The sub-prime mortgage crisis will impact African-Americans and other people of color more than anyone else.
Homeownership is at the foundation of the American dream, and this foundation has crumbled under the crash of the sub-prime mortgage market. Two million additional homes are expected to go into foreclosure in 2008. Given that Blacks and Latinos are a disproportionate number of sub-prime borrowers, and that the assets of these groups are mostly concentrated in homeownership, the current foreclosure crisis will result in a huge loss of wealth for communities of color whose people are struggling the hardest to build wealth. *
Some would say (the usual suspects!) " tough, they brought it on themselves". I believe that Epicurus, a wiser head, would be deeply concerned. It is not good for a country to allow any minority to retreat even further into a resentful laager. Secondly, it can only help increase crime. And thirdly, it is plain uncivilized for the wealthiest economy in the world to allow a section of the population to descend into homelessness.
*United for a Fair Economy, January 11th
This crisis has been caused by the heartless indifference of Greenspan and the current politicians, who could have called a halt to the predatory lending everyone knew was going on (you couldn’t avoid knowing about it if you had an email account!). Instead, they decided to let their pals make a killing at the expense of the poorest in the land. There is absolutely no excuse. It is the policy, particularly of libertarians, to impose the laws of the jungle. Hear them holler if they are harmed in any way! Up civilized behavior, down the jungle!
Now this disaster has spread all over the Western world,m and these so-called “smart” economists have perched us on the edge of a general recession. They are SO clever! Come on, you justifiers government non-intervention – – try and talk your way out of this!
The whole business press fawned over Greenspan, who actually spent most of his time in turn fawning over whoever was in power, ensuring that he kept his well-paid job. Was his mind on the economy? Apparently, only part-time. I wrote what I thought was a scathing piece against him (in rhymed verse) three of four years ago, and I am neither in business not an economist, but could see waht he wasn’t doing. Why are the gurus so naive?
Epicurus rejected irrational mysticism and surely would have agreed with John Lanchester writing in the January 3rd issue of the “London Review of Books.” Economic “mysticism” contributed to the current suffering that is now working its way through the global economy, just as surely as religious mysticism wreaked havoc in centuries past.
Lanchester eviscerates the arguments of those who reject banking reform with the mindless nonsense that “the cure for a problem caused by the markets is more reliance on market forces.”
To that twattle the author replies: “That faith seems to me verge on the mystical.” Mysticism, always suspect, is lethal when invoked in economics — macro or micro. So, too, was Adam Smith’s irrational solution, “the invisible hand” that mysteriously waves things to right. Tell that to those now facing the loss of their homes. . .
Notice the silence form the libertarians! Even they must be embarrassed. The “leave it to the market” thing is so Twentieth Century ( l wold call it it medieval except for the fact that the great moneybags of the time were never able to create mayhem on such a large scale back then)
What has happened is a mixture of greed and incompetence. Both are unattractive.
“And thirdly, it is plain uncivilized for the wealthiest economy in the world to allow a section of the population to descend into homelessness. ”
Utter nonsense.
Firstly, they are not descending into homelessness. They will simply RENT. How is that homelessness? Are renters beneath contempt, now?
Secondly, the statement contradicts itself! Had it not been for the predatory lending, these people would never have had homes to begin with! So how can they be “descending into homelessness”, since they never would have owned homes had there been no predatory lending? It is, instead, a return to a normal state. Your statement is absurd on it’s face!
Thirdly, in what sense can these people be said to “own” their homes, when they put zero money down, sign up for scam artist mortgages, and simply walk away when the bill comes due? Since they bought their house with other peoples money, you can’t say that any wealth transfer has taken place.
I note you make no mention of those who bought multiple homes, using scam mortgages, with the intention of making easy money, and so victimizing their fellow citizens. And making it impossible for honest people to afford a home.
No surprise, there, though. I’m very sure Epicurus would criticize the overly emotional tone of your post. I see much pathology there. 🙂 The poor are noble. The poor are victims. (cue the Andean flute music) They need to be taken care of. They are not adults, but children, who must be told what to do by their betters, who would be, of course, you.
The poor are not noble. They are not stupid, they are not victims, they are not children to be caged in like animals in some glorious society that cares. For that would be HELL ON EARTH!
I am a grown up. I did not buy a $600,000 mansion with an ARM mortgage. Because I have two eyes and a brain, and so do these “victims”. Only I call them bastards. Bastards who upper class twits are only to quick to defend, at that expense of the honest and virtuous in society.
And so I spit on any banking reform, any bailout, any help at all, for it benefits not the noble, but the ignoble. Not the virtuous, but those who steal from the virtuous. Not the victims, but the victimizers! I find the whole outlook quite evil.
I am free man. I don’t need any government to tell me what I can and cannot do with my money, and with money that others will lend to me. I do not see how Epicurus would agree with ANYTHING you written in this post. A man who believes in freedom of association must also believe in the enforcement of contracts!
It isn’t clear what costs the mortgagees incurred in this little spree. Did the buyers have down-payments to make? When I got my first mortgage I had to put down 30%. Certainly they had to use their savings to pay for the transaction costs and lawyers fees etc., quite a lot of money, although I doubt there are any statistics on this (no one seems to know a damn thing). They really have lost money if they are dispossessed. Yes, they can rent, but they have spent their miserable savings on costs and possible down-payments and have less money to pay for heath insurance etc.
So what were they trying to do? Join the “American Dream” – – be a house owner. Now they have been cheated of this simple ambition. Comments please on the American Dream tomorrow.
The argument is between moderation and common sense on one side and radical free-for-all and greed on the other. It is not whether capitalism in itself is good or bad. Lurching from one stupid financial crisis to another instead of keeping the ship on an even keel is apparently all right as long as it is the market that is causing the lurching and not the government.
Epicurus would probably say that if people are happy being taken in by the well-honed propaganda of unrestrained capitalism
why should other people be concerned? May they drown in their gold if that is what they want. Be happy yourself and spend the morning in the Garden.