Monday Open Thread (MLK Jr. Edition)
I am at work unfortunately, as my company requires you to take a personal day if you want today off :) For all of MLK's flaws he was a true leader who made a difference. He fought for the idea that everyone deserves the same individual human rights regardless of their external characteristics. And for that he should be recognized by all Americans of all colors.
Have a great Monday.
Submitted by Ender on Mon, 2008-01-21 09:07
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Comments :
Though I haven't listened yet,
Two video "Diavlogs" over at BloggingHeads.TV seem pretty worth a listen:
First we have Spencer Ackerman and Megan McArdle
.
Ackerman is the Am. Prospect and McAdrle is with the Atlantic.
They discuss topics (which you can watch individually) like:
-who is the GOP frontrunner?
-a discussion of the economic advisers of the candidates
-their defense advisers
-Obama's new approach
-Death numbers in Iraq
Second, we have Henry Farrell and Daniel Drezner
Farrell is "Crooked Timber" and Drezner is an economist.
They cover:
-NH
-coded political speech
-"sore-loserdom"
-the dark side of libertarianism
-Goldberg's "Liberal Fascism"
-Presidents and and our image abroad.
This one about elites and voters
looks good too.
United for a Fair Economy
Foreclusing the American Dream
For you statistics and data freaks, the above pdf link is a break down of institutional structures and biases that charge people with less money more for a loan. Scroll down for an excellent analysis of the data that includes proposed and realistic solutions.
The end result of this foreclosure crises will be and has been a great stain the US economy affecting the global markets as well.
Lest you think that I am just making this up, the World Economic Forum held annually in Davos Switzerland
will be headlining the economic challenges due to the aftermath of the subprime crises.
Economic opportunity was a large part of Dr. Kings vision of hope for equality for people of all races.
I'm only half stupid
To put it lightly,
that paper is very unscholarly.
If you look at the premises laced into the "key findings", you see a few things:
1. race-based complaining about matters that are not about race and should not discussed as if they are grounded in racism.
2. Dwelling upon selected results and stats (in the context of race) that offer no perspective about the anatomy of subprime prime problems and their CAUSES.
3. a willful ignorance about the role of subprimes, why they exist, who gets them and why.
I could go on but I won't.
Well, they obviously have a particular point of view that
they are pushing, but they do have graphs broken down first by income group and then by race, so there's at least some attempt to do an apples-to-apples comparison. It would be nice to see a breakdown by credit score, or other indicators besides income.
Come, my friends. 'Tis not too late to seek a newer world -- Tennyson
Brendan
check this out, if you feel so inclined.
I am not any kind of whiz on stats or data, while I know you are. :)
That is, if you feel so inclined.
faireconomy
I'm only half stupid
Extreme economic and statistical ignorance in their paper
This paper is left-wing hackery at its worst. Not worth the electrons it's transmitted on.
Are we to take people seriously who, rather than providing, oh, say, graphs of white vs. black income by year, simply provide handpicked comparison years of 1968 and 2005, and then extrapolate on this basis that it will take 440 years to "parity"? (In another case we learn that it will be 10411 years to parity. Uh huh.) And then we see random comparison years later in their paper of 1972 vs. 2006, 1968 vs. 2006, 1970 vs. 2006, 1983 vs. 2004, and 1982 vs. 2004. It's laughable how badly they're begging to be accused of cherry-picking years for comparison.
Or, people who claim that prepayment penalties, which are a very standard legitimate practice in loan underwriting to prevent borrower abuse of refinancing (thereby allowing lenders to offer lower interest rates), automatically make a loan "predatory"?
How many horribly misinformed statements can we pack into a single paragraph? Never mind that they're comparing against an old 91% tax rate (they never mention this number) that will find few, if any, defenders among even the left. Never mind that these tax rates were under a tax code that allowed a lot more deductions than the current one; tax rates pre-1986 and post-1986 are not exactly comparable. Never mind that asset price bubbles and busts have taken place for centuries and have nothing to do with tax cuts. No mention of the Fed as the real source of the recent excess "financial liquidity."
Or, later in that section, on corporate taxes, claiming that because the share of total taxes coming from corporate income taxes has decreased, that this somehow means "real people are paying more of the cost of government." As if corporate taxes don't fall on real people, too.
Or claiming that the capital gains tax results in an tax rate of 15% for the wealthy, when in fact this 15% tax is (1) a second layer of taxation on top of the 35% corporate income tax and (2) assessed even on nonexistent inflationary gains.
Or, for that matter, the entire premise of the paper, trying to cast subprime as somehow being a racial issue for MLK Day, based purely on absurd "disparate impact" statistics that provide precisely zero evidence of discrimination.
Jeepers, LordZ
Why'd ya have to go and be so mean about it?? ;)
I thought I put it quite delicately when I said:
I must admit, though, that I did get a little irritated and notice that I was grinding my teeth a little as I perused it. It is pretty dim stuff...it must be honestly said.
But hey, you have to consider the source. See their website under Popular Economics Education
...even as a euphemism, it STILL sounds as dimwitted and stupid as it actually is.
I'm sorry. I'm not a mean spirited person but this stuff is complete drivel. It's written and run by well meaning ignoramuses with their hearts in the right place but their brains about 4 feet up their ass.
And this is when I get a little angry at the Left:
You don't have to an economically illiterate rube with ZERO standards of intellectual vigor to make a good, sound case for economic reform. DAMMIT!
But you do need a clue.
Sorry.... :>(
Good news..
If you don't like it, I like it even more!! :)
I'm only half stupid
Just because!
Right? :)
Brendan,
we all know how credit and interest rates work.
when you take that simple construct into account. You can objectively see that they are beating around the bush and avoiding the relevant questions and answers that come with it.
Making loans available to people at a lower rate for which they do not qualify screws up risk management mechanisms and would simply lead to higher interest rates for everyone else in order to compensate.
Or
Making subprimes harder to get would simply price more people out of the home ownership market.
It's simple econ.
It gets worse the more you read it
Perhaps it's weird or biased of me to look at issues like this one from a perspective of:
OK, what's really happening here and why? Let's pull things apart and look for real and helpful answers and then we can ask the right questions about what to do so we can get the right answers.
By "right answers", we don't mean: "he answers we want" but rather the answers that give us helpful info.
...Then again, maybe it isn't so weird.
I think by right answers
You mean the answers you want.
Looking at the issue as a whole, it's hard to explain the disproportionate number of minorities that were targeted by predatory lenders. If it followed the same ratio as the general population, blacks would be a much smaller piece of the pie.
I compliment the study and found it enlightening.
I'm only half stupid
No MissL,
I really did mean info that is useful
No, it's not hard to explain. And the explanation leads us to information that is more "useful". Not only are you dwelling on something that is rather easy understand but you are also making that a discussion (as is the paper) in and of itself.
Subprime loans tend to be taken by people with more suspect credit scores and less collateral. A subprime loan is a way for people to get a manageable mortgage payment who do not qualify for regular rates or find the regular rate (that accurately reflects their risk level) too high to afford.
That is a simple truth. Now, blacks probably tend to have lower credit scores than whites and thus are generally more of a loan risk....so they are more apt to pursue a subprime loan to get a home they otherwise could not afford.
Now considering that "owning a home is an integral part of achieving equality and part of the American Dream" according to the paper, the advocates behind this paper are in somewhat of a pickle.
They decry the system that makes homeownership and credit more available to those who do not qualify for regular fixed rate loans at a better rate and point out that victims of this group happen to be more black than the population as a whole.
OK. So now what? They want ownership and access to ownership for blacks and then decry the results.
So, they either have to explain how they plan on maintaining access to ownership via a different way that doesn't undermine the credit system and lead to perverse side effects in the home market values and risk management systems.
or
They have to advocate living within one's means and building good credit to get a better rate on the home they want.
or
They need to explain, empirically, why blacks to earn less and have lower credit scores and go from there.
These are useful questions and ideas that take a broader context of cause and effect into consideration.
That's nice.
LIke it or not....... there will be consequences for ALL of us, however you want to slice and dice the problem, because of the strain on financial institutions.
You see even world leaders gathering at Devos for the World Economics Conference are pondering solutions, because there is a problem.
Everything you said is known. You can assign blame wherever you want to.
Now what do you do about it?
Thousands go into default loans causing more credit chaos and more write downs will not be good for the general well being of the overall economy or it's financial institutions.
I'm only half stupid
Everything I said is known?
Well, it's not reflected very well in that paper nor does it seem to matter even if they did know.
I'm not denying there is a problem. I'm simply framing the problem correctly through a simple forensic assessment.
That's an easy one
Blacks earn less because of structural factors and (see slavery/Jim Crow), because of their popular youth culture (intellectual pursuits are "acting white"). I'd throw in their prison population, but that goes under structural factors.
Credit is linked to income and the rest comes from living in "black areas". Redlining is still alive and well, it's just hidden better than before.
As an aside on Jim Crow: being young, the civil rights movement is ancient history as far as I'm concerned, but when you think carefully, there are many, many people still alive who weren't allowed to drink from the same water fountains as whites. I think there are still people alive who had parents who were once slaves. This isn't ancient history by any means.
I never broke the law; I am the law! --
George W. BushJudge DreddI'm listening to...
in and out
Black earn less because of "structural factors". Yes. But that's a pretty hazy term. I'm sure a comprehensive list of structural factors would encompass lots of unpleasant information to both the Right and Left...and by unpleasant, I mean unpleasant to their world view.
Credit is linked to income and credit scores. I know people with good income and bad credit scores who have a hard time getting loan credit. I also know people who with modest income and good credit scores who qualify for lower rates.
HIgh risk loans
and 'giving folks a chance' at the American dream.
What always seems bizarre to me, is that those that can afford it the least are charged the absolute highest interest rates..... as if somehow the higher the interest rate on a loan, the easier it will be for them to pay it off????
Why not make the loan payments less, for a longer term?
I'm only half stupid
well, if you're stumped on how credit works
you should really go read up on the logic of the system and how it evolves as a viable self-sustaining service with risk management at the center.
BTW, it's not always about low income, credit scores also reflect credit history and the borrowers repayment record as well as how much credit they already have out there.
The system is perfectly logical.
It's no difference than accident prone drivers paying higher insurance or people who live in dense urban areas paying higher insurance than rural drivers.
It all makes perfect sense when you get beyond some moral judgment based on some standard of your own choosing.
As for making the payment less for a longer term...they do that. It's call a 30 year mortgage. Sometimes they go even higher. But it all has to make financial sense. If some one thought it was a good to make such loans, they would do it and win more business. There must a good reason why it's not that common.
You're talking about different things
Re: your final paragraph. MissL is decrying the fact that interest rates are higher for the people that can afford it the least, not that overall payments are higher. That bothers me to some extent as well, though I understand why it works that way: If I let a bank borrow some of my money, then the longer I allow them to borrow it, the more they pay me in interest; so it makes sense that when I borrow money from a bank, I have to pay them a higher interest the longer it takes me to pay back the loan.
We are the environment. There is no distinction. What we do to the earth we do to ourselves. —David Suzuki
No we're not
we're talking about the same thing. I don't see what you see to say otherwise.
I'm well aware of her grievance. I'm simply saying it works the way it works for a reason.
The last paragraph is part of that answer.
And the reason IS.......
commissions! Get that commission. Jam the sale.
Commissions to the lenders eager to make the sale. Look boss I scored another moron. Now let's sell this sack of sh*t loan to the bank so they can 'spread the risk' creatively.
Here's a good one. Buy a house for 42 thous at a 13% interest rate. Over thirty years that is 164 thousand dollars paid out by the home buyer. That was the old days.
Now let's get creative. Score a buyer who is a high credit risk, and obviously trusting the lender to explain this complex financial transaction to someone who is obviously unawares, or uneducated. We will make our commission...... by selling him a 50 year loan with an arm rate, the first three years the payment is on the principle only. The predatory lenders doesn't care if the buyer understands the terms, cause he made his magic commission. He eases his conscience by saying, the guy can refinance later.
YOu see the way it works, for the predatory lender is for a reason. The commission. And all you have to do is sell the loan, disappear and you are scott free. That is what has been happening. Yet we hear shrieks...... don't regulate the industry! OMG that is so anti-free market.
This thirty year traditional loan stuff with proper vetting.
If a homeowner was in trouble today..... you could offer to lower his monthly payment and extend the loan for five or ten years, so at least the guy has some disposable income for say....... food!
You are talking about basic economic principles. If those had been used, there would NOT be a subprime mortgage crises.
I'm only half stupid
I'm not really taking sides here
between borrower and lender because it's a little more hazy and complex than you make it to be.
You on the other hand seem to be a little too lopsided in your portrayal of the entire matter.
You can search far and wide, I never absolved lenders of any wrong doing or lack of professionalism. Of course, I never absolved borrowers of fraud and irresponsibility either.
Bottom line, though, is that once you give borrowers some dure share of the responsibility, your caricature of the blood thirsty BIG BAD BANK looks a little less accurate than it previously may have.
It not that hazy or complex
There were a lot of bad actors here.
You are trying to speak about sensible practices, when the folks involved in this little deal that is blowing up the markets........ were anything but sensible, and that includes some banking institutions. Unfortunately we will all pay the price for this moral morass.
See 22 billion in writes downs here, 12 billion in write downs there. Another 8 billion over here. Hardly normal for this to hit so many institutions.
I'm only half stupid
well, I really don't think it's that simple
but regardless,
Can you show what I said that translates into this:
?
You make good points...
but I really don't care if mortgage lender X goes out of business or Merill Lynch loses 8 billion last quarter. To me thats just a bunch of rich people losing money on bad loans. The most expensive fixed asset I own is my car, and it Blue Books for about $3,000 (private sale). I've got $40,000 in student loans to pay back, and my fiancee has just as much (and we went to a state school!). I'm pretty much screwed no matter what.
The people who were too stupid to get a 30-year fixed and instead got an interest only with a teaser rate on a house they can't afford, I don't care about them either. Repeat above.
And to those middle class people who have stocks as investments for retirement, now they know better than to just dump money in the market and expect everything to just magically work out. Grandpa Stine learned that the hard way. His broker had him tied up in Worldcom. C'est la vie.
I never broke the law; I am the law! --
George W. BushJudge DreddI'm listening to...
Ouch!
Unethical practices bankrupt the markets.
All the little children want more candy. They are screaming that it's daddy's fault *the fed* when in fact the kids were misbehaving badly.
It's pervasive enough to have, now a global impact.
Merill Lynch goes out of business...... the top guy takes millions and runs, leaving the little guy out in the cold, literally.
Stupid people, yes, but also uneducated and prey to high pressure salespitchmen, looking to make a big commission at any cost.
As for stocks, investing is good, but like you say your grandpa's *broker* was pushing a company he knew was morally questionable. We can assume that your grandpa wasn't any stupider than the folks that took these loans they coulnd't afford.
WHY in god's name is oil being traded on the market?????!!!!! The market traders inflate the price by around 30%...... and the consumer and the whole economy get pinched.
All of this is a story of folks using questionable ethical practices to 'get rich quick' with no thought of consequences. They claim regulations ruin the markets, yet clearly no regulation has its consequences.
After Enron, you would have thought we would have learned.
I hope that you and your fiancee are okay and that you can find a good job! (or if you get screwed make sure it feels good, at least it's free)
But this is just another piece of this mess...... what's next for the folks that took out all those student loans, if they can't repay? One more shoe in this economic mess, that is yet to drop. And you have to ask.... did they leverage these student loans like they did with home loans.
I'm only half stupid
Interest rates need to take into account default risk
High-risk borrowers have higher default risks, so they are charged higher rates. This is just basic loan underwriting common sense. You have to charge an interest rate high enough to justify the risk of the loan. If you can make 5% in risk-free investments (e.g. Treasuries) and your expected annualized default loss rate is 2%, you need to charge at least 7% or you're losing money on the loan.
There is a certain extreme point where it may be counterproductive to charge a higher rate, since that higher rate itself may be what puts the borrower under, but at that point the real answer is that the loan simply shouldn't be issued in the first place. Once you're at that point it's a money-losing loan no matter how you slice it.
uh huh
I get that.
That point was reached but the sale was sometimes made anyway. This is a problem.
Or the sale was made based on two incomes..... when unexpected circumstances, car accident, illness. etc. The loss of the second income kills the deal and equals bankruptcy.
The problem....... buying a house these days seems counterproductive to lower middle income, and even many middle income folks.
I'm only half stupid
Don't get carried away
subprime foreclosures are still a distinct and small minority of all subprime loans currently out there.
The media has a tendency to overplay human drama and bad news. The subprimes are no different. We should always keep the hype in perspective.
Remember summer 2001? The summer of endless shark attacks? Turned out the shark attacks were not only far from record levels for summers past but they were actually quite average with no real change from previous years.
Ridiculous analogy
Go to Stockton California. Or Detroit Michigan. There are herds, flocks and a gaggle of shark attacks, or homes sitting empty.
I'm only half stupid
obviously not
because it's true.
Looking here or there for some proof does not change the actual numbers overall.
Denial
Deny reality if you wish.
Take the last word. I'm done.
I'm only half stupid
deny what?
You're not done yet.
what? this?
No. there's nothing to deny.
Yea, my company makes us work on MLK day.
They are good about allowing you to take it as a PTO day, but it comes offf your personal vacation days.
What's really messed up is that S. Cal does get it as a company holiday. We here in N. Cal suck eggs.
I do have a dream!
Off MLK thread, the Tokyo, Hong Kong, & Indian Stock Markets are down 5 & 7% already this morning. London was down 3.6%
. I can only imagine what is going to happen at the opening bell tomorrow.
Crash
Can you say what happens when you dergulate the banking industry?
I'm only half stupid
Uh-oh!!!
Keving Drum links to both todays' WSJ & NYT
which say:
WSJ - U.S. Warning Signs Point Toward a Deep Recession
NYT - Stocks Plunge in Europe and Asia on U.S. Recession Fear
The WSJ article says: "The U.S. has suffered recessions only twice in the past quarter century and both were short and mild. There are good reasons to fear that the looming recession, if it arrives, could be worse."
I hope I don't lose everything in my 401K this year.
You won't lose everything.....
as long as you don't cash it out.
The market will go back up again at some point, hopefully in a more rational fashion instead of this insane 'inflated off balance assests' (can you say Enron) bubble.
I linked to this the other day, but this is some scary stuff. The bond insurance market is in big trouble. The folks that thought sub-prime was bad, will do a triple take if the bond insurers go under.
Warren Buffet in his wisdom has started a bond insurance company, because it wasn't that hard to see this coming.
I just hope this doesn't have a snowball effect, on pensions, people defaulting on their credit cards, and round and round it goes.
I have intentionally postponed getting my IRA this year, because of this mess.
But....... never fear, there will be great investment opportunities to snatch up for the long haul.
I'm only half stupid
As someone once said
People my age put their savings in a savings account.
I guess I'm old fashioned, too.
The only thing is that I'm not getting a good return on the minimum required deposit. :-)
I never broke the law; I am the law! --
George W. BushJudge DreddI'm listening to...
I'm there too!
Savings rates suck right now.
I'm only half stupid
Dont cash it
Just keep your money in there.
After January of 2009, the Moron in Chief and his economic team are gone.
If your decades away from retirement, DONT TOUCH YOUR 401K.
It will go back up long before you retire.
I survived the Bush Administration
I feel
bad for folks that just retired, and were relying on their 401K.
I'm only half stupid
Can't believe the Packers lost
I was really looking forward to a Patriots-Packers Super Bowl. I guess now I'll try to look forward to the Giants getting demolished as the Patriots cap off a perfect season.
Come, my friends. 'Tis not too late to seek a newer world -- Tennyson
Yeah, it may have made a nice story
but the bottom line is that the Giants didn't only win but deserved to win and were the better team on the night and maybe in general.
The Packers were very unimpressive, IMO.
People will point to the Favre interception
and that certainly put the nail in the coffin, but the underlying problem was their complete lack of a run game. The play calling didn't help -- when you do so many screen passes, the defense can play close to the line and you don't open up the run. Too many 1 yard passes and 30 yard attempts and not nearly enough 8-12 yard passes.
I was glad for the Giants kicker, if he had missed again and GB had won that would have been a long offseason...
Come, my friends. 'Tis not too late to seek a newer world -- Tennyson
Vanderjagt
Lawrence Tynes would have been the next Mike Vanderjagt. Vanderjagt was just recently the NFL career leader in field goal percentage, but he's unemployed. After he missed that field goal 2 seasons ago against the Steelers, he never could kick the same.
I never broke the law; I am the law! --
George W. BushJudge DreddI'm listening to...
Looking for debators for Tuesday night
Topic is US should legalize all drugs
.
Sign up for pro, or con, or moderator. Pico, you want in on this, or a future one?
The cruxlux folks have been tinkering with and improving their system, and we might try to incorporate that as well. I'll check it out after work.
Come, my friends. 'Tis not too late to seek a newer world -- Tennyson
Gonna have to pass for the moment;
found out that I scored a second interview with a particular institution of higher learning, so I'm in the midst of scrambling to put together a job talk. Yikes!
I'll dart in and out as I can, but I can't commit to a big block of time right now.
Saint, n. A dead sinner revised and edited. - Ambrose Bierce
Why be a professional (something)
when you could be a volunteer debater?
Seriously, good luck on the interview.
I came. I saw. I posted.
Veni, Vidi, Bitchy.
We should set up an SC fellowship
to fund professional debaters. I'm sure our powerful base could dig up enough change from the couch!
Thanks: I have a couple weeks to prepare so I'm not as worried as I should be. When I'm panicking in a month, you'll know why. :D
Saint, n. A dead sinner revised and edited. - Ambrose Bierce
Words of Wisdom from Richard Dreyfuss
Hat tip to Peter Boettke
for pointing to this great Dreyfuss clip from Bill Maher 
.
More at Boettke's link. Good stuff.
Excellent points by Dreyfuss.
Wanna read an analysis of the Corporate MSM?
Here's a link to Orcinus, Dave Neiwert's blog.
I don't always agree with him but I do on this one. Long Live Blogs! Take a hike MSM!
Ever read the CunningRealist?
He's a NYC blogger, specializing in the Stock & finance industries. He isn't a happy camper today
.
I like CR.
I'm sure he and I would argue fiercely on varois issues of economic policy but he seems like a principled conservative in the mold of George Will. I have to at least respect that.
I came. I saw. I posted.
Veni, Vidi, Bitchy.
Interesting link. Thanks (nm)
8
Chatroom, anyone?
I guess new threads are inversely tied to stock prices....