crash08 UNDERWATER MORTGAGES - WALKING AWAY the psychology of - Brent White 11-02-09
Nigel Watson comments 11-22-09 (note: Word doc attached if difficulty reading this)
Don't let this 54-page whitepaper scare you away. Pages 1-2 include a half-page abstract; 3-4 is a tight little intro; pages 5-52 are about 23 pages of details; not counting footnotes – about half of every page. See page 8 for Tampa Bay's ranking. (note: page numbers are PDF margin guide's, not those printed on pages)
If you own a home, read every word. If you don't, pass it on to everyone you know who is an owner, which means everyone on your list because non-owners know lots of homeowners too.
Even if you don't own, read at least the abstract and intro (an executive summary), as well as my comments below. You may be an owner one day and forewarned is forearmed, eh?
Professor White's clear as a spring mountain lake logic is a pleasure to follow as he wends his way through the mess this nation had to become morally and ethically before these twin plagues beggared the culture and society that is its, now mostly unhappy and unwilling, host.
This fellow nails the primary moral issue of our time, namely, the Marianas Trench of a divide between the citizen and the capitalist mentalities of this society. His paper is a casuistic tour-de-force on this issue.
A vast majority of the former pays their bills, keeps their word, honors their commitments, if at all possible, and accepts personal responsibility for their actions.
The latter, on the other hand, use any and all means – fair and especially foul – to avoid/evade/dodge/fob off/deny/delay/buy off their bills/word/commitments/responsibilities. Yea, verily, these are way devious sons-of-bitches. They've always got more turns than a Roto-Rooter.
America's highly advertised and relentlessly promoted 'common values' exist solely in the befuddled minds of its misled citizenry.
This whitepaper, among other issues, indicts this divide and examines the reasons why all these good citizens have not told the schemers, the scammers, media and government mouthpieces for the propaganda machine to go fuck both themselves and their hideous contraption; something I've wondered about myself.
The Prof provides some answers to this seemingly puzzling behaviour. The reason you need to actually take the time to read this is to place in context Prof. White's comments re the shaky foundation upon which rests one of the few bulwarks still standing that is preventing the fairly rapid collapse of this society's law and order: moral constraint (page 27).
Any society only works if most of its participants abide by the rules agreed to by all at the outset. As time proves the need for this change or that, it is understood by all that an orderly and inclusive procedure is in place to move that society forward to a better place. The USA has had a series of ups and downs in this regard with each attempt by the few to push around the many being rebuffed, over time, as a natural reaction to such oppressive tactics.
We are now at a point - again (sigh) - when even the most clueless among us realize s/he has been betrayed, on one level or another, by the very institutions we had come to trust and rely on for the facts needed to make intelligent decisions about our lives: our government; business; the MSMedia. By design, the honest and honorable voices among us have the smallest bullhorns; the least amplification in the town square. The ones who know the truth have been pushed to the margins. You almost have to hunt them down in order to hear their vital message.
The most notorious, noisiest, brashest and boldest human billboards in our society mimic P.T. Barnum and your average college frat house. A few pretend solemnity, but, most entreat us – Oz-like – to ignore all those dark things lurking in the corners, especially those odd figures behind the curtain. Oh, but, it's really, really important for you to find out if you're smarter than the average 5th Grader (you're okay, as long as it's an American 5th Grader – ref. J. Kozol & J.T. Gatto).
All of this noise has but one purpose in mind, besides ever-present profit, to prevent John Q. Public's mind from having even one spare moment to contemplate (a dangerous pastime for any regime) the source of the monumental personal catastrophe most recently visited upon her or him, courtesy of the malevolent, metastatic, predatory fiat currency of the greed machine known as laissez-faire Capitalism.
NjW's comments on Professor White's detail section:
20 last paragraph – 81% of us feel it is immoral to default – by deduction then, 1/5 of us think it's oky-doky – let's see now (math ain't my strong suit), 45 million mortgages (est.) x .19 (ok to bail) = 8.55 million with no moral constraint factor (amorals);
21 so strong is this moral conviction, only 17% would default if equity shortfall @ 50% - OTOH, if they know another who did, then 82% are MORE LIKELY TO DEFAULT, especially if perceived as unfair bailouts to those less responsible than they are;
24-25 only 41% (or 59%, see 27) of 'amorals' would walk away @ $100k or $200k negative equity (do the math) 45 million mortgages x .41 = 18.45 million – no moral constraint – only naked fear to keep them in line, i.e., keep paying for the sins of a corrupt capitalist culture – the author's final sentence is a devastating indictment of our society's severely warped ethical and moral tenets, amid clever phrasing;
25 V. 'contagion effect,' as moral constraint's sway weakens, the endless tsunami of declining housing values (and let's not forget the shadow inventory), culminating in a tipping point resulting in a series of crashes on the bumpy road to a Depression Era-level nadir, or worse;
27 religiously inculcated guilt and shame are also being shamelessly manipulated by the credit card industry who now have trained cadres of soft-spoken (mostly) women whose sole job it is to 'connect' with the victim, uh, debt-slave, and 'help' them to see their way to paying something (make that anything they can get them to pay, especially if they were thinking about sending a few bucks to the power company, et al – despicable);
28-34 I couldn't agree more with the Prof's observations regarding the orchestrated demonization of the victims by the powers-that-be. This sad-ass culture's marination in the toxic philosophies of John Calvin and Roger Williams is alive and well, riding full gallop in pursuit of any punishment that can possibly be meted out to the wrong perps. God forbid (as she is apparently bent on doing) any of these jackasses from pausing to reflect in order to identify the true villains of this 3rd (and perhaps final) Act in America's long-running morality play.
37- VI. Here again, I couldn't agree more with the author's stance on both his morals and his math. I have long felt the price-to-annual-rental is the only fair way to appraise real property of any type, other than non-profits which require true comparables (churches, etc.). Personally, except for the investor class and other knowledgeable buyers, I would hold the lenders 90% responsible for every one of those damn liar's, alt-A's, option ARMS, and other klepto-gotcha type loans. They, the Realtors, the appraisers, the home inspectors, the underwriting departments and title companies were all in on it. They all had superior knowledge, and they all betrayed their agency relationships, not to mention common decency and fair play, with these poor schnooks they knowingly took to the cleaners.
39 Thus far, I've pretty well gone down the road hand-in-hand with the Prof. Now, we must briefly part ways. On this page he says that the lenders got loosey-goosey with their underwriting requirements due to their shift of focus away from the buyer's "skin in the game" (equity). I now know that, while that might have been the initial reason, it soon became more than apparent that the lax standards served only one aim: to feed Wall Street's ever more ravenous maw with all the raw meat it could lay its grubby mitts on to feed into the derivatives-sovereign wealth fund-global shell game and money-go-round. The lenders didn't "lose sight of" anything. They simply said, "Screw it! Let's make some major bucks while the bank's guards are out to lunch."
NjW's final observations:
If this fellow, certainly not 20 points smarter than Obama, Geithner, Summers and the rest of the gang, can go right to the heart of this problem – especially the admin's singular lack of an effective cattle prod to make the banksters want to adjust (mark to market, not the pansy-ass 'voluntary,' $1,000 to the wrong party insult on page 42) the bogus batches of bullshit on their books, and work in good faith with those homeowners still able to financially pay the freight – why couldn't the might and majesty of our fast-talkin', high-falutin' guv'mint cleave to the moral and pragmatic high ground here? Did none of these boobs check to see what FDR did in his first 100 days (a record that may stand 'til the end of days- and I know Mr. O set a land speed record for nations visited in the same period, but, ask me if I care)? FDR's FDIC obviated any need for a bank holiday this time around (at least they didn't repeal something), but, wouldn't an updated HOLC (Home Owners Loan Corp), with all it's requirements that banks actually do the banking thing, suspending all foreclosure actions for 90 days to allow time for negotiations, and yada, yada.
And in the grumpy linguist department; Have even academics abandoned the correct past tense spelling (though not, one hopes, its pronunciation) of lead? As one who eschews pleaded for pled (please refrain from reminding me there is no such word – there should be), I eagerly await the day when some journalist twit will make the logical leap (alas, backwards) to "After pleading 'not guilty,' the suspect was leaded back to his cell to await trial." When I want extra letters in my words, I'll request them from the letter fairy.
The Prof's paper is badly in need of a copy editor, but then, so am I, for a different reason.
Nigel Watson freethinker 727.493.1990 freesense@Gmail.com
"It is no measure of health to be well adjusted to a profoundly sick society." – Krishnamurti
-A good pun is its own reword.