Nothing to add right now. I'll just note how nice it is that, now that I'm officially rid of my place in Cleveland, I'll be able to read/comment in this thread without raising my blood pressure to unhealthy levels.
obviously we all bristle at the construction that the housing crisis was caused by home buyers whatsoever
I'd just full-stop right there.
The house-flippers were created by the banks. I mean, yeah, sure, a lot of flippers probably lied about their solvency to get loans but so did some of the poor folks, and I don't really hold it against them. The banks knew what was going on and actively enabled the liar loans.
The article sets up a dichotomy between well-off flippers and poor folks, and picks the flippers as being less sympathetic. Okay. But the flippers -- and other people who borrowed more than they could afford -- were a symptom of the bubble, not the cause of it.
If I'm apportioning blame, I'm happy to place house-flippers somewhere on the list. What they did to interior decorating during the mid-2000s is truly despicable.
Huh. I am completely unaware of the Great Decorating Crisis of the mid-2000s. What happened?
I don't think the prior owner of my house planned to flip it (not sure whether or not they planned to rent it out to queer young adults, which is what happened) but tomorrow I'm getting a new stove and fridge delivered that will work better than ones meant for a rental for teens and I am THRILLED.
They tear out the good along with the bad and replace it with the super shitty and ugly (but with veneer of newness). They're still doing it, but now it's for short-term rentals.
Mostly I was super horrified by all the design perpetuated in the House Flipping/Room Redesign in 24 hours/etc of the mid-2000s. There was a whole lot of painting each room a different bold color, lots of wide-wale chevron, etc. The current equivalent - paint the walls white, go for that pseudo-minimal-Scandinavian thing - is not my personal style but is objectively more attractive.
2: An instance of the Lump of Blame fallacy. While it may appear intuitively that there is some fixed amount of blame in a political economy, such that blameworthy actions by one interest reduces the amount of blameworthiness available to others, it is in fact well-established that both demand and supply of blameworthiness is highly elastic. So, in this case, blameworthy lobbying by plutocrats led to blameworthy laxness in financial regulation by politicians; and this laxness permitted blameworthy fecklessness in lending by banks, permitting in turn feckless borrowing by both the blameworthy speculating middle-class and the blameworthy insolvent poor; while in the background blameworthy intellectual charlatanry from various quarters enabled all the laxness, lobbying, and fecklessness.
Unless you have a very high quality razor.
6: Oh, yes, the poor quality. Looks great when new and will look like ass in 10 years And faux granite countertops!
permitting in turn feckless borrowing by both the blameworthy speculating middle-class and the blameworthy insolvent poor
You can't con an honest man, right? But the victims of con artists are still victims, even if their own greed facilitated the con.
Information asymmetry worked entirely in favor of the banks -- even when the borrowers incorrectly thought they were conning the bankers.
There is a cryptocurrency trading WhatApp channel that I spy on, and its full of crazy people with sudden wealth and poor judgement. One of them is concerned that he has four houses in the Miami area waiting to flip - none of them are insured and there's a hurricane a-comin'.
Didn't a bunch of Norwegian pension funds lose a ton because they bought the bonds backed by the mortgages before the people wanted Scandinavian furniture?
13: There's probably money to be made as a mail-order bride broker.
12: Comity. I'm just saying there's plenty of blame for everyone: no need to be stingy and good reason to avoid single-cause explanations.
Also good reason to add a comma in there somewhere.
I was particularly interested in the 1985 study of thyroids and the cancers that were found in people who died of other causes. I have sometimes wondered how true this is of other cancers. Specifically, pancreatic cancer, which has a reputation for being quite nasty, might have some of that reputation because it isn't encountered until/unless it's quite nasty - nobody is noticing a suspicious lump on their pancreas.
(I am not a cancer researcher and have no medical training, as should be obvious)
Wrong thread, unless you're investing in CDOs of life insurance policies of cancer patients.
In this analogy, freshwater economics is the lump and Norwegian pension funds the pancreas.
One of the things I spotted right away in the linked article is that they conflate higher credit scores with higher incomes. The two are correlated, but not perfectly. One of the things I remember from Michael Lewis's book The Big Short is that one of the weaknesses the people pushing this junk discovered in the rating system is that people with no credit history were given middling-range credit scores, which could be used to improve the average score of a bundle of loans that included some really execrable scores. So the underwriters were pushing the banks to lend to a bunch of people with essentially no credit history.
So when the linked article equates "top three quartiles of credit scores" with "wealthy or middle-class borrowers" and "bottom quartile" with "poor", I'm thinking it ain't necessarily so.
Are there good sources by now on the state of the U.S. economy from the 2000 crash to the 2007-08 crisis? I remember it looked pretty grim when I graduated in 2002, although that was in part for local reasons, and the post-college job I did get was in the consumer lending department of a bank, which gave me startling insight into the number of people in my home state who were in debt up to their eyeballs. I never really went back after the Great Recession to connect things end-to-end; but I do remember sitting at the bank staring at home equity loan applications and thinking: this is a recovery?
2nd 23. Also for sources on the 2008 crisis.
It's either this again or the Free Masons.
23 My work in the subprime field predates yours by a bit. (The loans did, even if the conclusion of the litigation didn't). It always seemed to me that the two drivers were that older working class people had (a) equity in the homes and (b) substantial credit card debt -- at least partly from buying prescription drugs.
2: The house-flippers were created by the banks. I mean, yeah, sure, a lot of flippers probably lied about their solvency to get loans but so did some of the poor folks, and I don't really hold it against them. The banks knew what was going on and actively enabled the liar loans.
Just to underscore this point with a personal observation, during the boom we took out a no-doc home equity loan on our property. I don't think the loan officer ever showed us what she put down for our income, while she encouraged us to go for a higher loan limit than we had originally planned on asking for. We had enough equity that documentation of income wasn't required, so she filled out the form electronically, and then we signed a little touch pad unconnected to any physical document to submit the application. My guess is that she put down whatever she thought would make the loan go through.
Point being that some of those "liar" loans didn't even require the borrower to actively lie, just for the bank officer who was getting rewarded for how many of these things she could write to be incurious about asking for any details that could derail the loan.
I don't know if my crusty old bank qualified as a subprime lender -- in my experience the underwriting policies were pretty rigid, although there were occasional waivers. I did jot down some notes on HMDA compliance somewhere (that's the anti-redlining ordinance): that home equity lines of credit didn't require the bank to report demographic information, because technically they were just extending credit and then every credit draw on the line was a separate loan-instance, so it would be impractical to report on 40 separate home improvement purchases or whatever. Banks were pushing that product heavily during those years, so any redlining data the government has is pretty compromised. (Also, if people applied electronically or by phone, they could choose not to disclose demographic information; if they walked into the office, loan officers were required to put down their best guess. Pretty sure I'm remembering this correctly.)
On a less obscure note, a "debt consolidation" home equity loan that paid off the $30K you owe on ten different credit cards (many issued by stores) did not, of course, require you to cut up the credit cards. There was nothing except prudence to keep people from leveraging 100% of their home value and then running up the balances again.
I remember one customer who had gone so far as to construct a house, attempt to sell it to pay off their debts, and move into an apartment (they needed a bridge loan on the house or something). I jotted down the address and drove out to see it after work: I wanted to see with my own eyes a house that had been built as a monument to credit card debt. It was hideous.
I actually pitched a "notes from the debt economy" piece to one of the co-editors of the Baffler when they were in town, and they sounded game. I really should have followed through, but of course it was too scary to contemplate and I blew it off in my usual self-sabotaging fashion. That was 2003.
We still have our original 2003 mortgage. I looked at it for fishy terms and stuff. It seems pretty normal.
tomorrow I'm getting a new stove and fridge delivered that will work better than ones meant for a rental for teens and I am THRILLED
Congrats! I love my new* fridge and stove; and honestly, the stove really does make a difference in terms of how often we cook and how much we enjoy it.
*Okay, almost a year old now, but they still look new and shiny!
paint the walls white, go for that pseudo-minimal-Scandinavian thing
I love that Scandinavian look, but could never submit to a minimalist regime.
There is a cryptocurrency trading WhatApp channel that I spy on, and its full of crazy people with sudden wealth and poor judgement. One of them is concerned that he has four houses in the Miami area waiting to flip - none of them are insured and there's a hurricane a-comin'.
Real estate in Florida: one of the most time-honored American scams.
Starting with Ponce de León, who financed his own expedition and then died.
The invention of the railroad really made it possible to scam the upper middle and middle class.
Wait, is lurid responsible for the financial crisis?
Of course not. If I were I could retire.
28 I had a case where the loan officer pled the Fifth. There was also a signed note, in the borrower's handwriting, attesting to an income that was at least 4x reality.
In Ohio, there's a bank that can plead the Fifth Third.
You have the right to avoid self-incrimination if troops ate quartered in your house.
This whole thread is unconscionably prejudiced against me.
in thread-jacky news I might feel less jacked up and my doctor is changing all my medicine again so maybe this will work? I channelled my desire to injure myself today into assembling ikea cabinetry.
I'm glad to hear that al. I hope it keeps getting better.
The house-flippers were created by the banks
I'm not sure this holds water. It wasn't Mr and Mrs Granite Countertops who were the victims of foreclosure fraud, for example. If anyone had adequate information and legal representation, it was they. The whole concept of "flipping" was based on the idea of selling up before the mortgage reset - that's what the word means - so they can hardly claim it came as a surprise. And pretty much by definition they were motivated by speculation.
In the UK, as well, the classic speculator was a buy-to-let landlord and their behaviour towards tenants has been supremely terrible.
One of the most repellent aspects of the property boom was that it was participatory. I recall 2003 to 2006 as being just dominated by this spectacular vulgarity and greed and awful, awful smugness. Everyone 15 years older than me had suddenly turned into a wannabe Trump and it was terrible. The generational element was very pronounced - everyone older than me was convinced that Property Never Goes Down and spent hours badgering me to borrow, and everyone my age or younger just saw it as this utter impossibility.
No, I really don't think you can let the absolute army of amateur slumlords involved off.
They still haven't learned, either. Even the opinionated academic still goes into a frenzy of greed whenever she passes an estate agent's window. It's like everyone born before 1979 has a chip implanted in their head responding to signals from the real estate lobby.
everyone older than me was convinced that Property Never Goes Down and spent hours badgering me to borrow
Indeed. I had no particular desire to own property, but once I finally had a "real" job (tenure track after 6 years of transient postdocing), I was assured by everyone that renting was for losers and that buying was just what "grown ups" did.
In the end, although I certainly didn't make any money, I suppose I didn't lose too much when you factor in the fact that while occupying the place my mortgage payment was probably less than rent on an equivalently nice home would have been. Still, the whole "oh, you simply must own a home" thing...such bullshit!
Even though I bought in 2004, which wasn't the peak of the subprime chicanery, but pretty close, my mortgage was surprisingly old fashioned. 20% down, extensive verification of income & credit history & etc.
I was assured by everyone that renting was for losers and that buying was just what "grown ups" did.
All of my older cow-orkers assure me that if they let me keep my job, I'll suddenly have an overwhelmingly clear understanding not only that I must buy a house but that it must be in a far-flung suburb because grown-ups don't live in cities.
I suspect we will look in a few decades at the all-white kitchen except for black granite counter tops with the same "that's so old looking" feeling that we have now when we look at harvest gold appliances and formica counter tops.*
Was it here or elsewhere that I read that home makeover TV shows don't get syndicated as re-runs much if at all because the stuff they put into the makeover looks "out of style" within a few years?
*Maybe I am just sensitive since we are redoing our kitchen but not to look like an operating room or the end of 2001: A Space Odyssey.
we are redoing our kitchen but not to look like an operating room or the end of 2001: A Space Odyssey.
A kitchen looking like the start of 2001 is still OK, though? (grunts, contemplates antelope femur)
I'm still holding out for the eventual prosecution of Kirsty Allsopp as a co-conspirator.
Even during the run-up to the crisis, it was still speculation for quick resale, not to rent out a house. People do that of course, but it wasn't something people talked about more during that period.
In a few millennia our descendants will look at the all-antelope campsite except for black granite obelisks with the same "that's so old looking" feeling that we have now when we look at harvest gold appliances and formica counter tops.
It's worth remembering that Arthur C. Clarke and Stanley Kubrick wrote the entire first 20 minutes of that film as an extended wordless pun. When the ape-man Moon-Watcher finally crushes the skull of his rival using the thigh bone of an antelope, it demonstrates that the Femur of the Species is More Deadly than the Male.
I didn't think it possible to despise that movie more than I already did, but hey, now I do. Learn something every day.
I feel like Mel Brooks's take on that in History of the World better captures the spirit of how a monolith might have inspired human evolution.
Since this appears to be the live thread, I'm giving a presentation at work tomorrow. It's not super high pressure, but it would be good to do well. Wish me well, reprobates.
Else I will crush your skulls with a femur.
Somebody bought a house on my street and tried to make money by renting it out. He was Israeli and I think involved with another guy from Israeli who was buying Pittsburgh real estate to rent out in a way that both defrauded Israeli investors and their tenants. Anyway, after that guy went to prison, the guy who bought the house near me finally sold the thing. I don't know if he was defrauded or not, but he sure sucked at real estate investment. He had the place rented out for maybe 18 months of the five or so years he owned it. He had it listed for sale most of the time, but the asking price was well above what a mint-condition place would get and his place was pretty beat-up. I think his unwillingness to take a small loss lead to a huge one. He was also a huge asshole, so mostly I'm just happy he sold the place.
Thanks, denizens!
65 is great.
It wasn't that great at all. One of his tenants (Russian) had heroin and a dog that was locked in the garage for days at a time.
It's generally a good idea to have dogs to guard your heroin.
It turns out that if you leave a dog in a garage for days in a densely-packed neighborhood full of middle class white peoples, they call the cops about the dog and then the cops can search the house.
It seems like you create a really tough environment for criminality. Could you move to DC?
Speaking of heroin and Ohio, these charts that Kevin Drum posted are pretty amazing. Yikes.
I've seen the commuting times there. No way. I'm at my office a 45 minutes after I get out of bed, unless I stop to catch Pokemon.
73 to 71.
72: I think that's mostly the elephant tranquilizers.
Not forever, necessarily. Just until 2020 or so.
Why doesn't somebody stop the elephants from reselling their drugs to people?
72: the truly creepy thing is how the charts are perfect Bass diffusion curves, like overdosing on fentanyl is the latest goddamn iOS app.
I notice that the OD rate really took off right after I moved away at the end of 2011. But I suspect it's unrelated.
Were you in the department of Applied Not Taking Too Much Elephant Tranquilizer?
23,24 Krugman's Return of Depression Economics from 2008 is Finance-centered, but it provided a framework that helped me think about the crisis-- basically, a shadow banking credit bubble leaking into real estate. He doesn't touch on how many households were using their homes as ATMs and were otherwise underwater-- I don't know a good source for that or other non-financial economic surveys of the crisis.
Pretty sure the data's from the past of Ohio that's semi-mine rather than semi-yours anyway. Still not much comment on the unbearable whiteness involved. If it gets people to be more humane about drug policy I'm fine with that but suspect it will just be the opposite of the crack hysteria. We'll see.
80: this is something I remember from reading Calculated Risk in the crisis - how much of the run-up of debt was second (or indeed nth) liens and HELOCs to pay for said granite countertops.
We have shitty 80's formica countertops. They look dirty even when they are clean, so I really don't clean them much.
50: The only flipper that I was acquainted with was a nice person and hard worker who put a lot of effort into rehabbing houses for sale. But sure, okay, maybe they are predominantly horrible people. My point is that -- absent further information about their behavior -- they are more appropriately thought of as victims of the people who created the housing bubble rather than being the people who created the causing bubble. (Though I acknowledge the point that Mossy makes in 7.)
I mean, if they were separately victimizing people and otherwise behaving badly, that's a bad thing, but that's not what caused the bubble. Similarly, I think despite their Crimes Against Design, heebie is being ungenerous placing the flippers "somewhere on the list" of causes of the crash, unless it's somewhere very, very low on a list where the first 1,000 places are occupied by financial engineers and their accomplices.
I would try to redo the kitchen, but I really don't think I need to fill another middle-aged white person stereotype.
Speaking of flipping, Trump just did a deal with Schumer and Pelosi on the debt ceiling. In my wildest dreams of how the Trump administration could go, I said that Trump would get so mad at congressional Republicans he'd work with against them out of spite. It looks like we might actually be approaching that part of the presidency. I think what we really need is a mole channeling Trump's attention at all times to how much he hates McConnell and Ryan and away from how much he hates Obama and Mexicans.
Still not much comment on the unbearable whiteness involved.
Might you comment at more length if we ask nicely?
You'll just have to wait for my next book, The Unbearable Whiteness of Being (Ohioan)
COME ON, opinionated meme, you can do better than that. (Also, Milan who? Talk about a has-been...)
I'm puzzled by the massive fentanyl jump that begins in 2013. It's not like fentanyl is a new drug.
(If that was you, peep, I'm sorry. I just hate Kundera. It goes back a long way.)
There's apparently a companion article about effects on (white} children, with some really enraging bits, like this:
Mongenel asked questions like, "Do you have enough to eat?" and "Do you like where you're staying?" and "Do you know what drug use is?" She didn't say she had just visited Lisa's house and found Lisa's father strung out on heroin in the bedroom they share. Lisa's bed was a pink sleeping bag on a piece of foam surrounded by pill bottles. . . . When Mongenel asked Lisa if she knew what drug abuse was, Lisa told us she'd heard of marijuana and knew it was bad.
I'm about the least pot-boosting person here, but that's fucking outrageous.
It wasn't me. I watched "That's 70s Show" at least once, but was never a huge fan.
I knew a psychologist in Ohio who told a guy huffing that it would really be better for him if he just went ahead and used cocaine.
Anyway, maybe he switched to recommending elephant tranquilizers.
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Could someone bump the Oakland meetup thread? We've got a time and a place. Friday, 7pm at Tay Ho.
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Presentation went well! Just another 6 hours of work!
91: fentanyl has really started to take over from morphine in emergency medicine just in the last few years, IMlimitedE. Maybe a spinoff from that? Though the article says it's not stolen from A&E, it's being made in illegal labs...
fentanyl was a thing in the 90s. not sure why it would blow up now.
91: I don't know anything about why it would have started in 2013, but one advantage from a dealing perspective is that fentanyl is a lot less dense than heroin. You can buy it over the internet and send it in an envelope.
I think you mean more dense, at least in terms of taking less volume of the drug to get an elephant to relax.
Anyway, like so many other things, I suppose the increase in fentanyl use is a lagged effect of the Bush recession and the blocking of a stimulus package during the Obama years.
And I'm home. Thanks everyone! Astonishingly, I procrastinated not until the night before but until the night before the night before, meaning I shambled through yesterday instead of today as the monster of productivity I am only after an all-nighter and was merely a shambling exhausted mediocrity for the past six hours. Yay!
You had to present for a whole six hours?
For two hours. I shambled for the other six hours of regular work.
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Since this thread has long since drifted off topic, I'd just like to state for the record that new Surface Pro is pretty great, both as a laptop replacement and as a tablet.
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It was a workshop. I had them do group discussions and things, so I wasn't talking the whole time.
So, the campus bookstore is selling Surface Pros for pretty cheap. But I'm not going to get one because my laptop is only two years old.
Talking is essentially my job description.
Staring at lamp and waggling my fingers is essentially my job description.
116 +a.
I hardly ever have my hand up a puppet's ass, though.
104: yes. I did mean more dense. It was first thing in the morning, so I wS a bit dense.