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Posted by Elle on January 7, 2010, 2:56 pm
>From today's NY Times at
http://www.nytimes.com/2010/01/10/magazine/10FOB-wwln-t.html?hp
---
John Courson, president and C.E.O. of the Mortgage Bankers
Association, recently told The Wall Street Journal that homeowners who
default on their mortgages should think about the message they will
send to their family and their kids and their friends. Courson was
implying that homeowners, record numbers of whom continue to default,
have a responsibility to make good. He wasn't referring to the people
who have no choice, who can't afford their payments. He was speaking
about the rising number of folks who are voluntarily choosing not to
pay.
... [T]he housing collapse left 10.7 million families owing more than
their homes are worth. So some of them are making a calculated
decision to hang onto their money and let their homes go. Is this
irresponsible?
Businesses, in particular Wall Street banks, make such calculations
routinely. Morgan Stanley recently decided to stop making payments on
five San Francisco office buildings. A Morgan Stanley fund purchased
the buildings at the height of the boom, and their value has plunged.
Nobody has said Morgan Stanley is immoral perhaps because no one
assumed it was moral to begin with. But the average American, as if
sprung from some Franklinesque mythology, is supposed to honor his
debts, or so says the mortgage industry as well as government
officials. Former Treasury Secretary Henry M. Paulson Jr. declared
that any homeowner who can afford his mortgage payment but chooses to
walk away from an underwater property is simply a speculator and one
who is not honoring his obligation. (Paulson presumably was not so
censorious of speculation during his 32-year career at Goldman Sachs.)
...
Mortgage holders do sign a promissory note, which is a promise to pay.
But the contract explicitly details the penalty for nonpayment
surrender of the property. The borrower isn't escaping the
consequences; he is suffering them.
...
[and the coup d'grace --]
No one says defaulting on a contract is pretty or that, in a perfectly
functioning society, defaults would be the rule. But to put the onus
for restraint on ordinary homeowners seems rather strange. If the
Mortgage Bankers Association is against defaults, its members,
presumably the experts in such matters, might take better care not to
lend people more than their homes are worth.
---
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Posted by Don on January 7, 2010, 3:41 pm
> No one says defaulting on a contract is pretty or that, in a perfectly
> functioning society, defaults would be the rule. But to put the onus
> for restraint on ordinary homeowners seems rather strange. If the
> Mortgage Bankers Association is against defaults, its members,
> presumably the experts in such matters, might take better care not to
> lend people more than their homes are worth.
We law-abiding Americans pay our debts for the most part, but when
things get really bad, like the Stamp Act, then we thumb our noses at
authority and don't pay and hold something like the Boston Tea Party.
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Posted by Elle on January 7, 2010, 7:39 pm
> We law-abiding Americans pay our debts for the most part, but when
> things get really bad, like the Stamp Act, then we thumb our noses at
> authority and don't pay and hold something like the Boston Tea Party.
I do think the chances of a violent revolution are higher now than
they have been in decades. I also think this is a characteristic of
all societies over time, not just the United States. Take away enough
people's ability to make a living (that keeps up with others well
enough), and then they have nothing to lose and in fact much to gain
by revolting. It just takes a critical mass.
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Posted by Don on January 7, 2010, 8:13 pm
> I do think the chances of a violent revolution are higher now than
> they have been in decades. I also think this is a characteristic of
> all societies over time, not just the United States. Take away enough
> people's ability to make a living (that keeps up with others well
> enough), and then they have nothing to lose and in fact much to gain
> by revolting. It just takes a critical mass.
Agreed. My guess is the USA will escape violent revolution this time,
because even in the Great Depression with the poverty and despair at
that time, the elected government survived. On the other hand, with a
few more Bush-Cheney administrations in a row and a few more financial
meltdowns that even Obama-like saviours couldn't fix, anything could
happen.
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Posted by Elle on January 7, 2010, 11:59 pm
> My guess is the USA will escape violent revolution this time,
> because even in the Great Depression with the poverty and despair at
> that time, the elected government survived. On the other hand, with a
> few more Bush-Cheney administrations in a row and a few more financial
> meltdowns that even Obama-like saviours couldn't fix, anything could
> happen.
I had in mind riots in the streets and possibly mobs killing at random
in parts of the country. I do not expect some kind of coup. I think it
is something for which everyone at all levels of community should be
vigilant at this point, especially as high unemployment persists. But
we are on the same page.
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