Roll Up for the Misery Tour

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Repo Tour Bus

Stockton, California real estate agent Cesar Dias leads weekly Repo Home Tours, filling two 18-seat buses with prospective buyers eager to view foreclosed houses that can be snapped up at dramatically reduced prices.

Dias, a Stockton native, said that when he started the free tour in September, some residents criticized it as a tasteless marketing gimmick. But as headlines announce record foreclosures and weeds sprout in the yards of abandoned homes, their tune has changed.

“We’re bringing in homeowners to get the grass green again,” he said.

As the brightly colored buses recently rolled through a subdivision dotted with “For sale” signs, a couple who were stringing up Christmas lights waved. The bargain hunters aboard waved back. Dias, who said his business was booming, offered a friendly beep…

via Los Angeles Times.

Christian Nation

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I’m watching “Hardball” on MSNBC, and Rachel Maddow just said Republican candidates had called the United States a “Christian Nation.” Chris Matthews called her on this, expressing skepticism that any candidate had used that exact phrase. Put on the spot, Rachel could not name a time, date, place in which a particular candidate had called the U.S. a “Christian nation.”

But I’m sitting here with all the Web at my fingertips, so I could look it up. Here’s one –

John McCain: “I would probably have to say yes, that the Constitution established the United States of America as a Christian nation.”

That’s a direct quote.

Even better — Linda Caillouet writes for the Arkansas Democrat-Gazette:

Government may have dropped the ball in modern American society, but religion dropped it first, Gov. Mike Huckabee told Southern Baptist pastors Sunday night.

“The reason we have so much government is because we have so much broken humanity,” he said. “And the reason we have so much broken humanity is because sin reigns in the hearts and lives of human beings instead of the Savior.” …

… Huckabee told the pastors gathered in the Salt Palace Convention Center that while the March 1, 1997, tornadoes which struck Arkansas were tragic, at least the devastation could be clearly seen from a helicopter. In contrast, he said, the catalysts for the nation’s recent school shootings — including the one March 24 near Jonesboro that left four students and a teacher dead and 10 others wounded — were harder to see but were driven by “the winds of spiritual change in a nation that has forgotten its God.”

I doubt there is any other nation on earth whose citizens get reminded of God with more regularity than this one.

“Government knows it does not have the answer, but it’s arrogant and acts as though it does,” Huckabee said. “Church does have the answer but will cowardly deny that it does and wonder when the world will be changed.”

The shootings were just one more wake-up call to the nation, he said.

“I fear we will turn and hit the snooze button one more time and lose this great republic of ours.”

Um, for whatever reason, the U.S. has enjoyed random mass violence since its inception. I can’t say that, on the whole, we are more given to random mass violence than we’ve ever been. But the Rev. Mr. Huckabee has a new book out called Kids Who Kill: Confronting our Culture of Violence. According to one review at Amazon.com,

Tumescent with quotes and references to support every idea propounded, the authors rely almost exclusively on conservative voices from William Bennett to Alan Keyes to Michael Medved. Few open-minded people could serious question the knowledge of these sources, but their pandemic citings and the under-representation of liberal mover and shakers (and there a few who advocate such common sense values) may turn off those who ideology blinds them to the sapience of conservatives.

I know you’re all going to rush out and buy the book. Back to the Reverend:

“I didn’t get into politics because I thought government had a better answer. I got into politics because I knew government didn’t have the real answers, that the real answers lie in accepting Jesus Christ into our lives.”

He compared his entry into politics to “getting inside the dragon’s belly,” adding, “There’s not one thing we can do in those marbled halls and domed capitols that can equal what’s done when Jesus touches the lives of a sinner.”

The most basic unit of government is not the city council, quorum court or state legislature, Huckabee said. “It is Mom and Dad raising kids and teaching them respect for authority, others and God.”

The nation has descended gradually into crisis, Huckabee said, and repairing the damage needs to be gradual, too. He said the solution is simple: faith in Christ.

Yes, we know how well that works.

Update: More Christian nationalism.

Update 2: Pastor Dan begins a series on theological questions to ask the candidates. I’ll get excited when there’s a candidate who can explicate the Dhammacakkappavattana Sutta.

An Attorney’s Take on Paulson’s Plan

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2 for 1 homes in Las VegasMaha recently wrote about Treasury Secretary Paulson’s plan to bail out the mortgage industry, relying heavily on Paul Krugman for analysis. Digby finds another perspective, highlighting an article by attorney Sean Olender in SF Gate:

…The sole goal of [Paulson’s] freeze is to prevent owners of mortgage-backed securities, many of them foreigners, from suing U.S. banks and forcing them to buy back worthless mortgage securities at face value – right now almost 10 times their market worth.

The ticking time bomb in the U.S. banking system is not resetting subprime mortgage rates. The real problem is the contractual ability of investors in mortgage bonds to require banks to buy back the loans at face value if there was fraud in the origination process.

And, to be sure, fraud is everywhere. It’s in the loan application documents, and it’s in the appraisals. There are e-mails and memos floating around showing that many people in banks, investment banks and appraisal companies – all the way up to senior management – knew about it.

…The catastrophic consequences of bond investors forcing originators to buy back loans at face value are beyond the current media discussion. The loans at issue dwarf the capital available at the largest U.S. banks combined, and investor lawsuits would raise stunning liability sufficient to cause even the largest U.S. banks to fail, resulting in massive taxpayer-funded bailouts of Fannie and Freddie, and even FDIC.

The problem isn’t just subprime loans. It is the entire mortgage market. As home prices fall, defaults will rise sharply – period. And so will the patience of mortgage bondholders. Different classes of mortgage bonds from various risk pools are owned by different central banks, funds, pensions and investors all over the world. Even your pension or 401(k) might have some of these bonds in it.

…What would be prudent and logical is for the banks that sold this toxic waste to buy it back and for a lot of people to go to prison. If they knew about the fraud, they should have to buy the bonds back. The time to look into this is before the shredders have worked their magic – not five years from now….

The goal of the freeze may be to delay bond investors from suing by putting off the big foreclosure wave for several years. But it may also be to stop bond investors from suing. If the investors agreed to loan modifications with the "real" wage and asset information from refinancing borrowers, mortgage originators and bundlers would have an excuse once the foreclosure occurred. They could say, "Fraud? What fraud?! You knew the borrower’s real income and asset information later when he refinanced!"

The key is to refinance borrowers whose current loans involved fraud in the origination process. And I assure you it was a minority of borrowers whose loans didn’t involve fraud.

The government is trying to accomplish wide-scale refinancing by tricking bond investors, or by tricking U.S. taxpayers. Guess who will foot the bill now that the FHA is entering the fray?

Ultimately, the people in these secret Paulson meetings were probably less worried about saving the mortgage market than with saving themselves. Some might be looking at prison time.

As chief of Goldman Sachs, Paulson was involved, to degrees as yet unrevealed, in the mortgage securitization process during the halcyon days of mortgage fraud from 2004 to 2006.

Paulson became the U.S. Treasury secretary on July 10, 2006, after the extent of the debacle was coming into focus for those in the know. Goldman Sachs achieved recent accolades in the markets for having bet heavily against the housing market, while Citigroup, Morgan Stanley, Bear Sterns, Merrill Lynch and others got hammered for failing to time the end of the credit bubble.

Goldman Sachs is the only major investment bank in the United States that has emerged as yet unscathed from this debacle. The success of its strategy must have resulted from fairly substantial bets against housing, mortgage banking and related industries, which also means that Goldman Sachs saw this coming at the same time they were bundling and selling these loans…

It is truly amazing that right now everyone in the country is deferring to Paulson and the heads of Countrywide, JPMorgan, Bank of America and others as the best group to work out a solution to this problem. No one is talking about the fact that these people created the problem and profited to the tune of hundreds of billions of dollars from it….

Read the whole piece here. The two-for-one deal is in Las Vegas.

Don’t Blame the Boomers

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Jill at Brilliant at Breakfast has words for the young folks who blame America’s problems on Boomers.

Last month I had an extended and rather heated exchange with one of our commenters who made a host of sweeping generalizations about baby boomers, few if any of which were true. I’ve had conversations with some of my Gen-X friends on this as well, with many of them similarly blaming the baby boomers for their own plight. I’ve even seen Gen-Xers trying to claim Keith Olbermann as one of their own, even though he was born in 1959 and therefore is indisputably a baby boomer. I hate to tell them this, but no less a Gen-X icon than old Lloyd Dobler himself, John Cusack, only escaped the dread Baby Boomer label by a mere six months.

I’m seeing a lot of this lately; blaming the baby boomers for everything that’s gone wrong in this country, hand-in-hand with the idea that Gen-X, Gen-Y, and the Millenials are somehow either a) hapless victims of the evil boomers (largely the province of Gen-Xers who are now reaching an age when the refusal to “sell out” is starting to have the nasty consequences of no savings and no health insurance); b) greedy, evil people who have sucked up all the resources and left nothing for anyone else; or c) an entire generation of hippies who had all the sex and all the drugs and all the fun and then became Republicans and tried to deny anyone else the fun they had.

I’ve seen a lot of this, too, and while I don’t think all Gen-Xers, etc., are guilty (that would be generalizing), enough of ’em are guilty, and it annoys the bleep out of me.

Jill is right when she says,

There’s this notion Chris and others put forward that the 80-hour workweek is somehow the invention of sellout baby boomers out of pure greed for bigger houses and ever-more electronic gewgaws and STUFF. But the fact of the matter is that at least for people born my year and later, especially those of us on a white-collar track, the defined benefit pensions and job security that our parents enjoyed was already largely gone by the time we emerged from college into a recession caused by the second oil shock in a decade.

This was my experience, also, and I’m older than Jill. By the time I was out of college the kind of job security my parents had enjoyed was already evaporating. I agree that younger people today are getting a raw deal generally compared to us Boomers, but we Boomers got a rawer deal than our parents did after World War II. And I believe the forces causing this creeping rawness were put into place while most of us Boomers were still babies.

I have in my hands a book titled Selling Free Enterprise: The Business Assault on Labor and Liberalism, 1945-1960 by Elizabeth Fones-Wolf. Dr. Fones-Wolf documents that during the very years the Boomers were birthed, a cabal of wealthy corporate leaders used their resources to undermine the popularity of New Deal progressivism and unions. They succeeded, and this success ushered in the era in which corporations could demand that workers pretty much turn over their lives to the Company. Before most Boomers were even in high school most of the damage had been done, and by the time we entered the workforce the rules had already been changed, although we didn’t realize it right away.

Our parents were certain that the road to success lay in staying with one employer for years and years and years, accumulating pensions and vacation time, and for the most part that worked for them. But most of us Boomers learned, slowly and painfully, that this life plan was no longer possible. Certainly some among us bought the corporate bullshit and played the games, but most of us have just been trying to survive. And now making a living is even more precarious. This concerns me deeply. I want to reverse this pernicious trend and help younger people achieve a better quality of life.

However, my dears, if you are going to blame me for your problems … go bleep yourselves.

I’ve pointed out many times that the archetypal rightie-bot is a Gen-Xer whose earliest political memories are of the Carter Administration. You see this over and over again. I’m not saying all Gen-Xers are rightie-bots, but I do think a disproportionate number of the loyal soldiers of the Right are Gen-Xers. I expect someday the Millenials will turn around and slam Gen-Xers for causing their problems, so be prepared.

Every generation has its idiots. My generation is as diverse as any. The activists among us did get some things wrong, such as putting too much faith in single-issue and “identity” politics. We also thought Ralph Nader was our hero … oh, wait; that’s a cross-generational mistake. Sorry.

The truth is that we Boomers were brought up in the 1950s to be idealistic and patriotic. I’ve written about this before, here and here. We faced an entirely different culture with entirely different challenges than younger people do today. No doubt some of what we did makes no sense outside that context — you had to be there — but if you’d been brought up in the 1950s, you’d have felt drawn to beads and patchouli oil, too. Trust me.

Recently Andrew Sullivan wrote an article for The Atlantic that extolled Barack Obama as the post-Boomer candidate (in truth, Obama was born in the waning years of the Boom) and blamed the Boomers for America’s culture wars and “a cultural climate that stultifies our politics and corrupts our discourse.” This is, IMO, one of the biggest piles of steaming crap Andy has ever produced, and that’s saying something. The rifts in our culture pre-date the Boom, and what has corrupted our discourse more than anything else is the emergence of the extreme Right via the Goldwater/Reagan wing of the Republican Party. (See pseudo conservatism.)

Must of the griping against Boomers is the result of rightie propaganda about the 1960s and the counterculture and Boomers generally, and like most rightie propaganda the Narrative has little to do with what actually happened. It’s disheartening to see so many allegedly progressive people fall for it. So if you’ve fallen for it, wise up.

Update: See also Richard Blair at All Spin Zone.

Straw Dogs

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In today’s New York Times, Paul Krugman explains the Bush mortgage bailout plan, announced last week by Treasury Secretary Henry Paulson.

The plan is, as a Times editorial put it yesterday, “too little, too late and too voluntary.” But from the administration’s point of view these failings aren’t bugs, they’re features.

In fact, there’s a growing consensus among financial observers that the Paulson plan isn’t mainly intended to achieve real results. The point is, instead, to create the appearance of action, thereby undercutting political support for actual attempts to help families in trouble.

In particular, the Paulson plan is probably an attempt to take the wind out of Barney Frank’s sails. Mr. Frank, the Democratic chairman of the House Financial Services Committee, has sponsored legislation that would give judges in bankruptcy cases the ability to rewrite mortgage loan terms. But “Bankers Hope Bush Subprime Plan Will Scuttle House Bill,” as a headline in CongressDaily put it.

As Elizabeth Warren, the Harvard bankruptcy expert, puts it, “The administration’s subprime mortgage plan is the bank lobby’s dream.” Given the Bush record, that should come as no surprise.

The plan has so many conditions that Barclays Capital estimated only about 12 percent of all subprime borrowers, or 240,000 homeowners, would qualify for relief. For example, people already delinquent on their payments, or anyone the mortgage lender decides ought to be able to pay the subprime mortgage, are excluded.

Krugman says there are three problems with the plan. First, banks and other financial institutions will take huge losses. Second, hundreds of thousands, probably millions, of American will lose their homes. And third, there is injustice, since many of the people stuck with subprime loans were victims of predatory sales practices.

Free-market culties tsk-tsk any mortgage relief program as short-sighted. Robert Murphy wrote at Townhall:

Lenders will learn the lesson that their contracts aren’t safe; contrary to popular belief, the government will not serve to enforce the law. (Or rather, the “law” can change on a dime, depending on the public’s mood.) Lenders won’t simply shrug their shoulders, say “aww shucks,” and continue with business as usual.

No, lenders will rationally respond to the new environment, by being much pickier in giving new loans. After all, it becomes much riskier to grant a mortgage to a young couple with little job experience, if the government will shield them from the consequences of default on the loan. Many people say that “the American dream” involves homeownership, yet this will be harder to achieve if the government introduces yet another uncertainty for lenders.

Another cultie named Peter Schiff thinks the problems lies with borrowers who simply aren’t taking big enough risks:

Lost in current discussion is the fact that few subprime borrowers have any skin in the game in the first place. Having put nothing down or having extracted equity in previous refinances, most subprime borrowers will lose nothing if their homes go into foreclosure. In some cases the teaser rates were so low that borrowers actually paid less than what they might otherwise have paid in rent. In fact, those who have already extracted equity have received huge windfalls from their homes and will leave their lenders holding the bag.

Talk about lucky duckies! However, according to Krugman,

Relief is restricted to borrowers whose mortgage debt is at least 97 percent of the house’s value — which means that in many, perhaps most, cases those who get debt relief will be borrowers who owe more than their house is worth. These people would be nearly as well off in financial terms if they simply walked away.

So, no equity “windfalls.” But let’s go back to Murphy, who explains the beauty of the capitalist system:

The reason borrowers agree to adjustable rates (which have the possibility of skyrocketing) and to pledging their home or other assets as collateral, is that this allows them to receive concessions from the bank—in particular, it allows them to borrow a great deal more money than would otherwise be possible. Very few people would persuade a bank to lend them money to buy a house, if the bank didn’t ultimately have the right to take ownership of the house in the event that the borrower couldn’t make the mortgage payments. Yes, borrowers would prefer that they get a $300,000 mortgage with no strings attached, but lenders wouldn’t be too happy with this arrangement. The beauty of a capitalist system is that property owners must compromise to reach mutually beneficial arrangements, since private transactions are voluntary.

He acknowledges that there are some “shysters and shady characters” in the home loan biz, but for the most part “the politicians want to grant a mulligan to hundreds of thousands who bought homes they couldn’t afford.”

But Krugman wrote,

The Wall Street Journal found that more than 55 percent of subprime loans made at the height of the housing bubble “went to people with credit scores high enough to often qualify for conventional loans with far better terms.”

And at Newsweek, Daniel McGinn wrote of a borrower who didn’t know a $300 property tax bill would be added to her monthly mortgage bill. I suspect this happens a lot, especially to first-time buyers. In my own home-buying experiences I learned you sometimes have to threaten the mortgage broker with bodily injury — or close to it, anyway — to get a straight answer to the question “what will be my total monthly payment?” In my book, a transaction is not “voluntary” if one of the two parties is withholding information from the other to maintain an advantage.

McGinn has more sympathy for the borrowers than Schiff and Murphy:

My own view is more sympathetic, for two reasons. The first, frankly, is self-interest. As a homeowner I’m concerned about the value of my own home. Studies show that anytime a house is foreclosed, the value of nearby properties tends to drop. Last month I spotted a “public auction” sign in front of a house two blocks from mine. I hope it’s not the first of many. My own mortgage is a conservative, fixed-rate loan, so I won’t directly benefit from the subprime bailout—but if it keeps some of my neighbors from losing their homes, I’ll benefit because it will help my house retain more of its value. (I will, of course, also be happy to avoid watching neighbors traumatized by foreclosure, but in this column I’m weighing the pros and cons economically, not emotionally.)

The other reason for my sympathy is that I’m aware of how hideously complicated mortgages have become over the last two decades. I have absurdly well-educated friends who don’t really understand how mortgages work. Even though I write about this stuff for a living, at times I’ve agonized over whether to pay points or whether my mortgage broker’s fees are legit.

But the Bushie plan offers little for most subprime borrowers, but at the same time does little to reduce investor losses. So what’s the point? I think Krugman called it exactly — it was created to undercut any attempt by Congress to actually help people holding subprime mortgages in danger of foreclosure. Free market culties like Schiff and Murphy may not like it, but in this case government is being used to prop up “free markets.”

In ancient times the Chinese made dogs and other animals of straw to be offered in sacrifice. Before the ritual a straw dog would be wrapped in embroidered cloth and handled with great care, but once the offering was made the straw dog was trampled and burned. “Straw dog” became a metaphor for something utterly expendable. “Free market,” unregulated capitalism makes straw dogs of us all.

Crazy v. Silly

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You’ll get a kick out of this Guardian post by Charles Pierce. Just a snip:

Within the struggling Republican party, there is the Angry party and the Crazy party. Sometimes – in fact, often – those two overlap. This year, those two elements between them have produced in the current Republican field the single biggest public fruitcake in the history of electoral government. At the start, it looked like Romney might accede to the leadership of that wing of the modern GOP that occasionally can be referred to as “not insane”. (In 2000, John McCain was the unquestioned leader of this faction, and he’s spent the last seven years denying it, which is how the post became vacant.)

Romney had the money and he had the record to disenthrall his party from the influence of the extremists that have taken it over the cliff and onto the rocks below. In this, he was powerfully equipped to do his party and his country a great service. Instead, against all odds, he’s spent two years carving out yet another political subset. To borrow a famous bit from the Monty Python crew, Mitt Romney seems bound and determined to fashion himself into the leader of the Silly party. …

… Romney was a decent Republican governor for Massachusetts in that he largely let things happen and stayed out of the way. He signed on to a healthcare reform bill that was driven by the Democratic state legislature and, for all his bloviating about it elsewhere, Romney pretty much let gay marriage slide safely into the mainstream. In fact, he largely gave up on the job a full two years before leaving it.

This person is almost unrecognisable on the presidential campaign stage. He has adopted weird, angry positions completely dissonant with his personality as a smooth handler of other people’s money. One minute, he’s Torquemada, babbling about doubling Guantánamo and lecturing McCain, of all people, about the efficacy of torture. The next, he’s running a television spot about immigration in which he makes Tom Tancredo sound like Emma Lazarus. (Subsequently, on that same matter, Romney has accomplished the not-inconsiderable feat of making Rudy Giuliani look reasonable on an issue of public policy.) At some point, Romney should be forced to make a speech while his consultants stand next to him, drinking glasses of water.

I do believe that what’s left of the Old Guard pre-Goldwater/Reagan GOP look to Romney to stop the insanity. However, to get the nomination Romney has to prove his angry/crazy creds to the base.

Frank Rich calls Romney “a glib salesman who seems a dead ringer for Don Draper, a Madison Avenue ad man of no known core convictions who works on the Nixon campaign in the TV series, ‘Mad Men.'” Pretty much my impression. The Old Guard may look to Romney to bring on the Return of Normalcy. But I don’t see much in the way of passion for Romney among the grassroots.

And then there’s Huckabee. Rich thinks Huckabee may be the Republican Barack Obama.

Both men have a history of speaking across party and racial lines. Both men possess that rarest of commodities in American public life: wit. Most important, both men aspire (not always successfully) to avoid the hyper-partisanship of the Clinton-Bush era.

Though their views on issues are often antithetical, Mr. Huckabee and Mr. Obama may be united in catching the wave of an emerging zeitgeist that is larger than either party’s ideology. An exhausted and disillusioned public may be ready for a replay of the New Frontier pitch of 1960. …

… The real reason for Mr. Huckabee’s ascendance may be that his message is simply more uplifting — and, in the ethical rather than theological sense, more Christian — than that of rivals whose main calling cards of fear, torture and nativism have become more strident with every debate. The fresh-faced politics of joy may be trumping the five-o’clock-shadow of Nixonian gloom and paranoia favored by the entire G.O.P. field with the sometime exception of John McCain.

Before we get all soft and gooey about what a swell guy Huckabee is, note that as recently as 1992 he was calling for AIDS patients to be quarantined and said that hollywood celebrities fund aids research from their own pockets, rather than federal health agencies.

Seems to me that over the past year or so Republican voters have fallen in and out of love with a succession of candidates — first Giuliani, then Thompson, now Huckabee. But the War and Profits factions in the GOP hate Huckabee and will do their best to undermine him, which makes the odds he will be the nominee very long, indeed.