Friday, December 21, 2007

The housing shell game

Reading a Krugman piece (h/t JP, as usual) about the housing bubble. The thing about bubbles is that they burst. Guaran-fucking-teed. The thing about the housing bubble is that it's bursting should have surprised no one. Damn, there was much hand wringing, and analyzing and over analyzing, and, and... no one did shit, unless you count standing back and doing nothing as doing something. "Free Market Solutions." Right, like "Compassionate Conservatism." and the easter bunny, and santa.....

One thing I was taught/learned/swallowed hook line and sinker in high school history was that when the Republican depression hit in the 1930's the wealth/money/property didn't disappear, it just changed hands. And a lot of it changed hands for pennies on the dollar. I remember having major "Hmmmm..." moments wondering how I could make a major snag when the next depression came around.

There's a whole city/culture of cards built with these bullshit mortgages. If the lenders slack off on their demands for payments, they can't make delivery on promised profits to the holders of the mortgage backed securities. (I admit to only knowing enough to be dangerous; I do not have a business brain) Law suits, etc in the making there. And in other ways over other issues. So the big question is: Who gets their ass bitten off? Do home buyers go homeless? Do banks fold? Does the Dow tank? Do foreign bans run for the hills and the dollar become worth less (than the Canadian dollar? or the Peso?) You only think you're ready; here it comes; the great shiftshaft: that it has all gone bad, people with ties to the financial industry are rethinking their belief in the perfection of free markets. Mr. Greenspan has come out in favor of, yes, a government bailout. "Cash is available," he says - meaning taxpayer money - "and we should use that in larger amounts, as is necessary, to solve the problems of the stress of this."

Yup. Us little guys are going to have to run to the rescue of Citicorp, Chase, WaMu, and a host of other poor defenseless corporate leg breakers. Heaven forbid they don't have their millions, in order to let a buck or two trickle down here or there.

There are still going to be shit loads of people losing their homes. In Seattle, many, many rentals go for the same or more than a monthly mortgage payment; after your first/last/security/cleaning... Wait, that's pushing down payment prices.

Obviously, we who don't understand this shit need someone to look after us by holding on to properties and monitoring who gets in and who doesn't... I thought that's what mortgage apps did...?

The important thing is that all these houses that were in the hands of people who were living paycheck to paycheck, just hoping and dreaming and guessing the money would be there when they needed it, will now be in the hands of people who... ...trusted that those peoples' paychecks would be there? ???

Fuck it. Dubya approves; Greeny approves; it has to be right. After all, Dubya has that Harvard MBA and has his experience in the oil industry in Texas... to...



DCup said...

Interesting post. This housing thing drives me crazy because the part of the story that's missing is where are all those people going who've been foreclosed?

Landlords now routinely check credit reports and they'll see that you've had payment issues so you're going to considered a bad risk.

Where does it end?

Chris in Seattle said...


The bushies don't care. Just like with New Orleans: Thousands with no where to go. The fucked up not fit for human habitation FEMA trailers were NEVER meant to be permanent housing. And now they're bulldozing subsidized housing to make room for high/white priced condos.

Dubya and his true believer followers get their heartiest jollies from the suffering of people less fortunate than they.