Let us pursue the rentiers throwing families into the street

 

The bio-politics of sub-prime

Read carefully, through the link,  this piece

of Pulitzer-style classic journalism:

Washington Post

‘My House. My Dream. It Was All an Illusion.’

Latina’s Loss in Va. Epitomizes Mortgage Crisis

 

Read, sympathize with her, and  look at the pictures of subprime victim Glenda Hortiz, immigrant from Honduras into Virginia, the day she lost her house, last September: she was induced to sign papers in English she didn’t understand, and had to pay $3000/month (€1930), while gaining $4200 (€ 2700) together with her husband. The uncompassionate machinery of capital over-accumulation, and the credit oceans Tsunami fuelled the financial meltdown with her life and dreams as well, among many. But due to serious and compassionate journalism, she sorts out form anonimity.

    A useful comment; MorganaLeFay wrote:

    The person who brokered this ridiculous mortgage has no funds at stake here. They pocketed the $10,000 in “fees”, sold the loan off to a securities firm and moved onto the next sucker. Later, this loan will help to pull down our financial system. And we will pay for it either with a direct bail out or through crushing inflation.The loan broker has perpetrated a fraud on the securities traders and on us by alleging that this hopeless loan was somehow on par with an average mortgage.What is needed is a law that sets lending standards and allows the state to put people in jail for the sort of fraudulent lending described in the article - that is if the loan is not held to maturity by the entity that brokered the loan.

At Comments closure, another Attorney intervened with  a word of compassion toward Gloria,  who had to stay at home from work a full year, because of cronic depression, after this fact.

jking1 wrote:

I can’t believe how idiotic some of these comments are. The woman DID NOT speak English. I’m an attorney. I can’t tell you how many times people who are fluent only in English, did not take the time to read the fine print of the 20 page credit card agreement when they obtained a new credit card, or didn’t read every single sentence of the 40 page document they signed when they purchased their home. Oh, what a wonderful world we would have if everyone were honest, and everyone made conservative financial decisions. But that’s not the case. When someone is desperate, it’s very easy for them to be taken advantage of. That’s why there are laws which prohibit excessive charges for loans (usury), and that’s why in some states, you have 3 days to get out of a purchase agreement for a home or a car. The law recognizes the reality that people will sometimes do things that they later realize is not in their best interest. The idea that this woman was even approved for a $400K loan is outrageous, and part of the problem is the tax bill which she probably was never told about. I have great empathy for her. I had a conversation with a mortgage broker who told me that he was doing 20 loans a month, at $1500 a pop. That’s a lotta money, and it provides great incentives to talk desperate, uneducated people into doing something that they unquestionably will regret.

 

 

 

TODAY’S PAPERS

Houses Without Homes

By Morgan Smith Posted Saturday, March 22, 2008, at 5:14 AM ET

The Los Angeles Times, Wall Street Journal, and Washington Post all front stories about the worsening housing slump. The LAT leads with an article on record foreclosure rates, reporting that at the end of 2007, they were at “the highest level since the [Mortgage Bankers Assn.] began keeping records in the 1970s.” The states hit the hardest by foreclosures and delinquent mortgages were Calif., Fla., Nev., and Ariz., and in those regions the housing crisis may last longer than it will nationally. The weekend edition of the WSJ leads with a prediction that the stagnant condo market will deteriorate further. Even though there’s already an excess of unfilled units, developers will still complete more building projects because they “usually put up their own money for a project first, then spend borrowed funds,” so once a project’s moved through its initial phase, they have a “strong incentive to keep building to finish,” and hope the market will turn in the meantime. And with its contribution to coverage of the troubled economy, the WP off-leads locally with a profile of a Va. woman who lost her home when she defaulted on a subprime loan, pushed through for her by predatory lenders.

Slate is everyday’s best (below and at post start, we show the two main Slate’s links). Easter weekend WSJ:

PAGE ONE

Woes in Condo Market Build

As New Supply Floods Cities

By JENNIFER S. FORSYTH and JONATHAN KARP

March 22, 2008; Page A1

 

The condominium market is about to get worse as many cities brace for a flood of new supply this year — the result of construction started at the height of the housing boom.

 

More than 4,000 new units will be completed in both Atlanta and Phoenix by the end of the year. Developers in Miami and Fort Lauderdale, Fla., are readying nearly 10,000 total new units in a market already struggling with canyons of unsold condos. (…)

Prices of condos have been steady in some areas and fallen elsewhere. The median condo sales price in the Cape Coral-Fort Myers area of Florida fell 26% to $202,300 in the fourth quarter of 2007 from $273,400 a year earlier.

 

Prices dropped nearly 20% in Tucson, Ariz., and 12% in the Atlanta area during that time, according to National Association of Realtors data. Inside the newly minted Quantum on the Bay in Miami, prices for two-bedroom units have fallen from the high $700,000s to around $500,000.

One option for a developer is to convert the condos to apartments. However, these projects are usually financed with the presumption that sales of individual condos pay off more than rents from a comparably sized apartment building. Also, lenders typically expect developers to pay off condo construction loans with the millions of dollars they receive when closing on the sales. Such a quick payout isn’t possible if the developer is only receiving monthly rental payments.

Minsky Meltdown and shut up, Bullshit-pedia!

“We are in the midst of a Minsky moment, bordering on a Minsky meltdown” said prophetically last Summer Paul McCulley of PIMCO (no.1 bond-fund manager), one of the many financial people paying attention to the intellectual work of Hyman P. Minsky. But he had also added, in January 2001 (“Capitalism’s Beast of Burden”), that Wall Street boyz quote Authors they have not read, by saying it was creative destruction moment, when the New Economy bubble was blowing up.

Pity that the same is true for Wikipedia, such a mess and anti-intellect meltdown! Try Hyman P. Minsky item; there is not even the usual caveat: this is a provisional draft, quotations are still missing. The text is outrageous, an insult to the memory of the great economist. You better shut down wiki, instead of publishing this bullshit: WSJ, the voice of the bosses, is much fairer to Minsky than you are (although Minsky was “obscure” only to WS journalists).

Cream of the cream (you evaluate arguments, and missing quotations):

“Yet, Minsky’s conjecture as how this instability develops proves to be misguided.

Ludwig von Mises explained how booms fueled by the expansion of Federal Reserve credit backed by nothing to member banks leads to malinvestment into unproductive activities. Unlike Minsky, Mises showed how the Federal Reserve destabilizes the economy. Minsky held the false belief that capitalism itself is unstable.”

We thought the Fed was a loosely, scarcely independent State institution, that had something to do with capitalism as a system, and the euthanasia of the rentier (e.g.: Randall Wray 2007; Galbraith, Giovannoni and Russo 2007); and lately it was coming closer and closer to max entropy and limited, shortrun impact (Aglietta, Chesnais, Roudini, etc.: goto our subprime references static page): we just needed this wiki’s lesson to refresh our knowledge.

We are curious, hungry to see the alleged, but still missing proof against Minsky’s Financial Instability Hypothesis. We suspect wiki contributor does not know what he is evoking, when referring to the von Mises version of the neo-Austrian paradigm, as if it were a dogmatic, obvious and  standard source … (von Mises VS Minsky is a nice match, in any case). At the moment, there is a 6-0, 6-0, 6-0 pro-Minsky collective mental experiment ongoing - in the global “shadow financial system” laboratory of the capitalisms of the future.

Then, in the references, Bullshitpedia gives you the wrong addresses: perhaps just to prevent the reader from being misguided by the persuasive Minsky’s prose. At the address they first recommend, all links are wrong and outdated, since they point to the Levy Institute, where Minsky actually worked 1991-96, but the entire link structure needs to be updated from the http://www.levy.org/ site, goto: working papers.

The famous 1993 paper is a good introduction to the Hypothesis: Hyman P. Minsky (1993), The Financial Instability Hypothesis. In: Philip Arestis and Malcolm Sawyer eds., Handbook of Radical Political Economy. Aldershot: Edward Elgar.
An anti-dote to Bullshit-pedia?

The proceedings of past Minsky Conferences, and the program of the imminent one:

17th Annual Hyman P. Minsky Conference on the State of the U.S. and World Economies.
Credit, Markets, and the Real Economy: Is the Financial System Working?

This year’s conference focuses on the current economic and financial crisis in the United States and its effects on the world economy. Topics include: causes and consequences of the “Minsky moment”; the impact of the credit crunch on the economic and financial market outlook; dislocations and policy options; the rehabilitation of fiscal policy; margins of safety, systemic risk, and the U.S. subprime mortgage market; lessons from earlier times to rehabilitate mortgage financing and the banks; financial markets regulation-reregulation; the inefficiency of computer-driven markets; currency markets fluctuations; and exchange rate misalignment.

The conference will be held April 17–18, 2008, at the Levy Institute’s research and conference center at Blithewood, on the campus of Bard College, Annandale-on-Hudson, New York.