They were all doing the same thing.
Fannie Mae's loan acquisitions were:
62% negative amortization
84% interest-only
58% subprime
62% required less than 10% downpayment
Freddie Mac's loans were even more risky, consisting of:
72% negative amortization
97% interest-only
67% subprime
68% required less than 10% downpayment
These exotic and subprime mortgages made Fannie and Freddie's loan acquisitions toxic.
All this can be placed at the door of politicians like Chris Dodd, Barney Frank and George Bush. Bush mindlessly pushed home ownership. Dodd and Frank - who lost their seats due their complicity in sinking the two GSEs - fought any kind of oversight about the obvious risks that had even become apparent to Bush who asked for tighter oversight of them 17,times only to be rebuffed by a Democrat congress and senate. 17 times.
It is not an oversimplification to state that this financial crisis began, both in time frame and economic ripple effect with the Freddie Mac/Fannie Mae collapse and subsequent bailouts. In fact, AIG, a former blue-chip giant that became 89% publicly-owned after its bailout, still had many highly profitable divisions. Unfortunately, AIG was heavily involved in the insuring of sub-prime mortgage packages- mortgages that were underwritten in large part by Fannie and Freddie.
The left - the media and the Obama administration conveniently forgot that these Government Sponsored Enterprises were run by Democrats- among them Franklin Raines, Jim Johnson, and Jamie Gorelick- all high-ranking members of the Clinton administration. Gorelick had zero banking or housing experience. It was a rich sinecure. People forget that Killer Cuomo, of nursing home virus fame - was the hammer who forced Fannie and Freddie to ramp up making crappy loans.
Even after investigations brought to light bad accounting practices and manipulations of the books of Fannie Mae, prominent Democrats such as Barney Frank, Chris Dodd, Maxine Waters, current Majority Leader Chuck Schumer, and Clay Lacy claimed loudly that there was nothing to worry about- that Fannie and Freddie would be just fine!
This was the context in which the banks jumped in the same way. They started out competing on conforming loans with private label CDOs and traveled down the quality chain in sync with the government.
Sure, there were brokers who knew they were making shit loans and many Wall Streeters off,laced them quickly.
«have you seen the 12 foot, razor wire topped, gun toting military protected fence/wall Nancy Pelosi has had built around the entirety of our Capitol Hill? There is a reason for this.»
“At the vote confirming Brett Kavanaugh to the U.S. Supreme Court on Oct. 6, woman after woman screamed out in protest from the Senate gallery and was carried away by guards. [...] People were pounding in outrage on the closed entrance to the Senate floor. [...] U.S. Capitol Police said a total of 164 people were arrested that day for “crowding, obstructing, or incommoding.” [...] The depth of opposition to Kavanaugh was revealed when on Oct. 4 over a thousand people from throughout the country, mostly women, demonstrated on Capitol Hill. [...] At the Senate Hart Office Building, crowds saying “NO” to sexual assault and to the reactionary agenda that Kavanaugh represents flooded the atrium and every floor. Over 300 chanting, militant protesters were arrested that day. [...] There were too many acts of indignation and outrage at Kavanaugh’s nomination to list them all. [...] Outrage against Kavanaugh broke out initially on July 9 at the Supreme Court on Capitol Hill [...] During Senate Judiciary Committee hearings the first week in September, over 227 demonstrators were arrested.”
““Trump is one of two people - Bin Laden is the other - to have orchestrated a violent attack on the US Capitol Building in the last twenty years. (The Capitol Building is believed to have been Flight 93's target.) Both were acts of war against the United States, although Bin Laden's was a foreign attack and Trump's a domestic one. Trump's attack not only came closer to success - they actually breached the building - but aimed to do far more to destroy our institutions and way of life. Bin Laden's was a raid, meant to terrorize and provoke a response that would feed further escalation of ongoing global conflicts. Trump's was meant to decapitate the legislative branch, with accompanying mass murder and hostage-taking, and to put a permanent end to democratic (small-d) governance in the United States.”
There is something wrong with your software that this stupid comment gets put on top just because a lot of people comment about how stupid it is. Can this be fixed as it seems to me it just foments stupidity and controversy.
Or, you could note the content of the top post, realize what the many replies are likely to be, and move on. A touch of entitlement in demanding that it "be fixed" because you are very slightly inconvenienced.
It was a frenzy of flipping houses too. Everyone wasn’t mortgaging the family home. At one point, a house would go on the market, sell immediately and within weeks be back on the market with no improvements but ten thousands of dollars higher.
It was that and more. People would use their homes to cash out on bubble equity to pay off credit cards (only to run them up again), to put in desperately needed swimming pools and other additions, and more. People were attracted by initials teaser rates and were too stupid to see the cliff they were headed towards a year or two down the road. Others just always wanted a home and were blinded by that want to not look to close. We got the house!!!! There were clearly people who HAD to know better - thousands and thousands of people who were paying no income tax and were getting refunds of the earned income tax credit bought houses with these loans. How in the world did they ever think that they could manage a mortgage?
I really think, despite some formidable posting, you have missed some basics - let me give you the view of a 10+ year corporate collections experience - including GC Services (owned by a family tight with the bushies - and as such a principle industry consultant in drafting the Fair Debt Collections Practices Act in the waining days of Jimmers Carter)
It wasn't a 'housing crises' or bubble - it was a CREDIT CRISES - AND - further - despite my limited experience on the 'goon squad' - I have been mentored by an Uncle who was a second generation Cleveland Banker - who BELIEVED in the kind of investment banking that you seem to believe still exists - when it no longer does.
Credit and credit availability - a recipe concocted via the worship of the libertarian right - from resurrected Ayn Randers to the Milton Friedman post 'free to be/sell me this pencil' influential crowd - to the globalization of central banking - so much so that between the rough parameters of the FDCPA ('78) - and the Reagan years when financial deregulation promoted the reinvigoration of American Capitalism ( and the initial rise of Trump the entrepreneur) - an entire generation grew up with loose - widely available and cheap - credit.
This loose credit built the current edifice REX - a second gilded age in America - extreme wealth - and - the (seemingly) ending of the once great majority striving because of wide opportunities [you Rick imply still widely exists - while MT and his readers here - myself included -disagree emphatically ] ...MIDDLE CLASS - of which -as anyone in collections can tell you - whether they have encountered American Express's BLUE BOX VALUES or not - there is an easily recognized and likewise understood pattern when debtors default - IE - by the choices they make.
1st - low hanging dying fruit - like the sears card or the gas card.
2nd - cell phone or land line...
Orchard credit - then Discover - THEN MASTERCARD/VISA MBNA ECT
LAST - AMERICAN EXPRESS (ALAS)
THEN THE AUTO...
AND LAST BUT NOT LEAST - WHAT USED TO BE THE BEADROCK - ESPECIALLY SINCE FANNIE AND FREDDIE AND A FELLOW BY THE NAME OF Petie Lynch MERGED THE OBSESSION FROM BUSH THE FATHER ON DOWN TO THE CLINTON GLOBAL CRIME FAMILY TO LITTLE SHRUB THE KING OF TEXAS TO OBUMMER TO THE GREAT DISRUPTER AND NOW THE BIDEN CRIME FAMILY ALA OBUMMERS 3RD TERM.
Namely - that home ownership was the key to middle class wealth creation and financial and hence family stability - and clearly Rick you still believe it.
I don't. I don't in part because what Lynch sold was the Mutual fund - and - that owning a home was crucial to the new means of pensioning for middle class America - the 401K - which was supposed to be the win win in American Investment banking - except - ooopsi - that was a crock.
It was sure good for Pettie and his crowd, now wasn't it? Isn't kinda neat the way those two just fit like frick and fartie frack?
The 401K was great for the EDUCATED MANAGERIAL CLASS - and a disaster in comparison with the former defined pension - that was widespread in the whispy by gone days prior to the Savings and Loan crisis in the 80's (and some of the postings on that here - pinning for Glass/Stegall & a Volker rule that never really existed in the first place)- that later bled into the Stock Market crazied Tech era and eventually - once the Techie thing landed and dust settled - the real estate fiasco.
[and is still available in the Government Unions and the Teachers to Boot - who barely teach a thing about actual capitalism - but get the DEFINED PENSION TO DO THE KNOW-NADA]
Loose credit masked declining incomes - and the beauty of it was exponential (and you still SEEM to buy the 'morality argument') - which in turn led to the debt bondage that - like 19th century WASPS viewed as self-induced drunken and libertine self-destructive behavior of the Irish - was now in the 21st 'living beyond their means' - and monetized the screw job after screw job while the hoopleheads just 'keep digging.'
Go back and look at the crushing commodities market (before price supports - a 'New Deal' anachronism the Kochs and Austrian School cool kids have been trying to shutter for decades now - just as they have Social Security via privitization) - and the Gold Vs 'free Silver' political fights - and the toxic views on immigration - and so much more and Today it is Big Tech the global Party of Davos not the Monopolies of Standard Oil or the Railroads.
And I know this is simplistic but bear with me. I believe in capitalism - but with rules Rick.
We are not living through some minor bumps in the road - or some metaphorical 'hair on the wall' hiccups - Taibbi's been on this a long time and it's part of why I'm hooked as a fan boy- he is so much more right than wrong.
MT as a writer sides with those I once viewed as harshly and as cynically as it seems you do - but that was over fifteen years ago - when it was still a literal gold rush in the collections field - and why was it a gold rush - because the credit was still flowing - and now it cant.
American Investment Banking didn't 'blow itself up' in 2008 and we haven't just been screwed by Dodd & Frank and ect - that is really simplistic Rick - and wrong.
American Investment Banking sold us out BECAUSE IT WAS JUST TO *&^(iNG tasty to play Jack Sparrow and go 'a Pirating' the world over {especially with all that money the statist 'hybrid' Chinese were throwing at them - in the loose money world the west created }- making the de-industrialization of America - the ending of widespread opportunity for the next generation - all of it -a deliberate orgy of greed and nothing new - except in scope.
Both parties - until Trump ripped the scab off the great fantasia. Leaving both sides desperate to off him and the populism he recognized and road.
Global financialization is in most respects globally designed and led BY AMERICA - BUT NOT MY AMERICA - it is only now that - since 2008 - an awakened American populism - from the right and the left - just as it did in the late 19th century - has awakened to the threat it poses to both financial and personal freedom.
It's awakened for the same reasons it did before - even if this time its not about child labor and choking on coal dust or brain rot from mercury or lead. Americans do not decline gracefully or willingly - despite such erudite directions from the Kennedy School over Gov or even the Hoover Institute clowns in the Journalism department.
Americans fight back. But first they had to figure out WHO was SCREWING THEM, and how.
The middle class has seriously shrink, betrayed by the left, its so-called protector. The left uses its protectees very much like the coward who puts a woman or child in front of them as a shield from his opposing gunman. They really never cared about the middle class, women, blacks, browns etc. these groups were simply useful tools to a political end.
Globalism is the biggest reason why so many middle class jobs have gone overseas. One is a quirk of fate - only our industrial base wasn’t flattened in WWII. Most of the others had to rebuild from the ground up and did so with modern processes and equipment. More importantly was that Clinton sold out industrial America for dirty campaign money and in exchange, gave a corrupt China MFN status and admitted them to the WTO. He knew they used poverty and slave labor as a trade weapon, that they polluted massively and that they manipulated their currency. He betrayed the middle class. Just as he did in repealing Glass Steagel, making the financial sector a ticking time bomb.
Jobs were exported as a result of lower cost opportunities in China and India. It didn’t have to happen - equalizing tariffs could have legitimately been put in place to take into account their slave labor pay rates and heavy pollution. We didn’t HAVE to over regulate like Big Brother making it unappetizing to do business here. We didn’t HAVE to maintain business income tax rates that were so uncompetitive. The whole tax industry of transfer pricing - shifting revenue overseas - exists only because we have been uncompetitive here.
That is what killed the middle class - a purposeful decision to become incompetitive.
Pensions? I don’t blame business a whit in shifting the investment decisions and risk by shifting to a defined contribution plan from a defined benefit plan. It makes sense to insulate a business from the vagaries of the stock market. That’s not their business. Fort hose who haven’t, they tend to suffer under the unfounded liabilities - government plans being exhibit A.
The family unit? Sure having a HOME helps. But not necessarily a house. It’s about a mom and dad, with at least one of them working and setting an example to children as well as providing discipline in its many aspects. That was destroyed by the left with LBJ and his great society where people were encouraged to become dependent rather then remain independent, to break family units apart because they get paid more with more babies and no man in the house, and by inviting more dependent people from our southern border to cross freely, importing more dependents who will vote for them.
The bank has a fiduciary duty to loan insured deposits to good credit risks. Part of performing this duty is to bring some skepticism when evaluating loan applications. It's the market's job to make people want things we can't afford. It's the bank's job to say f**k no.
When we bought our home in 2003, we chose to buy a home on the less expensive side, even though we “could have qualified for a home worth double that with YOUR incomes” said our bank loan officer at our credit union... We chose a 15 year note, paid it off in 12 years, and are happily retired, early. But people aren’t taught basic financial information in school and often, not at home while growing up either.
I always know that the person opposing my views has acknowledged loss when the wheel out the leftist lingo such as “trope”. I’m just surprised Yu didn’t use “dog whistle” or “gaslight”. Soon you will begin to repeat “equity” ad nauseam
As my mother said to me one time after making an unwise investment, “The nice lady at the bank...”. This is a question of trust, not “stupid borrowers.”
On point with this article, the financial and political elites have no clue how much average Americans of all backgrounds were affected by the 2008 crash, and now it's happening again and worse for millions of people during the pandemic. Your line about bailing out banks, but letting restaurants fail, captures perfectly the orientation elites have: top-down, and themselves first.
New York magazine is a rag for yuppies, and yes they still exist. The only thing they are good at is gauging the sentiment of a small set east of 9th Ave.
Putting on progressive clothing is one of the silliest gambits I've ever seen establishmentarians pull. And if you needed any more evidence that the Democrats are now the party of the establishment and Wall Street, it was the portrayal of WSB as a Trumpist movement.
LOL!!! so true-- even their what's on section SUCKS and I used to read it before visiting friends in NYC few times a year. Used to read James Chait (?) but nothing in the last 5 plus years has been any good. Kind of a People magazine for the very superficial
Thanks for the suggestion. 💗 I am a bit boring about medical things-- I go with my professional sources and my patients experiences here in Canada. Even lockdowns aren't comparable-- people are too different in their reactions to it and the supports provided are different in different countries and even within each country. On top of that I am crazy busy these days dealing with the mental health issues and keeping up on reading JAMA etc. pieces coming out about the uselessness of masks etc. There is too much MSM reporting on things they haven't a clue about and are too lazy to go beyond official narrative sources.
What a terrific pair of articles. I know now about the situation from 30 minutes of testing this Substack then a week of looking at financial pubs and sites. There's a reckoning underway. Americans are a savvy and brave and reckless bunch, and even if you don't believe in the deep state, the actions of the entrenched are really pissing people off. The sandwich shop analogy was spot on, and we all eat sandwiches.
Great reply, Matt. The mainstream media is just plain terrified. They have children in private schools, mortgages on their houses in Montclair and Pelham Manor - and perhaps are even more terrified for their egos. What if they don't get invited to the correct parties? They all know (even if the don't admit it to themselves) they could be the next one cancelled for wrong-think. So their defense is to scramble around and try to be on the winning side. Welcome to totalitarianism.
Excellent points Polly! I would expand that group of MSM to include the large institutional administrators-- they are 24/7 fund raisers for their behemoths and get paid 7 figures (with bonuses) to do so-- their educational or health admin functions are a distant second concern. They become institutionalized apparatchiks to whatever governing bodies/govts regulate/control them.
In 2007 I got out of the stock market. I told my brokers, "Only triple A rated treasuries ands munis for me." One day my New York bankers put me into their AAA rate MBS at face value and then devalued them to basically 0. I was broke. The Gov't stepped in and settle the legal battles at less that 1c on the dollar. Multiple my case by millions of investors, pension funds and savers. Under Reagan 1200 bankers went to jail for the S&L crises. 0 under Obama.
So I did another startup, built it up, sold out, and went into rental housing for a retirement business. Then Covid, and the eviction moratorium. All my tenants lost their jobs but we worked it out after a few months. We worked together. Only two simply refused to pay rent any more -- the two who didn't lose their jobs, they eventually moved out, moved in friends, in one case to use the house as a dog kennel, completely trashing it. I was helpless to do anything. The rent moratoriums started in April. They won't end until next September... In NYC a third of tenants are behind. 20 million households in America. There is a piper yet to be paid.
All of this because of lockdowns that even the WHO now says were ineffective.
There is a lot of anger out there from conservatives like me, from small business people, and from people like my tenants. We don't give a fuck what pronoun you want to be called by but we do care about fairness. We are tired of playing by the rules, working hard, being successful and having it all stolen.
Yes the piper has yet to be paid. Agreed-- call it the Fairness Coalition. Ironically this COVID BS is exposing the fallacy between right and left issues-- there are none-- here are only HUMAN issues, values and principles. I am starting to see these coalitions here in Canada. They are growing. BTW-- thanks I forgot the Reagan put the S&L people in jail.
Of course, a huge role in this crime against population has St. Obama and his equally disgusting Wall Streeter Eric Holder. The general population is still not aware about the extent of Obama's "Hope and Change" fraud
-- from "Banks are too big to fail",
-- to the scam of the century -- Russia-gate hoax that still continues with the lying team back in power
-- to Venezuela as an existential threat to the US “Venezuela is fundamental threat to USA” -- declared Obama formally initiating regime change.
What despicable Obama and DNC+GOP oligarchs meant is -- “Socialism is a threat to capitalism”… hence imperial War-party endless wars -- against “godless” Bolivia, Nicaragua, Venezuela, Syria, Cuba, Libya, China…..
Wars are immensely profitable for leaders and donors of both wings of the US War Party.
US "99%" population is to milked, controlled, keep silent by censorship and distracted by "gay and abortion wars"...
The most dangerous group in the country is marxists. The second most dangerous group is libertarians.
The first group is dangerous because its constituents somehow fancy that a large public bureaucracy will somehow facilitate public financing for the benefit of the many or outright control industry for the benefit of the many, even as all evidence points that politicians are selfish scumbags that almost never do the right thing, in any country and in any environment. The Marxist will screech BS, that this time it will be different, somehow the centralized bureaucracy will be kept in check and will somehow act for the greater good. You can point to the current state of affairs and show that every bureaucrat is paid off, and almost every regulatory body, including the ones governing higher education (the pinnacle of left wing thought), exercises it’s power for the benefit of the regulated or those facilitating the regulations. Magically, somehow, if we get rid of capitalism, the sociopaths who are drawn to these positions of power will vanish, and benevolent Christ like figures will run the government.
On the other side of the spectrum, is an almost as odious group of cretins: libertarians. For these cartoon characters, the United States doesn’t have a history before WWII. A naive population was manipulated by foolish or evil politicians to accept big government as a substitute for the benefits of regulation. Any argument that points out that if a society permits stratospheric wealth concentration will inevitably lead to extreme corruption is met with with the tired, tried and trite response that “oh you see, if the government wasn’t big, capitalists wouldn’t have to pay off the regulators to gain unfair advantage.” On this point, I’ll give the devil his due: the Marxist will accurately point out that this is ludicrous, flying in the face of history, and that government doesn’t grow or get captured as a result of misguided public perception, but with careful construction by the capitalist (really, fascist) oligarchy. The libertarian forgets that every single US state, including the slave holding south, prohibited formation of corporate entities UNLESS the state legislature approved it and the corporate charter EXPRESSLY stated how, in exchange for limited liability, the entity would act in the public good. This rule was in place because if you grant limited liability without a countervailing balance, there is no free market because there is no market without consequence for every negative action. The libertarian forgets that when the robber barons paid off almost all of the states to get rid of this regulation, the problems first emerged: enormous crimes, huge environmental consequences (see Montana and the copper king), etc. The libertarian ignores that pre-Marxist scholars indicated that the modern corporation marks the end of capitalism because there is no limited liability in capitalism. The libertarian forgets that once the corporation ends the free market by enabling the privatization of gains and socialization of losses, even a bare bones government is going to be compromised. The Copper King bribed his way to the US senate by paying off the entire Montana legislature, which in turn ended the election of US Senators by state legislature (I single this guy out, but he isn’t close to other evil bastards of the first fascist oligarchy that took over the country). The libertarian forgets that it was the super rich bankers that paid off Congress to enact the Federal Reserve, which in turn spawned undo credit, which in turn lead to two world wars and a Great Depression. For the libertarian, history begins in the 1930s and 40s, when Americans, not quite sure how they were getting screwed beyond belief, demanded a check to this madness and the era of big government began.
Of course, neither the Marxist or the Libertarians want to get to the heart of the matter. Marxists don’t want to get to the heart of the matter because their real motive is replacing the fascist capitalist oligarchy with a “benign,” “caring,” and “socially conscious” Ivy League educated bureaucracy, you know, like tenured boomer professors that constantly advocate for self sacrifice and what not, as they pillage the public treasury with guaranteed student loans, etc. Most libertarians don’t want to get to the heart of the matter either because to them the only thing that matters is not taxing capital because the only thing that matters is capital; for instance, a pornographer (nothing wrong with porn, just laughing at the right wing association) making a million dollars a year from a website should absolutely be taxed at a far lower rate than a pediatric neurosurgeon making the same because the former is a job creator who takes risk and the latter is just a unit of labor (market value be damned at the end of the day).
And with this long winded rant I arrive at what is the heart of the matter: any collectivist entity that has the capacity to externalize its costs must be heavily, heavily constrained by another force. This country’s sin is the distinction between private and public. The distinction is between individual and collective. A government can externalize its cost and tyrannize. A corporation can do the same. In both instances, the social science is clear: sociopaths are attracted to these entities because it allows them to get wealth, power and prestige without accountability to laws or markets.
The US constitution did a great job constraining government (for a while). A second document similarly constraining private legal entities should be drafted and executed. Oh, you don’t want constraints because, gasp, free market? Fine, set up shop as a sole proprietorship, like businesses did between 1776 and the mid nineteenth century. What’s that you say? That’s not practical? My reply to that is something that starts with “F” and ends with “U.”
And, may I ask, who facilitated the increased size of the state? The first radical expansion in federal authority happened at the behest of and was subsidized by John Rockefeller (ICC). The Federal Reserve was financed and facilitated by bankers.
It’s the same thing with you fellows, living an idealized world where the vices of the wealthy extend no further than rational greed, provided we leave them alone, when a plain look at history reveals the contrary: the super wealthy want total control and power, no different than politicians. When the wealth aggregates as it has done today, they usually achieve their end and society crashes.
But yeah, the state is growing not because of billionaire cretins financing its expansion, but because stupid proles that vote the wrong way... sarcasm off.
I don’t understand Marx in the way I don’t understand libertarianism, and the associated smugness of both groups ignoring how something looks in practice , rather than theory. Everywhere it’s been tried, it’s failed. The reason is that to accomplish the goals of Marxism requires a large collectivist entity, eg a huge government, to redistribute resources. The people attracted to such entities are always and without exception the worst humanity has to offer. You can rant on some theoretical diatribe on how it will be different, but it’s going to be the same thing: those who seize the power to redistribute will redistribute for their own benefit.
When I say you don't know the first thing about Marx, it means you don't know the first thing. The end goal of Marx is to abolish the State. As for the administration, it can fluctuate according to the circumstances. China has a huge economic success, lifting millions of people out of poverty, something ignorants like you scoffed at being even possible. They took means that didn't come out of Stalin's book so you got caught by surprise.
As for the notion of « those who seize power », it depends on how much the people are implicated in that. But it's clear it's too complicated for you. And it's no wonder. You don't have enough sense to learn about things before commenting on them
When you say I don't understand Marxism, you pull the statement right out of your rear end, like other Marxists.
"The end goal of Marx is to abolish the State."
Really? Wow. Milton Friedman also advocated abolition of the state or its minimization to such an extent so as to be completely ineffectual. In reality, IN PRACTICE, what happens is that those that accumulate the wealth, purchase or resurrect the state and subsequently expand it for their own benefit. Oh of course, if you point this undeniable fact to them, supported by the last 150 years of history, they will also argue that "you really dont understand capitalism, we didnt go far enough, we didnt gut enough." Its stunning to me how so alike the two groups are, despite professing vehement disagreement.
"You don't have enough sense to learn about things before commenting on them."
I could point to the litany of historical examples, including but not limited to North Korea, the USSR, and yes, even China (more on this later). You aren't going to care. You are going to tell me that isn't Marxism, we didn't go far enough, we didn't do enough, etc. Or, alternatively, in more brazen situations, you'll identify one singular thing those societies accomplished that was better than post WWII America, ignoring the other parade of horribles, and just state its better than what we have or had. It doesn't matter to you what the doctrine looks like in practice, like a teenage girl enamored with a handsome serial rapist, you just look at the beautiful exterior, namely, the fact that the words of marxism and the idealism on paper just feels so good. By the time you are in the hotel room and the door is locked its too late, but hey, lets go one more time, it will be different this time.
" China has a huge economic success, lifting millions of people out of poverty, something ignorants like you scoffed at being even possible. They took means that didn't come out of Stalin's book so you got caught by surprise."
Indeed, they didn't use Stalin's playbook, well except in the beginning, when the Maoist regime successfully killed more people than both him and Hitler combined. No, I give you that, they've adopted the strategy of a more effective champion:
“The Capitalists will sell us the rope with which we will hang them.”
― Vladimir Ilich Lenin
Of course, I have to disagree with our deceased glabrous friend on the term "capitalist," there's no such thing, just like there's no such thing as "marxist," at least as the two doctrines exist in practice. There's just different flavors of fascism, and they absolutely did figure out to use our private fascism to benefit their public fascism. I'm curious though, if the result is lifting people out of poverty, without consideration of the means of doing so, what's the problem with the present state of affairs? I mean, without Western Capital and know-how, there is absolutely no chance that the Chinese would have been able to achieve what they achieved. The proof is in the pudding, until they opened up to the West, they were one of the poorest countries in the world. So, in reality, our libertarian friends our correct!!! "Capitalism" is the greatest system ever! Globalization is amazing. We just have to go as far as the Chinese did. For instance, a few million Uyghurs making Iphones for less than a dollar a day is what we have to do over here. Why don't you like Trump? He said wages have to go down? We can be like China if we drop our wages and increase the use of slave labor. We can even have the factories in a nice location! Don't take it from me, just listen straight from the horse's mouth:
I think though, your comment below regarding the intermediary step involved to facilitate your utopia really gets to the heart of the matter both as to what really happens when your murderous doctrine is applied and what is really the hidden driver for people that advocate for it.
Say what? Marxism's goal is the abolishment of the state, and the current government of China is your example? You're right, that must be pretty complicated.
You know what else lifted millions, actually, BILLIONS out of poverty?? Fucking capitalism, you ignorant tool.
Was it corrupt? Sure. Are you saying the CCP doesn't involve corruption?
Was the created wealth unevenly distributed? Sure. Are you saying the wealth generated by the Chinese economy is evenly distributed??
In point of fact, the Chinese "success" is piggybacked on improvements to human life that have been initially generated by...you guessed it: capitalism.
I mean, this is such a glaring flaw in your contention...I guess it must be too complicated for you.
It's a closed loop, Lord Acton's "All power corrupts, absolute power corrupts absolutely" takes over in seemingly every case. You have a great idea. But then when some asshole goes off the rails with the power he's given to enforce that second document it's groundhog day. We have to find a practical solution. I think Plato was right, need a Philosopher King, someone altruistic, and about 6'-6" and 500 pounds.
I agree. Every hierarchy and system degrades. The correct frameworks provide a longer time frame and better framework. The problem with this country is the focus on private vs. public. It should be collectivist versus individualist. Collectivist entities should not have the same rights as real people and heavy counterbalances have to be in place to avoid this mess. Governments are just one kind of collectivist institution.
But no less than the Supreme Court reinterprets the Sherman Act to make it harmless, recognizes corporations as individuals (Rockefeller on his stone pillar "supreme worth of the individual" above all else), uses the 14th amendment as protection for corporations instead of people. Richard Olney, Grover Cleveland's AG, comes up in every book as having an epiphany. Using the Interstate Commerce Act (Government regulation) against people, instead of as protection for them against the railroads. Thomas Frank tells me the great cynicism of the GOP is that they don't believe themselves, that it can be changed. So they bark at their own tails. I'm telling you, on the brink of nihilism here.
Excellent piece. Last line is the best of the rest. The situation is increasingly explosive. Forty percent of Americans believe the election was stolen, no forum for a review of the evidence to settle the matter, heightened and reckless rhetoric, the constitution is in tatters, it all leads towards extreme outcomes, which may be Biden's ultimate purpose: 1. kinetic outcome will enrich one of his primary funders (private security contractors) while 2. eliminating his political enemies.
Ultimately, people are frightened and totally disenfranchised. What follows the end of politics as day follows night? Keep up the good work.
«Forty percent of Americans believe the election was stolen»
And forty percent believe it was "stolen by Putin" in 2016... From their point of view that was proven in 2020: without "Putin's interference" Trump lost, so obviously his victory in 2020 was caused by Putin. So simple! :-)
How could anybody anywhere still believe the russians stole the 2016 election? The MSM hyped it for years simply to hurt Trump, but the avalanche of data regarding FISA abuse and the ridiculous Steele dossier has buried that propaganda.
«Trump is one of two people - Bin Laden is the other - to have orchestrated a violent attack on the US Capitol Building in the last twenty years. (The Capitol Building is believed to have been Flight 93's target.) Both were acts of war against the United States, although Bin Laden's was a foreign attack and Trump's a domestic one. Trump's attack not only came closer to success - they actually breached the building - but aimed to do far more to destroy our institutions and way of life. Bin Laden's was a raid, meant to terrorize and provoke a response that would feed further escalation of ongoing global conflicts. Trump's was meant to decapitate the legislative branch, with accompanying mass murder and hostage-taking, and to put a permanent end to democratic (small-d) governance in the United States.»
If TDS can make someone believe that D Trump is worse than O bin Laden and declared war on America and failed to "mass murder" senators and representatives, it can make many believe that the 2016 election was stolen, and the convictions of Trump minions by Mueller prove it.
I am beginning to have an ugly feeling that I may have underestimated TDS. My general reaction is, "You're not serious, right? Trump = Bin Laden? I guess they were both involved in the building trades."
...where does this energy go now that he's out of office?
«How could anybody anywhere still believe the russians stole the 2016 election?»
"The music never stops"! :-) More of the same from an english newspaper that "coincidentally" seems to have an 100% hit rate on "deep state" narratives:
«American Kompromat review: Trump, Russia, Epstein … and a lot we just don't know
A new book on the old president is titillating but scattershot, a compendium of wild stories and salacious accusations
Craig Unger’s new book has already made headlines, in this newspaper and elsewhere, because of a charge from an ex-KGB colonel, Yuri Shvets, that Donald Trump has been a KGB asset for 40 years. But as Unger himself points out, former CIA director Michael Morell has called Trump an “unwitting agent” of the Russians; former national security director James Clapper has described him “in effect … an intelligence asset”; and former CIA director John Brennan has said Trump is “wholly in the pocket of Putin”. So Shvets’ accusation isn’t really very surprising.
Many other Trump-Russia books have dated Trump’s initial contact with the Russians to a visit to Trump Tower by then Soviet ambassador to the United Nations Yuri Dubinin, in 1986. Unger – through Shvets – reports that the association actually began six years earlier when Trump purchased 200 television sets from Semyon Kislin, a Soviet émigré who co-owned Joy-Lud electronics on Fifth Avenue. According to Shvets, Kislin was actually a spotter agent for the KGB.»
This music or narrative will run forever and ever... :-)
Similarly In the UK the english press after the 2008-2009 crash and bailout started to publish stories about voters being outraged by the many hundreds of billions handed out to finance and property companies to bail them out.
At some point almost overnight and pretty much at the same time the english press switched to stories attacking the government for spending billions to bail out unemployed workers and that it was this that was creating big deficits.
Matt- stay strong. Fuck the phony bullshit elitists and their cute little MFA essays. Stay close to the real people on the street. That’s where real life exists.
The sub prime meatloaf bundling great loans with redline crapola was made to solely to pass the reqs of Fanny Mae and Freddie Mac. If those quasi governmental entities were not legally required to accept that shitloaf none of that would have happened. Gov't pressure for "geenlining" is the direct cause.
File under "true but will absolutely be called 'racist'".
One of my son's black friends was mystified when a (Countrywide) mortgage agent tried to sell him a 400k house with a variable (on his $30k income) by showing him a chart of home prices over a decade and a half and telling him "Look, if you're not making more money in five years, just sell and pocket the equity from the price increase! Easy money!"
He'd made his peace with being relatively poor and carved out an enjoyable life. He smelled scam and noped out. But it was an interesting data point a year or two later when it all hit the fan.
As I read this something occurred to me. Maybe the Covid hysteria would have been less had the government NOT intervened. So many people have been hypnotized by stimulus and clickbait crack because that very stimulus allowed that to happen.
I’m still appalled by the fact my grandchildren’s tax dollars will be servicing debt we issued to prop up Carnival cruise lines, who basically uses serfs as their staff and registers there ships in far flung spots around the globe to avoid American labor laws. American Airlines is another one that should’ve been allowed to die. It all disgusts me. The truly poor haven’t been helped as is evidenced by the homelessness epidemic in many major cities.
This morning I walked around in a building on a lake in Southern Oklahoma that was built by the WPA and CCC back in the 30s. Almost 100 years old and these things are still standing - to me a testament to what true government “aid” should look like. These jack wagons in DC keep printing money to keep the oligarchy rich and the lobbyists keep feeding them more dough, and the cycle continues.
Instead our tax dollars go to help a few kids get wealthy, a few billionaires to have a few less billions, and will still leave us morally and spiritually bankrupt...and about the same as we were before economically. What a farce!
COVID hysteria began when Wuhan supply chain interruptions led to razor thin leveraged margins “eroding”. That meant bailout or ruin. This is the start of corporate media whores whipping up a panic. $$$
Then after Trump stumbles into a trap its seen as a way to undo him - it worked.
COVID restrictions are also a good way to prevent free assembly, and the hated religious worship.
COVID crushes small businessmen- who just might support the GOP.
COVID emergency measures allow innovative election practices.
COVID does allow Rioting - if approved.
COVID destroys your enemies politically, disenfranchises their voters, lets you take trillions, enriched connected Tech Lords individually by billions each, and a year later we’re living in Communist Eastern Europe 1980s in terms of political rights with the social safety net of Brazil’s Favelas.
COVID is Annus Mirables for the Elites, and Annus Horribles for the rest.
I don’t see two party being referenced in my remarks.
We’re a one party govt, BTW
Agreed, the 2 party system is currently a mirage. The party in control is the Uniparty where the labels D and R no longer have any meaning as they both draw from the top end of the enormous trough. Its One big club. Whatever R or D in "in power" no longer has any meaning, they all feast just as succulently. They are on the same side and work together because they suckle from the same teat of the entrenched bureaucracy. They know the FIB and MSM control the elections. Enjoy your Red White and Blue Banana republic with Dominion certainty of electoral results.
But what if Trump can claw to actual leadership of the R party? Push aside the obvious grifters, and joe public knows who they are. Only then will we have a real 2 party system again. From my POV this is the only salvation for a USA as founded. It is that serious.
Agreed! Lockdown (lots of studies of the damage) show an exponential growth of health stress due to job loss, family separation and isolation. Think of all the money Pharma will make treating all the depression and stress as a result. Then add all the experimental " vaccine" money and the drugs they will provide people who have experienced side effects (Bells Palsy, fertility issues, heart issues etc.)
As far as I know cruise lines didn't get any money or loans from the stimulus packages thus far. Neither has Boeing although they came close and many people believe and claim they did . Airlines did get 15 bil
Look up "Strength Through Joy", a Nazi program (yes, I know, I just Godwinned this, but it is relevant). It shows how cruise ships might just have some importance to a totalitarian overlord.
Matt, keep up the great work. You are a true journalist. I hope you make a fortune while the rest of the media propagandists go broke. Best wishes.
“There’s a lot of anger out there, and it will jump at chances to express itself.”
Brother- you don’t know how much of an understatement this is!
Spot on! I recounted my own story on the other Game Stop post, so I'll just say here that the part about the shame was very, very real. I was 40+ years old when we defaulted on our mortgage. Prior to that, we had platinum credit. And our mortgage was not an ARM- didn't matter- the value of our home depreciated about 45%. It was beyond embarrassing not to be able to pay our bills, and even friends and family insinuated or said outright that we homeowners were to blame. And yes, unlike this past year where people have been able to dip into their retirement accounts without a tax penalty, we paid the hefty penalty as we drained our accounts to try to stay afloat. There was also no moratorium on evictions or foreclosures. I know there are many readers of this blog who (rightly) criticize Democrats for their many failures during the 2008 crisis. I remember also, though, a Mitt Romney statement that was roughly, "Don't fight the foreclosure on your home. Let the VCs come in and buy up the properties." Democrats are very weak on these matters, for sure, but Republicans will also leave you high and dry with not so much as a "by your leave."
Whoa Nellie! There are so many comments here, I'll just reply to the original post. I had posted elsewhere that my husband lost his job, which was 2/3 our income, and then was diagnosed with Parkinson's and could not get another job, which was what made it impossible to pay the mortgage. Had this unfortunate event happened without a drop in the housing prices, we would have just sold our property and moved and downsized to my income level. It was the trifecta of loss of job, health crisis and plummeting housing market- all of it continuing for years that made our situation impossible to sustain.
I'm not looking for anything here other than to say that sometimes, even responsible people can get their boat swamped. Not asking anyone to feel sorry for me. Just saying that my family, like a lot of other families, got hit hard by a macro economic downturn that was not entirely under our control.
Your loss of short term liquidity due to the drop in housing prices was unfortunate. By rights, you should have been able to sell the house for a value approximating the mortgage. It is not typical of the things that were going on in 2008. Most people were using the house as a piggybank, and refinancing to get more money out of it to live large. Alternatively, people were flipping houses and expecting that the game of musical chairs would never end. It always does, though.
«I was 40+ years old when we defaulted on our mortgage. Prior to that, we had platinum credit. And our mortgage was not an ARM- didn't matter- the value of our home depreciated about 45%. It was beyond embarrassing not to be able to pay our bills, and even friends and family insinuated or said outright that we homeowners were to blame.»
And indeed you were to blame: whoever signed up for a loan on 10-20 times leverage on an asset that can go down in price should be blamed if that asset goes down in price.
If you could not afford the risk of a 45% loss on a leveraged speculation you should have been a renter. Do you think that you are entitled to own real estate, and risk-free too? Your implication that you were not to blame can only be justified if someone had formally guaranteed that the price of your house would never fall that much. You may have been deluded that it was a one-way bet, but turns out nobody guaranteed that to you.
Sure you are bitter that most people who owned real estate before you did get away with the risks of highly leveraged borrowing over a volatile asset, but eventually someone eventually will be burned (not Wall Street of course) by that volatility.
Also: a 45% drop? Only highly speculative real estate close to the "beachfront lot in Arizona" type had a fall that huge.
False.
I also had a ~50% drop in my home valuation at that time. Could've easily been more had I bought 3 months later than I did (the peak).
Jillian is not responsible for her house valuation halving in a year. Go troll/shill somewhere else bub.
How does one go from being able to afford a payment on a home when it is worth $500,000 (for example) to not being able to make the exact same payment on the same home now worth $300,000? The payment is based on the loan, not the value. The only real "cost" is being unable to sell at will.
I guess that you know well the answers:
* Many if not most of them though they would have to make the payment on the $500,000 mortgage only for a short period, and then flip the house for a big cash profit.
* Some lost their jobs in the recession and they had never expected to have at the same time the downside of a crash in house price and a loss of their salary, because they thought that cannot happen, must not happen, to middle class people, only to lower class "losers".
«Jillian is not responsible for her house valuation halving in a year»
But was she responsible for exposing herself to that risk or not?
Was she forced to buy or did you and her have the option of renting? I know a number of people who starting in 2005 decided that the risk was too big and sold to people like you and Jill and switched to renting to minimize the risk.
How do you become risk adverse to corruption and fraud? how do you forecast for that? What a ridiculous suggestion. You know it was fraudulent criminal behaviour right?
Something very missing in this is that buying in say 2005 yielded access to what one couldnt afford.
I bought a home in 2005 and sold in 2011 losing 16%. BUT my alternative rental i could afford without a loan from loose banks was a much lamer condo that would have gotten me 80% less interest from the opposite sex. And the parties we had in the house, OMG.
When the banks are loose and end up losers, you can lose money too but you are gaining something otherwise unattainable. In the end, my total costs on a monthly basis were what it would have cost to rent the house the whole time, but a landlord wouldnt have done that deal based on my income. the banks did and I'm eternally grateful.
I couldn't have said it better! 💗
sorry about to hear about your experience but fluctuating value of the house is not correlated to one's ability to come up with a set monthly payment anymore than a 500 per month you pay in car payments is correlated to the fact that in 4 years the car going to be worth 40% less.
Most people who buy houses - and who were foreclosed on during the crash - bought those houses to LIVE in. Not as speculation, nor particularly as investment. Simply to have a place to live and raise their kids and maybe retire.
When you pay rent, at the end of the deal, you walk away with nothing - no principal at all. When you buy a house, you pay the mortgage for 20 years, or 25 or 30 - and then you own it. No more monthly payments.
And I'm not sure what part of the country you live in, but in California, in many markets it's actually more expensive to rent than to pay off a mortgage.
We bought our home to raise our kids in, and to spend the rest of our lives in. (Having written about music for the better part of 30 years, I've accumulated thousands of LPs - to the point that I told my wife that our last move was MY last move - my back has no more moves left in it. You move vinyl enough times, it wears on you. Next time I move out, it will be feet-first. And my kids can argue over the records.)
«Most people who buy houses - and who were foreclosed on during the crash - bought those houses to LIVE in.«
That's just handwaving...
«Not as speculation, nor particularly as investment. Simply to have a place to live and raise their kids and maybe retire.»
I have heard this ridiculous claim so many times and I always ask: so you would agree that there should be a law that homes should always be sold for the same amount they were bought for, if the goal of owning them is just to live in them without considering the speculative upside.
Somehow I think that many if not most people would not buy if they had to sell for the same price they had paid. The "certainty" of a big fat tax-free, work-free upside is pretty common as a motivation for buying vs. renting, and for buying as big as possible, with the highest leverage achievable, to get the maximum speculative profit possible.
«When you pay rent, at the end of the deal, you walk away with nothing - no principal at all.»
That is usually wrong: if you pay rent, you still got the money that would have gone into paying interest on the mortgage, which is usually over half the mortgage. Many have computed that if real estate prices were not ballooning it would be cheaper to rent and put the capital into securities. Putting the money into real estate rather than securities means that one expects real estate to balloon in price faster than securities.
«in many markets it's actually more expensive to rent than to pay off a mortgage»
That only happens if interest rates are low, that is if real estate prices are growing fast. And it does not take into account the risk that the price of the real estate could fall below the amount of the mortgage, while rents have neither upside nor downside.
In the end the only reason to buy vs. rent+stocks is the expectation that capital gains on real estate will be bigger than dividends or capital gains than on stock, that is that highly leveraged speculation will win.
Accordingly quite realistically BusinessWeek wrote recently:
https://www.bloomberg.com/news/articles/2020-12-22/opendoor-open-faces-an-expensive-path-to-profitability-in-real-estate
“From the minute the average couple busy a home they're constantly calculating how much they'll make when they sell it, and most won't sell for much less once that day comes.n
“ if you pay rent, you still got the money that would have gone into paying interest on the mortgage” Just how fucking out of touch are you, actually? If you rent (like I have my entire adult life until a few years ago), it’s because you don’t make enough money or have a steady-enough job to feel comfortable buying. I wasn’t saving any money when I rented; I was spending that money on my rent!
“Most people who buy houses buy them to to LIVE in” is just “hand waving”? Why? Because it doesn’t help the lame-ass point you’re trying to make? Most people DO buy houses to live in, asshole. Is it also an investment? Sure. Especially in places like here in CA, where, like Jim said, it’s cheaper to buy than to rent. It just makes sense to buy, if you can (I can’t, but my girlfriend can). But we LIVE in these houses, dick.
Don't be a dick.
Wow-- your self-righteous is ridiculous! LOL! Heh who died and made you god?
You are rather fond of this criticism...yet oblivious to the underlying self-indictment.
This sounds like it was a budget issue ..maybe from loss of a job or other income source? A drop in the value of a home doesn't effect the mortgage payment on a fixed rate loan. It sucks if you need to relocate and have to sell at a loss or if a better rate is available and you can't refinance because of LTV requirements. It sounds like terrible timing if you weren't able to take advantage of the short sale options many people used post crash
Yes not clear here why you lost the house if it wasn't an ARM. Did you also lose your job?
Some one got adjusted out of their house? Or adjusted THEMSELVES out of their house? A shark sold someone a mortgage loan they can’t afford? Who borrows tens of thousands of dollars without a lawyer to review things, especially when they know what they don’t know?
Now don’t get me wrong. There were plenty of crooks in the housing bubble on Wall Street and in the mortgage brokering business. They should all be in jail. On the other hand, there were loads of people who knowingly took out liar loans and they should be in jail too. You never hear that though. Every borrower was a victim. Not true. It took two to tango. Three in this case - greedy Wall Street bankers, deceptive and dishonest brokers and lying or stupid borrowers.
None should be let off the hook and none should be pitied.
Who borrows thousands of dollars without a lawyer? EVERYBODY. I have purchased a dozen homes in my life and never, not once, has a lawyer talked to me about the type of financial vehicle financing the property.
Because that's what this situation needs!
More lawyers!
*gags self to death*
«Who borrows thousands of dollars without a lawyer? EVERYBODY.»
Only the people who expect that the price of the collateral will balloon, so any problems will be paid for by the next buyer. If they are sure that the price will double in 10-15 years, why worry about the terms and conditions...
If wishes were horses, beggars would ride.
I hope you know finance then. Otherwise you are a fool
Man, you must be on the spectrum, I feel so sorry that you lack even basic social skills.
Extreme privilege. HE can afford a contract lawyer, so everybody can.
Its called " a self-righteous prig" here where I live. Easy to virtue signal when youre anonymous. Can't you feel the smug smile?
The vast majority of borrowers are represented by a lawyer at the closing.
The real estate attorney concerns himself with the validity of the title and the transaction, not the financing. He is not a mortgage broker.
No, but I could have gotten any of my lawyers to weigh in on how I was financing. Of course, I never did anything but a bog simple 30y fixed, so...not much to say.
I think that's demonstrably false.
The average house price in the US in May 2020 was 284,600. Nearly 50% of home loans "use" PMI (as of 8/19 - it fluctuates, that's the latest I've seen).
No matter how cheap a lawyer is (or how good of an idea it is to run a serious contract like a note by one) - you can't honestly believe someone borrowing $250k, and unable to scrape together 50k for a down payment, is willingly going to spend $500/$1000 extra?
This isn't a comment on whether they SHOULD or not - just on actual behavior.
A number of states, like NY, Mass, NC, De. and others literally require that a buyer be represented by an attorney. Quite a large number of mortgage lenders insist on it even in states where it is not required.
Do you talk to lawyers before buying insurance? No you talk to an insurance broker. How about investments? A Stock Broker. Same with Mortgages, you talk to a Mortgage broker, they explain it. But they arent lawyers.
"... lying or stupid borrowers."
Elizabeth Warren on credit card agreements: "I taught contract law at Harvard University and I can't figure out some of the stuff that's in these agreements - and you expect a mother with 2 kids and an Associate's Degree to understand what it's all about?"
This bullshit of blaming the victim with the "they knew what they were getting into," or my personal favorite, "Hey, nobody forced them to sign that contract!" is tiresome.
This isn't fair. People understand the cost of credit. They just get in situations where they feel they need it or worse so many businesses require a credit card to do anything. It's "not a mother with two kids and an associate's degree" that can't figure it out. That is a disparagement.
This is true. If you do not have a credit card/functional credit you will truly get raked over the coals. I’ll defend the payday loan places-you have to pay for convenience, but Rent to Own places would make a Jersey loan shark blanch in shame with their rates.
Average people were flipping houses and living large.
What’s really tiresome is that everyone with adverse outcomes in life looks for someone else to hold the doodybag for them
Doodybag? Finance got $29 Trillion from the Fed in 2009, add a few trillion in QE, and another $9.7 T this year.
Why can’t the commons get enough love to live indoors and eat regularly?
I’m so Right Wing I’m flossing with steel wire, and paid my way my whole life. I also understand these people are criminally insane, and need to answer for it. If you invited these Financial Wizards to Dinner you’d have to count the spoons after...some WILL be missing.
Adverse outcomes?
Adversity and outcomes “on the way”...as we say in my trade.
Tell me how much the government lost...or earned...on bailouts to financial companies. We know that they lost money bailing out decrepit car companies in favor of the unions whose unsecured c,aims were elevated above secured claims.
Ok everyone (including me!) lets not feed the troll anymore
No, what's really tiresome is that hose that complain loudest about "everyone with adverse outcomes in life" are the ones that benefit the most when government steps in to hold the doodybag.
No really. I agree with everything Matt said. There were also plenty of folks flipping houses and building decks, etc with easy money. Until there weren’t.
Low to no down payments and interest only loans.
As someone with part Cherokee lineage, I find this admission by Warren humiliating.
But they are stupid and/or foolish to trust strangers. It isn't hard to find out the kind of loan you're signing up for. Sorry if you don't like that, but it's obviously true.
hear hear-- just ignore self-righteous Rick-- he doesn't realize that he isn't a better person just because he says he is.
I believe Elizabeth Warren as,far,as,I can throw the building I’m in.
Yes, some people knowingly took out "liar loans," probably as a result of lying to themselves, or being convinced that real estate would keep on going up. We were offered one and turned it down. But you're ignoring most of the stories, people who were lied to, getting an ARM when they thought it was a normal mortgage (who can afford a lawyer in such a deal? Bit of privilege showing through, there.) Or who had an affordable mortgage until the whole economy was ripped out from under them - by Wall St., who suffered very little.
In 2008, Wall St., collectively, and a bunch of idiotic economists drove the economy into the ditch. They should all have been left to wait tables for a living, or worse. Some should be inn prison - still. but no, they were bailed out, which was hugely, passionately unpopular at the time. That was one of the big sources of the Tea Parties, for one example. So the whole thing was an exercise in corruption - by Obama's government.
Why is it that so many people ignore the genesis of the housing bubble came from governmental requirements that loans be made to people who couldn’t afford them under penalty of law? The banks who were threatened thst they could open new branches or acquire other banks unless they paid off liberal community organizers? The requirement that Fannie and Freddie make bad loans? The Congressmen who got sweet deals on their own loans to protect predatory lenders?
And if you can’t afford to buy a house without basic advice from a lawyer you probably can’t afford the house anyway. But you WANT it. I want a lot of things - when I was young I wanted to be a MLB right fielder. No one gave it to me. Is it unfair that I couldn’t get my desired occupation? Was I discriminated against?
The most important transaction in your life any some of you demand that a person be justified in relying upon a person on the other side of a commercial deal? Have you lost your minds? Should they be accompanied by the store manager of a grocery to ensure they buy the best deals on offer? Shall we hold McDonalds liable when fools eat their crap twice a day and get diabetes and heart disease?
When are people supposed to stand on their own feet and realize hat they are in over their heads in in such a fundamentally critical financial and life decision??
The people who sold them, like the people who sold opioids should take some responsibility.
No doubt. Couldn’t agree more. But the borrowers weren’t angels and stupid is as stupid does.
Here it is people, the most shopworn trope in the post 2008 conservative playbook: the poor widdle wenders were forced -- forced I tell you -- to throw away their underwriting standards and approve those loans, and even resort to fraud. They HAD to lend to the unworthy, or face jail! Because we all know that it's Congress who tells the financial services industry what to do and not the other way around...
I do not understand why you think the bankers tell the regulators what to do.
I work in the DoD and I know about regulatory capture, and the impact of bought congresspeople, but that isn't the same as a regulated industry telling the regulators to shove it and do what they want.
Let's say it were, though. Why are you so insistent on letting the politicians off here? They are certainly culpable.
Why is it that people think everything is an apples to apples comparison-- all neat and linear? Nothing about human behaviour is--ever. As a medical professional it is mind blowing that you think that there is a direct correlation between eating McDonalds and heart disease/diabetes. I have patients that eat similar diets and have none of those illnesses-- must be something else could cause those illnesses right?
You can't compare that to the fraud and corruption done by unregulated practices by banks and their "salespeople" who promise you will get "more cash flow", better rates etc. to unsophisticated buyers aided by levels of govt who ignore (or remove it - Glass Stegal) and look the other way not to jeopardize funding during election time. It is not even remotely comparative.
Thank god I live in a country where there are rules (and recourse for the home owner) about this kind of predatory "salesmanship". And yes we have real bank regulations as well. Banks are not total crap tables here. FYI-- Canadian real estate didn't implode, no bank failures and no bank bailouts-- all due to very basic regulations (Canadian banks do very well--$ billions well all around the world)
Funny my husband the fraud lawyer is dealing with a case where a big company is suing an insurance company for not providing Ponzi scheme insurance thought -- seriously -- and they are "sophisticated buyers" but lost millions of dollars so they get opportunity to get it back. Not the unsophisticated home owners who were lied to, not provided basic information about what they were buying and yet the "company" gets recourse. Nice system!
Your " boot strap" comparison is eye-rolling. The world and especially human behaviour is not that linear and direct --ever.
Well then, let’s get everyone assigned a government monitor to make sure that everything they thing they bargained for or are entitled to is delivered. But query, do the monitors get monitors?
I believe almost all mortgages made in Canada are "recourse" yes? That is the fundamental reason there wasn't a housing meltdown in Canada. Simply doing the same here in the states would end the threat of a repeat and take bad actors in the mortgage origination process and ignorant consumers off the table.
In the past, and theoretically still, bankers and other corporate lenders were required, under penalty of law, to deal honestly, precisely because otherwise they had a license to steal. Which they now have, because they've bought off the cops.
Otherwise, ordinary people couldn't buy houses, or even cars, at all.
«Why is it that so many people ignore the genesis of the housing bubble came from governmental requirements that loans be made to people who couldn’t afford them under penalty of law? The banks who were threatened thst they could open new branches or acquire other banks unless they paid off liberal community organizers?»
Can you quote the word of any federal law as to that? The CRA as the name says requires nothing like that:
https://www.federalreserve.gov/consumerscommunities/cra_about.htm
«the Federal Reserve
* examines state member banks to evaluate and rate their performance under the CRA;
* considers banks' CRA performance in context with other supervisory information when analyzing applications for mergers, acquisitions, and branch openings;»
I cannot see any requirement or threat there, never mind related to pay off "liberal community organizers". Is the Federal Reserve a far-left propaganda organization?
«The requirement that Fannie and Freddie make bad loans?»
Can you quote the text of any law that allows Fannie and Freddie to make loans to people, never mind bad ones? AFAIK Fannie and Freddie can only *buy* loans already made by banks and other mortgage lenders. It is up to the banks to make good or bad loans. The banks have however paid Congress to ensure that Fannie and Freddie and the Fed bail them out by buying the bad loans they made, and indeed the Fed has bought trillions of dollars of bad loans ("toxic assets") at "special friends of Congress" prices from the banks.
Prosecutor, Charge Thyself
A 2010 WSJ article which speaks to HUD secretary requiring the two GSEs to hike Their purchase of subprime loans to 50% of the total. And forcing them to degrade lending standards.
Also REGULATORS, whose approval for mergers and branch openings were withheld unless they followed preferred lending guidelines, controlled that process. You want a law - look at other enabling statutes giving them broad authority to regulate mergers and branch openings.
You see, to love the regulatory state. Why demand specific statutes when broad grants of authority work like a charm?
It doesn’t fit in to talk reality. It makes what I assume are otherwise reasonable people nutso cuckoo. To wit, I will read the replies.
What a strong man does then is quit trying and drink.
If John Doe or Juan Perez or Laqueesha Brown or Hmong Tet etc can lose their house, then the Hedge funds, CITI and AIG can lose theirs. Paul Krugman can take his Nobel to the pawn shop, and the ratings agencies can go to jail. So can whoever blew it at the SEC.
The problem wasn't adverse outcomes, the problem is the adverse outcomes were 'unequal'. The criminal masterminds can go to jail, certainly mr. mozillo at Countrywide.
Now in truth history suggests that having avoided Jail, they'll now ride the Trumbrels.
Which explains the panic, stealing the election and all the rest.
You are not looking at a government of genuine thugs taking power, no.
We'd be better off under genuine thugs, they understand consequences.
You are looking at spoiled and usually old, privileged all their life over-promoted bourgeois criminals who are terrified, and every response and action, word demonstrates their terror.
They were of course never afraid of Trump, they were afraid of his voters, of a nation that would go against the elites.
How many years is Trump going to be the whipping boy of the unprincipled left? Let me remind you that some moron named Obama was President for 8 years and his “wingman” didn’t prosecute anyone. Bang on him for that. As to Wall Street, they heavily backed both Hillary and Biden over Trump. Hmmm. Wonder why Obama and a holder didn’t go after them?
Rick I was talking about 2008 in the first two paragraphs.
After that I talk about the present govt, Biden's.
The link between 2008 and 2021 being;
"Now in truth history suggests that having avoided Jail, they'll now ride the Trumbrels. Which explains the panic, stealing the election and all the rest."
I'm not leftist, as explained earlier I'm so right wing I floss with steel wire.
Trump was not blamed above by me.
He's gone, he tried, he failed. This govt can't be reformed.
These elites are quite beyond saving.
My only mention of Trump being they're afraid of the voters, and the nation.
I'm not principled at all about politics now, the Constitution is destroyed by counter-party treachery - I hold my Oath...abrogated by counterparty.
Now we can live in a country with oh..a few million, and a few million more like me...noticing the Capitol only stands because of Troops! Whee.
Actually...my Oath nullified... I'm FREE!! NIHLISM HERE WE COME !!
If you don't like government by train wreck neurotic criminals, lets try government by Condottieri ! WHEE !!
I agree with you to a point.
1. You need to know you should have a lawyer and then you need to be able to afford one.
2. Mortgages should NOT be so complex you need a lawyer.
3. Part of the problem here is that at the same time this crap was going on the same Wall Street firms were pushing for whole industries to be pushed overseas to China wiping out jobs.
4. The 30 yr mortgage as it is built today is a disaster waiting to happen. The days of working steadily for one or two firms for 30 yrs are gone. People today are going to have ups and downs in income and stretches of months without work as automation takes over. Even lawyers and doctors are soon going to be finding themselves at risk. Already seen a large loss of autonomy and drops in relative income for those professions and it is just going to get worse.
5. It took 2 to tango but the only ones left to suffer were the borrowers. The finance guys were too big to fail or jail as Holder told us. SO, half the dance pair got screwed while the other got richer. We could have just as easily given the money to the borrowers so they could then pay the banks. Oh....THAT would be a moral hazard.
Bottom line, with what is coming, the old way of thinking about the economy is gonna have to change. The reliance on stable incomes and economic growth to solve the issues of sheltering, feeding, educating and providing healthcare to a national population is just going to have to be rethought and that is going to have to include how we view the possession and application of capital. Aging populations. Gig work. Offshoring. Large scale automation whether in the form of robotic process automation or production automation, the decimation of brick and mortar for the internet, expert systems to replace lawyers and doctors, all these are going to massively disrupt the old order and make it much much harder to point to people and say that their circumstances are their own fault when in fact the environment they are coming out into has made their very existence unnecessary.
In our system, people are "human capital stock" or "consumers" or "taxpayers" but never citizens anymore. They are inputs to the economy, not valued simply for being human.
The point of all of our systems, government, law, capitalism etc. is to provide for the most number of people possible the best possible life. BUT..the system is broken and antiquated and it is failing to provide what it did in a different, less technologically advanced, time.
BUT..ultimately the PEOPLE are the WHOLE point. Capitalism for its own sake is a waste. Democracy for its own sake is useless. Democratic Capitalism that fails to provide for the needs of the nation is a failure.
If you can’t afford a lawyer, you can’t afford a house.
Mortgages need to be complex for lots of reasons. There are legal consequences to borrowing so much money on a recourse basis secured by your hime. This isn’t a simple process like most other purchases and moreover it represents the largest investment most people will make in life. Most people aren’t financially sophisticated. And loan products have gone from conforming loans to all sorts of options that are highly complex. You can’t simply outlaw all but confirming loans,
Outsourcing is not just a product of evil corporations outsourcing manufacture. It is also a product of government policy. China, the biggest beneficiary uses the equivalent of slave labor salaries to reduce costs. India too. And both countries pollute up the yang yang, but Obama and Biden foolishly allowed them to continue to,do,so,in the Paris accords. That’s just stupid and it reduces loads of costs.
On the other hand American companies are subject to huge and costly regulation, much of which are politically driven rather than otherwise. The left’s alliance with labor unions prevented them from aligning labor costs with competition, to a large degree. Here’s an interesting story - Pittsburgh Plate Glass (PPG) sought to keep their labor costs for legacy employees whole while creating a new tier for new hires. That resulted in a bitter 5 month strike thst still didn’t resolve the issue. Ultimately, the company thst invented modern plate glass and safety glass for cars exited the glass business, selling it to a Mexican company that was free of this kind of nonsense and hyper regulation. Now PLG Imdistriesmsells paints and costings instead.
The US under Clinton responded by granting China MFN status instead of hitting them with equalizing tariffs that would have kept the jobs here. Oh, and they also welcomed them into the WTO. Primarily fo dirty campaign contributions.
And they did that knowing that China was an economic bandit. Clinton had to know what the natural consequences of doing all this was, but he wanted the dirty money. And presidents come and go, but guys like Xi stay for decades. The first guy to call China out and impose realistic policies were banged by domestic political opponents because they want power - regardless of the effect upon the citizens.
And you wonder why any company would not export jobs to the lowest cost provider??
Heel we all do it ourselves. Why do you think that Walmart and then Amazon succeeded? Selling low cost Chinese goods for less, putting small business out of business. Walmart has 265 million people shop in their stores for a reason - Americans want lower costs, just like manufacturers. Amazon has 150 million shoppers and 100 million prime customers for a reason.
The result is while outsourcing labor hurts jobs, shoppers don’t give a shit because they shop on price just like manufacturers.
And how many people say, I’m buying American cars? I walked my dog today for two miles and counted the cars. 184 foreign cars, 71 US cars. Not so long ago, foreign cars were novel in the US. You’d see the VW bug a lot and a few other cars. Repair shops advertised “foreign cars” as a specialty. The first Honda in the early 70s was a shitty little tiny car a bit larger than the crazy Smart car. They and others grew massively. Why? Because they were cheaper at first. Quality came later. But you don’t hear about how the people buying these cars were hollowing out the US manufacturing base and causing massive job exporting.
Because the little guy is always a victim, he can’t be part of the problem,.....
The highs and lows that individuals may experience is a product of many things. But what would you do with mortgages to accommodate that? As a lender, I’d look at a person’s likelihood of job stability and decline offering mortgages to people most likely to have variable and unstable income. Thst is only business sense 101. But if they did thst, something tells me there’d be demonstrations in the streets.
And why is it the government’s job to provide food, healthcare, shelter, etc.? Why isn’t it a person’s individual responsibility to confirm their consumption to their reliable means? The central government was intended to be one of limited powers. And before the middle of last century, none of these things you see, to think are national responsibilities were performed by the Federal government. The growth of these federal programs created more need than they satisfied by telling people that they didn’t have to be primarily responsible for themselves. Now you have people who do the math and determine whether they get more pocket money from handout programs then by working. We have less needy people and more wanty people. And let’s not even get into the resulting devastation to the nuclear family unit thst these programs produced.
The people have become what they want to be. They want equity enforced regardless of effort. You are absolutely correct that the system is broken, but at the end of the day the citizens broke it. DeToquville said that America would lose its character when the citizens realized that they can be bribed by the government.
Now you have inter generational dependency. Not an accident - the left realized that if they are perceived as providing people with their needs and wants, they’ll get their votes. So they’ve kept millions captive in a soft form of slavery, dependent upon them for life’s essentials, trapping them in broken communities filled with violence, drugs and a low interest in education which would allow them to keep up with our changing technological economy and society. Funny how these technological ply challenged people all know how to use their smartphones and organized for more more more that they don’t earn.
Capitalism works when people don’t have socialist infrastructure to cripple them into dependents.
rick.. were you born retarded, or was it all that rotgut whisky and prozac? or are you just a psyop professional, gracing us all with your broken propaganda and anxious, buns up and kneeling, neoliberal boot licking?
Its it so sad-- you see it everywhere-- usually with virtue signalling and self righteous commentary. " I am doing well so I can kick those that didn't do what I did" " I am in the group I don't want this person in, because I won't be special (ie house owner)anymore" Cringe worthy. Standard insecurity and what fuels xenophobia.
It is the worst human trait. I want everyone to do well. I believe everyone deserves opportunity and equal access. What I don't believe in is predatory "salesman" taking advantage of people -- that is where some minimal regulations can come in-- like a cool off period etc . So that 79 yr olds don't get burned, so that undereducated dont get burned.
Rick does have a point, though. The 2008 crisis was exasperated in the legislature where regulations were modified or amended. Many of the loan agents were performing clerical duties, ignorant of the dire consequences. Yes, there were also those that knew it would end up badly for some, but the real culprits were on Wall Street where the risky loans were packaged in derivatives and CDSs and sold to the nearest sucker. The Tarp agreement ensured that the taxpayers bailed them out while the financial executives issued themselves obscene bonuses to add insult to injury. The Obama administration effectively endorsed the agreement by failing to go after the culprits even though Senator Carl Levin's subcommittee on investigations had uncovered considerable evidence toward indictments. https://www.hsgac.senate.gov/imo/media/doc/Financial_Crisis/FinancialCrisisReport.pdf
Yes. Virtue signaling is a pain. Please stop doing it.
Actually, as I've read more of Rick's posts, I can see he does NOT hold the lenders, and their governmental non-regulators blameless. He just points out that a LOT of the people who got "hurt" could have seen this was bullshit and avoided their exposure to greater risk than they could afford.
I have posted one anecdotal case where a young black guy called bullshit on a Countrywide offer ON GENERAL PRINCIPLES. And lo, he was not harmed by the crash.
That said, I also see your compassion for those victimized. You guys are both saying "It's not a binary situation!" and then kind of pretending the other is saying that it is. It IS possible for people to be partially blameless and partially responsible for their own bad outcomes. It IS possible that financial institutions were presented with bad incentives by government. It IS possible that politicians looked at positive (for them) outcomes of actions that were going to cause disaster.
I can see both of your rhetorical 'houses', and I'm looking for some pox.
Just look at it pragmatically, though. From the point of view of the new home buyer, even fully assuming that the bank is totally greedy and self serving, why would they approve a loan that they expect to default? They want to make money, so giving a loan to someone who can't afford it would make no sense.
What these home buyers were missing, is that the people making the loans were handing them off as quickly as possible, so they wouldn't be left holding the bag. They repackaged all of these loans into CDOs and sold them off to other suckers. They got their profits and got out before the loans blew up. I suspect that if the people who made the loans had been forced to hold onto them, this whole thing would have looked very different.
It doesn’t take a lot of losses in a financial crisis to sink a lender. Look at JP Morgan Chase. Their tier 1 capital is 11%. That’s much higher than typical capital ratios were in 2008. This, it doesn’t take a very high percentage of loan losses to sink a bank.
That’s why I get a kick out of only 6% of loans were CRA loans. That’s more than enough to sink a bank. Private label mortgage CDOs didn’t start out as subprime generators. They were just competition for Fannie and Freddie. They used the Fannie Freddie lending standards - hence the term “conforming loans”. That made them marketable and fairly highly rated by credit agencies.
The politicians led the race to the bottom by mandating Fannie and Freddie take huge amounts of crappy loans.
Between 2005 and 2007, they acquired few conventional, fixed-interest loans with 20% down. They loaded up on subprime, interest-only, or negative amortization mortgages—loans more typical of banks and unregulated mortgage brokers.
Fannie and Freddie made things worse by their use of derivatives to hedge the interest-rate risk of their portfolios. But as private-sector companies with shareholders to please, they were doing this to remain competitive with other banks. They were all doing the same thing.
Fannie Mae's loan acquisitions were:
62% negative amortization
84% interest-only
58% subprime
62% required less than 10% downpayment
Freddie Mac's loans were even more risky, consisting of:
72% negative amortization
97% interest-only
67% subprime
68% required less than 10% downpayment
These exotic and subprime mortgages made Fannie and Freddie's loan acquisitions toxic.
All this can be placed at the door of politicians like Chris Dodd, Barney Frank and George Bush. Bush mindlessly pushed home ownership. Dodd and Frank - who lost their seats due their complicity in sinking the two GSEs - fought any kind of oversight about the obvious risks that had even become apparent to Bush who asked for tighter oversight of them 17,times only to be rebuffed by a Democrat congress and senate. 17 times.
It is not an oversimplification to state that this financial crisis began, both in time frame and economic ripple effect with the Freddie Mac/Fannie Mae collapse and subsequent bailouts. In fact, AIG, a former blue-chip giant that became 89% publicly-owned after its bailout, still had many highly profitable divisions. Unfortunately, AIG was heavily involved in the insuring of sub-prime mortgage packages- mortgages that were underwritten in large part by Fannie and Freddie.
The left - the media and the Obama administration conveniently forgot that these Government Sponsored Enterprises were run by Democrats- among them Franklin Raines, Jim Johnson, and Jamie Gorelick- all high-ranking members of the Clinton administration. Gorelick had zero banking or housing experience. It was a rich sinecure. People forget that Killer Cuomo, of nursing home virus fame - was the hammer who forced Fannie and Freddie to ramp up making crappy loans.
Even after investigations brought to light bad accounting practices and manipulations of the books of Fannie Mae, prominent Democrats such as Barney Frank, Chris Dodd, Maxine Waters, current Majority Leader Chuck Schumer, and Clay Lacy claimed loudly that there was nothing to worry about- that Fannie and Freddie would be just fine!
This was the context in which the banks jumped in the same way. They started out competing on conforming loans with private label CDOs and traveled down the quality chain in sync with the government.
Sure, there were brokers who knew they were making shit loans and many Wall Streeters off,laced them quickly.
But never forget how this started
Sure, but none of that seems to really address what I wrote, which itself was a response to your claim that the home buyers deserve the blame.
I never said that they deserved THE blame. Just a healthy portion of it.
Look itmup
«have you seen the 12 foot, razor wire topped, gun toting military protected fence/wall Nancy Pelosi has had built around the entirety of our Capitol Hill? There is a reason for this.»
This reason?
https://edition.cnn.com/2018/10/04/politics/kavanaugh-protests-us-capitol/
https://www.workers.org/2018/10/39345/
“At the vote confirming Brett Kavanaugh to the U.S. Supreme Court on Oct. 6, woman after woman screamed out in protest from the Senate gallery and was carried away by guards. [...] People were pounding in outrage on the closed entrance to the Senate floor. [...] U.S. Capitol Police said a total of 164 people were arrested that day for “crowding, obstructing, or incommoding.” [...] The depth of opposition to Kavanaugh was revealed when on Oct. 4 over a thousand people from throughout the country, mostly women, demonstrated on Capitol Hill. [...] At the Senate Hart Office Building, crowds saying “NO” to sexual assault and to the reactionary agenda that Kavanaugh represents flooded the atrium and every floor. Over 300 chanting, militant protesters were arrested that day. [...] There were too many acts of indignation and outrage at Kavanaugh’s nomination to list them all. [...] Outrage against Kavanaugh broke out initially on July 9 at the Supreme Court on Capitol Hill [...] During Senate Judiciary Committee hearings the first week in September, over 227 demonstrators were arrested.”
Or this?
http://danshaviro.blogspot.com/2021/01/trump-and-bin-laden.html
““Trump is one of two people - Bin Laden is the other - to have orchestrated a violent attack on the US Capitol Building in the last twenty years. (The Capitol Building is believed to have been Flight 93's target.) Both were acts of war against the United States, although Bin Laden's was a foreign attack and Trump's a domestic one. Trump's attack not only came closer to success - they actually breached the building - but aimed to do far more to destroy our institutions and way of life. Bin Laden's was a raid, meant to terrorize and provoke a response that would feed further escalation of ongoing global conflicts. Trump's was meant to decapitate the legislative branch, with accompanying mass murder and hostage-taking, and to put a permanent end to democratic (small-d) governance in the United States.”
There is something wrong with your software that this stupid comment gets put on top just because a lot of people comment about how stupid it is. Can this be fixed as it seems to me it just foments stupidity and controversy.
PS: Matt rules!
It's a good example of a Wall St. reply.
Or, you could note the content of the top post, realize what the many replies are likely to be, and move on. A touch of entitlement in demanding that it "be fixed" because you are very slightly inconvenienced.
It was a frenzy of flipping houses too. Everyone wasn’t mortgaging the family home. At one point, a house would go on the market, sell immediately and within weeks be back on the market with no improvements but ten thousands of dollars higher.
It was a lot like the overvaluation of GME.
It was that and more. People would use their homes to cash out on bubble equity to pay off credit cards (only to run them up again), to put in desperately needed swimming pools and other additions, and more. People were attracted by initials teaser rates and were too stupid to see the cliff they were headed towards a year or two down the road. Others just always wanted a home and were blinded by that want to not look to close. We got the house!!!! There were clearly people who HAD to know better - thousands and thousands of people who were paying no income tax and were getting refunds of the earned income tax credit bought houses with these loans. How in the world did they ever think that they could manage a mortgage?
I really think, despite some formidable posting, you have missed some basics - let me give you the view of a 10+ year corporate collections experience - including GC Services (owned by a family tight with the bushies - and as such a principle industry consultant in drafting the Fair Debt Collections Practices Act in the waining days of Jimmers Carter)
It wasn't a 'housing crises' or bubble - it was a CREDIT CRISES - AND - further - despite my limited experience on the 'goon squad' - I have been mentored by an Uncle who was a second generation Cleveland Banker - who BELIEVED in the kind of investment banking that you seem to believe still exists - when it no longer does.
Credit and credit availability - a recipe concocted via the worship of the libertarian right - from resurrected Ayn Randers to the Milton Friedman post 'free to be/sell me this pencil' influential crowd - to the globalization of central banking - so much so that between the rough parameters of the FDCPA ('78) - and the Reagan years when financial deregulation promoted the reinvigoration of American Capitalism ( and the initial rise of Trump the entrepreneur) - an entire generation grew up with loose - widely available and cheap - credit.
This loose credit built the current edifice REX - a second gilded age in America - extreme wealth - and - the (seemingly) ending of the once great majority striving because of wide opportunities [you Rick imply still widely exists - while MT and his readers here - myself included -disagree emphatically ] ...MIDDLE CLASS - of which -as anyone in collections can tell you - whether they have encountered American Express's BLUE BOX VALUES or not - there is an easily recognized and likewise understood pattern when debtors default - IE - by the choices they make.
1st - low hanging dying fruit - like the sears card or the gas card.
2nd - cell phone or land line...
Orchard credit - then Discover - THEN MASTERCARD/VISA MBNA ECT
LAST - AMERICAN EXPRESS (ALAS)
THEN THE AUTO...
AND LAST BUT NOT LEAST - WHAT USED TO BE THE BEADROCK - ESPECIALLY SINCE FANNIE AND FREDDIE AND A FELLOW BY THE NAME OF Petie Lynch MERGED THE OBSESSION FROM BUSH THE FATHER ON DOWN TO THE CLINTON GLOBAL CRIME FAMILY TO LITTLE SHRUB THE KING OF TEXAS TO OBUMMER TO THE GREAT DISRUPTER AND NOW THE BIDEN CRIME FAMILY ALA OBUMMERS 3RD TERM.
Namely - that home ownership was the key to middle class wealth creation and financial and hence family stability - and clearly Rick you still believe it.
I don't. I don't in part because what Lynch sold was the Mutual fund - and - that owning a home was crucial to the new means of pensioning for middle class America - the 401K - which was supposed to be the win win in American Investment banking - except - ooopsi - that was a crock.
It was sure good for Pettie and his crowd, now wasn't it? Isn't kinda neat the way those two just fit like frick and fartie frack?
The 401K was great for the EDUCATED MANAGERIAL CLASS - and a disaster in comparison with the former defined pension - that was widespread in the whispy by gone days prior to the Savings and Loan crisis in the 80's (and some of the postings on that here - pinning for Glass/Stegall & a Volker rule that never really existed in the first place)- that later bled into the Stock Market crazied Tech era and eventually - once the Techie thing landed and dust settled - the real estate fiasco.
[and is still available in the Government Unions and the Teachers to Boot - who barely teach a thing about actual capitalism - but get the DEFINED PENSION TO DO THE KNOW-NADA]
Loose credit masked declining incomes - and the beauty of it was exponential (and you still SEEM to buy the 'morality argument') - which in turn led to the debt bondage that - like 19th century WASPS viewed as self-induced drunken and libertine self-destructive behavior of the Irish - was now in the 21st 'living beyond their means' - and monetized the screw job after screw job while the hoopleheads just 'keep digging.'
Go back and look at the crushing commodities market (before price supports - a 'New Deal' anachronism the Kochs and Austrian School cool kids have been trying to shutter for decades now - just as they have Social Security via privitization) - and the Gold Vs 'free Silver' political fights - and the toxic views on immigration - and so much more and Today it is Big Tech the global Party of Davos not the Monopolies of Standard Oil or the Railroads.
And I know this is simplistic but bear with me. I believe in capitalism - but with rules Rick.
We are not living through some minor bumps in the road - or some metaphorical 'hair on the wall' hiccups - Taibbi's been on this a long time and it's part of why I'm hooked as a fan boy- he is so much more right than wrong.
MT as a writer sides with those I once viewed as harshly and as cynically as it seems you do - but that was over fifteen years ago - when it was still a literal gold rush in the collections field - and why was it a gold rush - because the credit was still flowing - and now it cant.
American Investment Banking didn't 'blow itself up' in 2008 and we haven't just been screwed by Dodd & Frank and ect - that is really simplistic Rick - and wrong.
American Investment Banking sold us out BECAUSE IT WAS JUST TO *&^(iNG tasty to play Jack Sparrow and go 'a Pirating' the world over {especially with all that money the statist 'hybrid' Chinese were throwing at them - in the loose money world the west created }- making the de-industrialization of America - the ending of widespread opportunity for the next generation - all of it -a deliberate orgy of greed and nothing new - except in scope.
Both parties - until Trump ripped the scab off the great fantasia. Leaving both sides desperate to off him and the populism he recognized and road.
Global financialization is in most respects globally designed and led BY AMERICA - BUT NOT MY AMERICA - it is only now that - since 2008 - an awakened American populism - from the right and the left - just as it did in the late 19th century - has awakened to the threat it poses to both financial and personal freedom.
It's awakened for the same reasons it did before - even if this time its not about child labor and choking on coal dust or brain rot from mercury or lead. Americans do not decline gracefully or willingly - despite such erudite directions from the Kennedy School over Gov or even the Hoover Institute clowns in the Journalism department.
Americans fight back. But first they had to figure out WHO was SCREWING THEM, and how.
That is Trumps real legacy.
The middle class has seriously shrink, betrayed by the left, its so-called protector. The left uses its protectees very much like the coward who puts a woman or child in front of them as a shield from his opposing gunman. They really never cared about the middle class, women, blacks, browns etc. these groups were simply useful tools to a political end.
Globalism is the biggest reason why so many middle class jobs have gone overseas. One is a quirk of fate - only our industrial base wasn’t flattened in WWII. Most of the others had to rebuild from the ground up and did so with modern processes and equipment. More importantly was that Clinton sold out industrial America for dirty campaign money and in exchange, gave a corrupt China MFN status and admitted them to the WTO. He knew they used poverty and slave labor as a trade weapon, that they polluted massively and that they manipulated their currency. He betrayed the middle class. Just as he did in repealing Glass Steagel, making the financial sector a ticking time bomb.
Jobs were exported as a result of lower cost opportunities in China and India. It didn’t have to happen - equalizing tariffs could have legitimately been put in place to take into account their slave labor pay rates and heavy pollution. We didn’t HAVE to over regulate like Big Brother making it unappetizing to do business here. We didn’t HAVE to maintain business income tax rates that were so uncompetitive. The whole tax industry of transfer pricing - shifting revenue overseas - exists only because we have been uncompetitive here.
That is what killed the middle class - a purposeful decision to become incompetitive.
Pensions? I don’t blame business a whit in shifting the investment decisions and risk by shifting to a defined contribution plan from a defined benefit plan. It makes sense to insulate a business from the vagaries of the stock market. That’s not their business. Fort hose who haven’t, they tend to suffer under the unfounded liabilities - government plans being exhibit A.
The family unit? Sure having a HOME helps. But not necessarily a house. It’s about a mom and dad, with at least one of them working and setting an example to children as well as providing discipline in its many aspects. That was destroyed by the left with LBJ and his great society where people were encouraged to become dependent rather then remain independent, to break family units apart because they get paid more with more babies and no man in the house, and by inviting more dependent people from our southern border to cross freely, importing more dependents who will vote for them.
This is what has decimated the middle class.
https://amgreatness.com/2021/02/07/our-animal-farm/
Ya!!! Fuck everyone!
The bank has a fiduciary duty to loan insured deposits to good credit risks. Part of performing this duty is to bring some skepticism when evaluating loan applications. It's the market's job to make people want things we can't afford. It's the bank's job to say f**k no.
So, the Congress is as guilty of having being stormed as the protesters, since it takes two to tango
Couldn’t you have been more creative
When we bought our home in 2003, we chose to buy a home on the less expensive side, even though we “could have qualified for a home worth double that with YOUR incomes” said our bank loan officer at our credit union... We chose a 15 year note, paid it off in 12 years, and are happily retired, early. But people aren’t taught basic financial information in school and often, not at home while growing up either.
Oh fuck, this trope again.
I always know that the person opposing my views has acknowledged loss when the wheel out the leftist lingo such as “trope”. I’m just surprised Yu didn’t use “dog whistle” or “gaslight”. Soon you will begin to repeat “equity” ad nauseam
As my mother said to me one time after making an unwise investment, “The nice lady at the bank...”. This is a question of trust, not “stupid borrowers.”
On point with this article, the financial and political elites have no clue how much average Americans of all backgrounds were affected by the 2008 crash, and now it's happening again and worse for millions of people during the pandemic. Your line about bailing out banks, but letting restaurants fail, captures perfectly the orientation elites have: top-down, and themselves first.
First and only.
Something about this article made me finally start sending you money.
New York magazine is a rag for yuppies, and yes they still exist. The only thing they are good at is gauging the sentiment of a small set east of 9th Ave.
Putting on progressive clothing is one of the silliest gambits I've ever seen establishmentarians pull. And if you needed any more evidence that the Democrats are now the party of the establishment and Wall Street, it was the portrayal of WSB as a Trumpist movement.
LOL!!! so true-- even their what's on section SUCKS and I used to read it before visiting friends in NYC few times a year. Used to read James Chait (?) but nothing in the last 5 plus years has been any good. Kind of a People magazine for the very superficial
Thanks for the suggestion. 💗 I am a bit boring about medical things-- I go with my professional sources and my patients experiences here in Canada. Even lockdowns aren't comparable-- people are too different in their reactions to it and the supports provided are different in different countries and even within each country. On top of that I am crazy busy these days dealing with the mental health issues and keeping up on reading JAMA etc. pieces coming out about the uselessness of masks etc. There is too much MSM reporting on things they haven't a clue about and are too lazy to go beyond official narrative sources.
My shit is completely out of control. I try to not spend too much time on the internet.
[Rick Perry voice] Whoops.
What a terrific pair of articles. I know now about the situation from 30 minutes of testing this Substack then a week of looking at financial pubs and sites. There's a reckoning underway. Americans are a savvy and brave and reckless bunch, and even if you don't believe in the deep state, the actions of the entrenched are really pissing people off. The sandwich shop analogy was spot on, and we all eat sandwiches.
Great reply, Matt. The mainstream media is just plain terrified. They have children in private schools, mortgages on their houses in Montclair and Pelham Manor - and perhaps are even more terrified for their egos. What if they don't get invited to the correct parties? They all know (even if the don't admit it to themselves) they could be the next one cancelled for wrong-think. So their defense is to scramble around and try to be on the winning side. Welcome to totalitarianism.
Excellent points Polly! I would expand that group of MSM to include the large institutional administrators-- they are 24/7 fund raisers for their behemoths and get paid 7 figures (with bonuses) to do so-- their educational or health admin functions are a distant second concern. They become institutionalized apparatchiks to whatever governing bodies/govts regulate/control them.
Yes.
Which Montclair? I'll presume it's not the one for which my dad served on the city council for 12 years.
The Montclair just south of Springfield. :)
In 2007 I got out of the stock market. I told my brokers, "Only triple A rated treasuries ands munis for me." One day my New York bankers put me into their AAA rate MBS at face value and then devalued them to basically 0. I was broke. The Gov't stepped in and settle the legal battles at less that 1c on the dollar. Multiple my case by millions of investors, pension funds and savers. Under Reagan 1200 bankers went to jail for the S&L crises. 0 under Obama.
So I did another startup, built it up, sold out, and went into rental housing for a retirement business. Then Covid, and the eviction moratorium. All my tenants lost their jobs but we worked it out after a few months. We worked together. Only two simply refused to pay rent any more -- the two who didn't lose their jobs, they eventually moved out, moved in friends, in one case to use the house as a dog kennel, completely trashing it. I was helpless to do anything. The rent moratoriums started in April. They won't end until next September... In NYC a third of tenants are behind. 20 million households in America. There is a piper yet to be paid.
All of this because of lockdowns that even the WHO now says were ineffective.
There is a lot of anger out there from conservatives like me, from small business people, and from people like my tenants. We don't give a fuck what pronoun you want to be called by but we do care about fairness. We are tired of playing by the rules, working hard, being successful and having it all stolen.
Someone will put these coalitions together.
Yes the piper has yet to be paid. Agreed-- call it the Fairness Coalition. Ironically this COVID BS is exposing the fallacy between right and left issues-- there are none-- here are only HUMAN issues, values and principles. I am starting to see these coalitions here in Canada. They are growing. BTW-- thanks I forgot the Reagan put the S&L people in jail.
Its a scam. All of it.
How about a coalition of Nihilist willing?
Well said.
Of course, a huge role in this crime against population has St. Obama and his equally disgusting Wall Streeter Eric Holder. The general population is still not aware about the extent of Obama's "Hope and Change" fraud
-- from "Banks are too big to fail",
-- to the scam of the century -- Russia-gate hoax that still continues with the lying team back in power
-- to Venezuela as an existential threat to the US “Venezuela is fundamental threat to USA” -- declared Obama formally initiating regime change.
What despicable Obama and DNC+GOP oligarchs meant is -- “Socialism is a threat to capitalism”… hence imperial War-party endless wars -- against “godless” Bolivia, Nicaragua, Venezuela, Syria, Cuba, Libya, China…..
Wars are immensely profitable for leaders and donors of both wings of the US War Party.
US "99%" population is to milked, controlled, keep silent by censorship and distracted by "gay and abortion wars"...
Bravo Matt for your decades of work !!!
The most dangerous group in the country is marxists. The second most dangerous group is libertarians.
The first group is dangerous because its constituents somehow fancy that a large public bureaucracy will somehow facilitate public financing for the benefit of the many or outright control industry for the benefit of the many, even as all evidence points that politicians are selfish scumbags that almost never do the right thing, in any country and in any environment. The Marxist will screech BS, that this time it will be different, somehow the centralized bureaucracy will be kept in check and will somehow act for the greater good. You can point to the current state of affairs and show that every bureaucrat is paid off, and almost every regulatory body, including the ones governing higher education (the pinnacle of left wing thought), exercises it’s power for the benefit of the regulated or those facilitating the regulations. Magically, somehow, if we get rid of capitalism, the sociopaths who are drawn to these positions of power will vanish, and benevolent Christ like figures will run the government.
On the other side of the spectrum, is an almost as odious group of cretins: libertarians. For these cartoon characters, the United States doesn’t have a history before WWII. A naive population was manipulated by foolish or evil politicians to accept big government as a substitute for the benefits of regulation. Any argument that points out that if a society permits stratospheric wealth concentration will inevitably lead to extreme corruption is met with with the tired, tried and trite response that “oh you see, if the government wasn’t big, capitalists wouldn’t have to pay off the regulators to gain unfair advantage.” On this point, I’ll give the devil his due: the Marxist will accurately point out that this is ludicrous, flying in the face of history, and that government doesn’t grow or get captured as a result of misguided public perception, but with careful construction by the capitalist (really, fascist) oligarchy. The libertarian forgets that every single US state, including the slave holding south, prohibited formation of corporate entities UNLESS the state legislature approved it and the corporate charter EXPRESSLY stated how, in exchange for limited liability, the entity would act in the public good. This rule was in place because if you grant limited liability without a countervailing balance, there is no free market because there is no market without consequence for every negative action. The libertarian forgets that when the robber barons paid off almost all of the states to get rid of this regulation, the problems first emerged: enormous crimes, huge environmental consequences (see Montana and the copper king), etc. The libertarian ignores that pre-Marxist scholars indicated that the modern corporation marks the end of capitalism because there is no limited liability in capitalism. The libertarian forgets that once the corporation ends the free market by enabling the privatization of gains and socialization of losses, even a bare bones government is going to be compromised. The Copper King bribed his way to the US senate by paying off the entire Montana legislature, which in turn ended the election of US Senators by state legislature (I single this guy out, but he isn’t close to other evil bastards of the first fascist oligarchy that took over the country). The libertarian forgets that it was the super rich bankers that paid off Congress to enact the Federal Reserve, which in turn spawned undo credit, which in turn lead to two world wars and a Great Depression. For the libertarian, history begins in the 1930s and 40s, when Americans, not quite sure how they were getting screwed beyond belief, demanded a check to this madness and the era of big government began.
Of course, neither the Marxist or the Libertarians want to get to the heart of the matter. Marxists don’t want to get to the heart of the matter because their real motive is replacing the fascist capitalist oligarchy with a “benign,” “caring,” and “socially conscious” Ivy League educated bureaucracy, you know, like tenured boomer professors that constantly advocate for self sacrifice and what not, as they pillage the public treasury with guaranteed student loans, etc. Most libertarians don’t want to get to the heart of the matter either because to them the only thing that matters is not taxing capital because the only thing that matters is capital; for instance, a pornographer (nothing wrong with porn, just laughing at the right wing association) making a million dollars a year from a website should absolutely be taxed at a far lower rate than a pediatric neurosurgeon making the same because the former is a job creator who takes risk and the latter is just a unit of labor (market value be damned at the end of the day).
And with this long winded rant I arrive at what is the heart of the matter: any collectivist entity that has the capacity to externalize its costs must be heavily, heavily constrained by another force. This country’s sin is the distinction between private and public. The distinction is between individual and collective. A government can externalize its cost and tyrannize. A corporation can do the same. In both instances, the social science is clear: sociopaths are attracted to these entities because it allows them to get wealth, power and prestige without accountability to laws or markets.
The US constitution did a great job constraining government (for a while). A second document similarly constraining private legal entities should be drafted and executed. Oh, you don’t want constraints because, gasp, free market? Fine, set up shop as a sole proprietorship, like businesses did between 1776 and the mid nineteenth century. What’s that you say? That’s not practical? My reply to that is something that starts with “F” and ends with “U.”
Yeah clearly the libertarians are the problem, as the state swallows up everything.
Lol 😆
And, may I ask, who facilitated the increased size of the state? The first radical expansion in federal authority happened at the behest of and was subsidized by John Rockefeller (ICC). The Federal Reserve was financed and facilitated by bankers.
It’s the same thing with you fellows, living an idealized world where the vices of the wealthy extend no further than rational greed, provided we leave them alone, when a plain look at history reveals the contrary: the super wealthy want total control and power, no different than politicians. When the wealth aggregates as it has done today, they usually achieve their end and society crashes.
But yeah, the state is growing not because of billionaire cretins financing its expansion, but because stupid proles that vote the wrong way... sarcasm off.
It's clear you don't know the first thing about Marx
I don’t understand Marx in the way I don’t understand libertarianism, and the associated smugness of both groups ignoring how something looks in practice , rather than theory. Everywhere it’s been tried, it’s failed. The reason is that to accomplish the goals of Marxism requires a large collectivist entity, eg a huge government, to redistribute resources. The people attracted to such entities are always and without exception the worst humanity has to offer. You can rant on some theoretical diatribe on how it will be different, but it’s going to be the same thing: those who seize the power to redistribute will redistribute for their own benefit.
When I say you don't know the first thing about Marx, it means you don't know the first thing. The end goal of Marx is to abolish the State. As for the administration, it can fluctuate according to the circumstances. China has a huge economic success, lifting millions of people out of poverty, something ignorants like you scoffed at being even possible. They took means that didn't come out of Stalin's book so you got caught by surprise.
As for the notion of « those who seize power », it depends on how much the people are implicated in that. But it's clear it's too complicated for you. And it's no wonder. You don't have enough sense to learn about things before commenting on them
When you say I don't understand Marxism, you pull the statement right out of your rear end, like other Marxists.
"The end goal of Marx is to abolish the State."
Really? Wow. Milton Friedman also advocated abolition of the state or its minimization to such an extent so as to be completely ineffectual. In reality, IN PRACTICE, what happens is that those that accumulate the wealth, purchase or resurrect the state and subsequently expand it for their own benefit. Oh of course, if you point this undeniable fact to them, supported by the last 150 years of history, they will also argue that "you really dont understand capitalism, we didnt go far enough, we didnt gut enough." Its stunning to me how so alike the two groups are, despite professing vehement disagreement.
"You don't have enough sense to learn about things before commenting on them."
I could point to the litany of historical examples, including but not limited to North Korea, the USSR, and yes, even China (more on this later). You aren't going to care. You are going to tell me that isn't Marxism, we didn't go far enough, we didn't do enough, etc. Or, alternatively, in more brazen situations, you'll identify one singular thing those societies accomplished that was better than post WWII America, ignoring the other parade of horribles, and just state its better than what we have or had. It doesn't matter to you what the doctrine looks like in practice, like a teenage girl enamored with a handsome serial rapist, you just look at the beautiful exterior, namely, the fact that the words of marxism and the idealism on paper just feels so good. By the time you are in the hotel room and the door is locked its too late, but hey, lets go one more time, it will be different this time.
" China has a huge economic success, lifting millions of people out of poverty, something ignorants like you scoffed at being even possible. They took means that didn't come out of Stalin's book so you got caught by surprise."
Indeed, they didn't use Stalin's playbook, well except in the beginning, when the Maoist regime successfully killed more people than both him and Hitler combined. No, I give you that, they've adopted the strategy of a more effective champion:
“The Capitalists will sell us the rope with which we will hang them.”
― Vladimir Ilich Lenin
Of course, I have to disagree with our deceased glabrous friend on the term "capitalist," there's no such thing, just like there's no such thing as "marxist," at least as the two doctrines exist in practice. There's just different flavors of fascism, and they absolutely did figure out to use our private fascism to benefit their public fascism. I'm curious though, if the result is lifting people out of poverty, without consideration of the means of doing so, what's the problem with the present state of affairs? I mean, without Western Capital and know-how, there is absolutely no chance that the Chinese would have been able to achieve what they achieved. The proof is in the pudding, until they opened up to the West, they were one of the poorest countries in the world. So, in reality, our libertarian friends our correct!!! "Capitalism" is the greatest system ever! Globalization is amazing. We just have to go as far as the Chinese did. For instance, a few million Uyghurs making Iphones for less than a dollar a day is what we have to do over here. Why don't you like Trump? He said wages have to go down? We can be like China if we drop our wages and increase the use of slave labor. We can even have the factories in a nice location! Don't take it from me, just listen straight from the horse's mouth:
https://www.youtube.com/watch?v=DwBaL-5o1oc
I think though, your comment below regarding the intermediary step involved to facilitate your utopia really gets to the heart of the matter both as to what really happens when your murderous doctrine is applied and what is really the hidden driver for people that advocate for it.
Say what? Marxism's goal is the abolishment of the state, and the current government of China is your example? You're right, that must be pretty complicated.
You know what else lifted millions, actually, BILLIONS out of poverty?? Fucking capitalism, you ignorant tool.
Was it corrupt? Sure. Are you saying the CCP doesn't involve corruption?
Was the created wealth unevenly distributed? Sure. Are you saying the wealth generated by the Chinese economy is evenly distributed??
In point of fact, the Chinese "success" is piggybacked on improvements to human life that have been initially generated by...you guessed it: capitalism.
I mean, this is such a glaring flaw in your contention...I guess it must be too complicated for you.
Love me a long winded rant!
Get your own blog.
It's a closed loop, Lord Acton's "All power corrupts, absolute power corrupts absolutely" takes over in seemingly every case. You have a great idea. But then when some asshole goes off the rails with the power he's given to enforce that second document it's groundhog day. We have to find a practical solution. I think Plato was right, need a Philosopher King, someone altruistic, and about 6'-6" and 500 pounds.
I agree. Every hierarchy and system degrades. The correct frameworks provide a longer time frame and better framework. The problem with this country is the focus on private vs. public. It should be collectivist versus individualist. Collectivist entities should not have the same rights as real people and heavy counterbalances have to be in place to avoid this mess. Governments are just one kind of collectivist institution.
But no less than the Supreme Court reinterprets the Sherman Act to make it harmless, recognizes corporations as individuals (Rockefeller on his stone pillar "supreme worth of the individual" above all else), uses the 14th amendment as protection for corporations instead of people. Richard Olney, Grover Cleveland's AG, comes up in every book as having an epiphany. Using the Interstate Commerce Act (Government regulation) against people, instead of as protection for them against the railroads. Thomas Frank tells me the great cynicism of the GOP is that they don't believe themselves, that it can be changed. So they bark at their own tails. I'm telling you, on the brink of nihilism here.
Bingo! This guy gets it.
Excellent piece. Last line is the best of the rest. The situation is increasingly explosive. Forty percent of Americans believe the election was stolen, no forum for a review of the evidence to settle the matter, heightened and reckless rhetoric, the constitution is in tatters, it all leads towards extreme outcomes, which may be Biden's ultimate purpose: 1. kinetic outcome will enrich one of his primary funders (private security contractors) while 2. eliminating his political enemies.
Ultimately, people are frightened and totally disenfranchised. What follows the end of politics as day follows night? Keep up the good work.
«Forty percent of Americans believe the election was stolen»
And forty percent believe it was "stolen by Putin" in 2016... From their point of view that was proven in 2020: without "Putin's interference" Trump lost, so obviously his victory in 2020 was caused by Putin. So simple! :-)
How could anybody anywhere still believe the russians stole the 2016 election? The MSM hyped it for years simply to hurt Trump, but the avalanche of data regarding FISA abuse and the ridiculous Steele dossier has buried that propaganda.
Ever heard of the Mueller report?
«How could anybody anywhere still believe the russians stole the 2016 election?»
TDS seems to lead to have lasting side effects on memory like SARS-CoViD-2, for example here is a mild law professor writing on a related subject:
http://danshaviro.blogspot.com/2021/01/trump-and-bin-laden.html
«Trump is one of two people - Bin Laden is the other - to have orchestrated a violent attack on the US Capitol Building in the last twenty years. (The Capitol Building is believed to have been Flight 93's target.) Both were acts of war against the United States, although Bin Laden's was a foreign attack and Trump's a domestic one. Trump's attack not only came closer to success - they actually breached the building - but aimed to do far more to destroy our institutions and way of life. Bin Laden's was a raid, meant to terrorize and provoke a response that would feed further escalation of ongoing global conflicts. Trump's was meant to decapitate the legislative branch, with accompanying mass murder and hostage-taking, and to put a permanent end to democratic (small-d) governance in the United States.»
If TDS can make someone believe that D Trump is worse than O bin Laden and declared war on America and failed to "mass murder" senators and representatives, it can make many believe that the 2016 election was stolen, and the convictions of Trump minions by Mueller prove it.
I am beginning to have an ugly feeling that I may have underestimated TDS. My general reaction is, "You're not serious, right? Trump = Bin Laden? I guess they were both involved in the building trades."
...where does this energy go now that he's out of office?
«How could anybody anywhere still believe the russians stole the 2016 election?»
"The music never stops"! :-) More of the same from an english newspaper that "coincidentally" seems to have an 100% hit rate on "deep state" narratives:
https://www.theguardian.com/us-news/2021/feb/07/american-kompromat-review-trump-russia-epstein-craig-unger
«American Kompromat review: Trump, Russia, Epstein … and a lot we just don't know
A new book on the old president is titillating but scattershot, a compendium of wild stories and salacious accusations
Craig Unger’s new book has already made headlines, in this newspaper and elsewhere, because of a charge from an ex-KGB colonel, Yuri Shvets, that Donald Trump has been a KGB asset for 40 years. But as Unger himself points out, former CIA director Michael Morell has called Trump an “unwitting agent” of the Russians; former national security director James Clapper has described him “in effect … an intelligence asset”; and former CIA director John Brennan has said Trump is “wholly in the pocket of Putin”. So Shvets’ accusation isn’t really very surprising.
Many other Trump-Russia books have dated Trump’s initial contact with the Russians to a visit to Trump Tower by then Soviet ambassador to the United Nations Yuri Dubinin, in 1986. Unger – through Shvets – reports that the association actually began six years earlier when Trump purchased 200 television sets from Semyon Kislin, a Soviet émigré who co-owned Joy-Lud electronics on Fifth Avenue. According to Shvets, Kislin was actually a spotter agent for the KGB.»
This music or narrative will run forever and ever... :-)
The Guardian was taken over by the British M5/6 in 2018 as a way to silence Wikileaks from exposing government fraud. It has since parroted official propaganda. https://consortiumnews.com/2019/09/11/uk-security-services-neutralized-countrys-leading-liberal-newspaper/ John Brennan and James Clapper are co-conspirators in the Russia-gate fraud. One doesn't have to be a Trump supporter to know the accusations were ludicrous. https://consortiumnews.com/2017/06/29/nyt-finally-retracts-russia-gate-canard/?print=print
It's as if Yuri Nosenko got elected president. The spooks and would-be spooks can't resist falling down their own holes.
It's no surprise you get criticism from "the left" these days. Wokeness is the handmaiden of plutocracy.
https://imgur.com/gallery/CxfYNn9
Indeed.
https://imgur.com/a/vq72qS7
Similarly In the UK the english press after the 2008-2009 crash and bailout started to publish stories about voters being outraged by the many hundreds of billions handed out to finance and property companies to bail them out.
At some point almost overnight and pretty much at the same time the english press switched to stories attacking the government for spending billions to bail out unemployed workers and that it was this that was creating big deficits.