Tuesday, March 18, 2008
Predatory Borrowing
I am not a financial news hound. My eyes, until recently, have glazed over every time I approached the business section of the paper, only to minimally return to subconsciosness temporarily at the sports section...perhaps, during a world series of something. Given that, it is notable that even I, with not a whit of understanding of wall street, investment, or any of that jazz, had noticed that something was wrong with the mortgage and housing market for the past several years. I have several friends who have taken out loans to purchase houses, many of them with the intent of then using rental income to pay for it. I don't suspect any of them were being taken in by so-called predatory loans; I think most of them were takingadvantage of state programs for first time homeowners. Nonetheless, most of them were on measly little incomes, and went to considerable machinations, once the tantalization of "home ownership" had taken hold, based on various estimates of future earnings, debt, inflation, and so on, to work out their dream. I did not envy them, and was sincere when I rebuffed their attempts to convince me that I should be doing the same. I just have no interest in being anyone's landlord.
But they generated enough awareness that when I began seeing the ads for 0% down !!!!!!!! and so on, and having perhaps come across a mention of the various tricky maneuvers by investment firms, that I was able to connect the dots and see the naked emperor, even as other, more authoritative voices clamored all's well in free market land.
What I am saying is I love it when my intuition is born out. I avow it happens rarely, so I must milk it for all the pleasure it can give me.
This article in a New York Times "Deal Book" Blog has an interesting, and more importantly, mostly understandable, discussion, including an appearance by a John Galt, the lovely idea that "predatory borrowing" is to blame in the demise of Bear Stearns, and an interesting parable/real news story about a farmer bailed out when his honey is stolen by a protected bear.
But they generated enough awareness that when I began seeing the ads for 0% down !!!!!!!! and so on, and having perhaps come across a mention of the various tricky maneuvers by investment firms, that I was able to connect the dots and see the naked emperor, even as other, more authoritative voices clamored all's well in free market land.
What I am saying is I love it when my intuition is born out. I avow it happens rarely, so I must milk it for all the pleasure it can give me.
This article in a New York Times "Deal Book" Blog has an interesting, and more importantly, mostly understandable, discussion, including an appearance by a John Galt, the lovely idea that "predatory borrowing" is to blame in the demise of Bear Stearns, and an interesting parable/real news story about a farmer bailed out when his honey is stolen by a protected bear.
Labels: US politics
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