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Posts Tagged ‘Foreclosures’

Sorry kids, it’s been a busy week (out in the non-blogging world), but I found a few interesting things to share.

Lying Eyes had a nice piece on the limits of markets.

Jonah Goldberg notes that the taboos on criticizing Obama (and his manifest arrogance) are becoming the stuff of ordinary observation.  This breaking of taboos on criticizing bad politicians from “victim” groups is a healthy one.

The gang at Alt Right note the not-terribly-surprising interest of neocons in embracing gay marriage.

Larry Auster’s hippy past comes to light without shame or regret (or much explanation). Incidentally, this guy criticized John Kerry’s service record back in the day, as if he were the second coming of Audie Murphy.  It’s apparent that Larry served in the marijuana trenches of Colorado during the Vietnam War. And he banned me for noting the contradiction and absurdity of his highly judgmental grandstanding on the physical courage of a man, a man whom I do not particularly like, who at least spent some time on the Two Way Range.

Hillary Clinton suggests Serb minority in Kosovo might be oppressed (this after supporting her husband’s genocidal war of Muslim Kosovar liberation that left the Serbs to the tender mercies of the KLA terrorist regime run by head terrorist, Hacim Thaci).  For some reason, I think admitting that this was a huge mistake, the equivalent of Soviet “liberation” of the Poles in World War II, is quite unlikely, as are American promises of protection to the Serbs, who are the whipping boy of Europe.

In other news, Serbs will be Serbs:  young toughs were battling the cops this week in the street to stop a gay pride parade in Belgrade.  Honestly, I don’t support thuggish violence, but at least these people still have enough blood in their veins to know that Euro-decadence is the harbinger of national decline.  Conservatives in America react with a little venting and then a shrug at this and much else.  In a just world, no one beats up gays, and gays do not go out into the street in their bondage gear and expect to be treated as if they were anything but a dangerous, antisocial subculture.  (Sadly, Paladino in New York does not have the guts to defend his first instinct on this issue.)

I was happy to see the Chilean miners be freed  from their long ordeal.  It’s truly great news.  To his credit, their president mobilized national and international resources to help, including America’s NASA, and thereby showed a self-confidence that is often absent in the prickly, insecure Third World.  (Of course, Chile is probably the least Third World of all such countries, not least due to the stability and economic growth of the Pinochet years.)

Everyone is in a tizzy about the fraud of mortgage lenders being addressed now by BofA’s moratorium on foreclosures.  These issues, frankly, are interesting only to lawyers, and I’m one of them, and even my eyes glaze over at the details.  Mortgages and foreclosures are far too technical, as is our old-fashioned regime of property transfer and registration.  Once payments are stopped and a workout cannot be had, the rest is all details. No one has alleged anyone had their house taken when they were making timely payments; it’s all a question of whether some highly technical documents that no one reads or understands were signed by the right bureaucrat or not. The whole thing is a tempest in a teapot.  Since post-foreclosure any title is good against the world, contrary to the hype, this should all blow over.  More important, how much national wealth do we want sacrificed so that a completely outdated and overly expensive process is conducted with scrupulous regard for the defense bar.  That said, if you’re of a Machivellian bent, now is a great time to stop paying on your house; you could probably live their for four to five years with minimal efforts at defending from the bank, particularly in hard hit areas like California and Florida.

What can we make of all this news.  Well, America and the world are having a reckoning with their loose money fiat regime unleashed barely 70 years ago after World War II.  This whole system is unsustainable, and now the real gap between our perceived (i.e., paper) wealth and real wealth is more and more apparent.  The name of the game is deleveraging, which means paying back debts individually and collectively.  And that means pain, austerity, and, due to our nation of welfare addicts, instability in the transition. In such times, anything is possible, both in foreign and domestic affairs.  The best one can do is try to hedge.  And this means being prepared for uncertain times, i.e., anything from the Dust Bowl 30s to the Somalia 90s. And the best way to do that is to reduce debt, sock away some cash (literally, under the mattress), buy tangibles, adopt a minimalist personal philosophy, and be prepared for anything.  America may have sold its soul for granite countertops, but right now a few gold coins, an AR-15, and a month or two worth of stored food and some tradeable stuff like a generator will do a hell of a lot more for you than a stainless steel refrigerator or a jet ski.

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Above is an interesting chart. So is this one:

There clearly were many factors in the housing bubble, all of which aligned to create a perfect storm of sorts: higher levels of leverage among investment banks, a trade imbalance, reliance by institutional investors on misleading ratings by ratings agencies, inflationary monetary policy, conversion of housing assets into opaque financial instruments, reduced lending standards, the pressures of the Community Reinvestment Act, the mystique of home ownership, business models that invited fraud, and a pervasive mania of speculation. But one factor that seems increasingly undeniable is the Bush administration’s belief that Hispanics were “natural Republicans” and that the best way to get them into the fold was to give them a stake in the “ownership society” through various housing subsidies. Hispanics’ increasing numbers in the so-called “sand states” had a lot to do with the bubble’s disproportionate influence in those regions, and these subprime borrowers’ low levels of human capital and earnings eventually led to the music stopping as payments were unmade and new borrowers could not materialize to prop up the inflated housing prices. I mean, throughout the boom, no one said, “Does it make sense a sheetrocker from Chiapas making $11/hour can afford a $400K McMansion in Anaheim?”

This is what may be called an “overdetermined” event. In other words, without large levels of Hispanic immigration and Bush’s obsession with cultivating Hispanic political support, the bubble may still have happened. But it seems unlikely that it scale would have been quite so huge and the wave of defaults quite so numerous in the absence of the low-skill Hispanic immigration wave the U.S. has undergone since the 1986 amnesty. A million people per year is a lot of people. As the chart above shows, subprime lending tripled in the boom and the bulk of that expansion was increasing lending to blacks and Hispanics. Even more important, as shown in the second chart, blacks and Hispanics–according to the Boston Fed–have default rates nearly two times higher than white subprime borrowers. Of course, the media, the Democrats, and the Republicans don’t want to discuss such things; it’s not considered polite, and, thus, the greatest demographic and social change of the United States since the Civil Rights movement is thoroughly and deliberately under-analyzed and misunderstood by well-meaning (and not-so-well-meaning) political elites.

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