Are we subsidizing bad behavior? Discuss.

yes, yours.

CC, flattered that you are a reader....

is this news? this country went soft a long time ago... the rugged individualist has been emasculated... another sad legacy of the baby boomers

Riversider - I have no personal quarrel with you, as others seem to - and I am not trying to start a row. But I would beg you to consider your sources if you really want to have an intelligent reasoned discussion -

"National Review (NR) is a biweekly magazine and web site, founded by the late author William F. Buckley, Jr. in 1955 and based in New York City. It describes itself as "America's most widely read and influential magazine and web site for Republican/conservative news, commentary, and opinion."[1] It is usually considered the center of intellectual activity for the American Conservative movement in the twentieth century."

http://en.wikipedia.org/wiki/National_Review

Using an opinion from a source such as this dooms any subsequent discussion to name calling and finger pointing because it begins that discussion with an argument & conclusive statements. This article doesn't want to be discussed. It doesn't leave any room for discussion. There are certainly publications on the other end of the spectrum that do similar things, and they would be no more suitable to use to begin a civilized, well meaning discourse.

Obama isn't operating in a vacuum, and he didn't take office under regular circumstances. the lens of history is too far sighted to judge him yet. But let me ask you a serious & well intentioned question. Do you think, as a country we would be better off if the Mccain/Palin ticket had won the election& then they had had to deal with all the various crisises (sp?) and issues that have marked the first eight or so months of the Obama administration?

bump

Actually lp my major issue is source quality and even presenting source material having read and understood it. Add to that the position that we have no idea what riversider truly means, well credibility is just shot to shit, isn't it?

Whenever RS finds the word Obama linked to a negative notion, which happens too often in the kind of media she browses, she c&p it here. I have no idea why. Why RS, why? Why do you torture us with this? Why SE and not some libertarian forum? Please answer.

AR, you have become SO corporatist lately.....

LP: Perfectly stated.

Riversider - 92% of home owners and ALL of the renters - it's asinine that 33% of our country rents and Obama is making us subsidize homebuyers. Subsidizing isn't only taking money from my pocket to buy someone else a house but it also makes housing more expensive so when I go to buy I'm going to have to pay more. The handouts won't work long term and they are simply unfair to guys like me who could have afforded to buy in 2007 but chose to continue renting.

shut up
shut up
shut up

mimi
about 4 hours ago
ignore this person
report abuse Whenever RS finds the word Obama linked to a negative notion, which happens too often in the kind of media she browses, she c&p it here. I have no idea why. Why RS, why? Why do you torture us with this? Why SE and not some libertarian forum? Please answer.

hmm, mimi is a non-American citizen who doesn't live here but is buying an SRO that harassed tenants according to a recent thread she started. Why is mimi discussing American politics? Why is mimi involved in SROs? And where the hell is her husband to put a stop to all of this?

I agree with columbiacounty.

JM, you've become so warm and fuzzy.

Let me start with the premise that people are stupid; then we had the Bush Administration which decided that it should make home ownership more widely available; followed by the bankers & their no doc loans & interest-only loans & the fact that we as a nation decided that RE never lost value & that your home was your new ATM. I've heard the mantra that so many people were suckered into these loans that I've rather started to believe it. Those of us on StreetEasy are here sitting in our comfortable homes & most of us aren't looking at being homeless & living in the car or in a tent city so until we have walked a bit in somebody else's Prada pumps, perhaps we shouldn't be so quick to lash out, Riversider.

The banks are the ultimate symbol of bad behavior and we've given them hundreds of billions in aid, given them unlimited credit at 0% to lend out at 5% and told the world that it is our national priority to make sure they stay solvent using taxpayer debt, despite their business decisions.

We subsidizing bad behavior.

Have to agree with that one, they face asymmetric risk. Heads they win, tails tax payers lose

With all the money we gave to the banks, we should have gotten far more concessions from them. Part of the problem is that we have the foxes guarding the hen house yet I wonder how much power the legislators have today vis a vis the big money interests. Of course if you have power but just choose not to use it, you still have the same outcome.

if you have power but just choose not to use it, you still have the same outcome.

BINGO!

"President Obama%u2019s massive mortgage-bailout plan is nothing more than a thinly disguised entitlement program that redistributes income from the responsible 92 percent of home-owning mortgage holders who pay their bills on time to the irresponsible defaulters who bought more than they could ever afford."

Actually, I personally know two of these evil "irresponsible defaulters".

Neither bought "more than they could ever afford".

Why did they default? Because the ensuing economic blowup caused them to lose their jobs. Both have been out of work for more than a year.

I personally know two of these evil "irresponsible defaulters"

This is a shame, but "mortgage relief" doesn't address this. The audience is those that bought more house than they should have or did equity take outs. Losing a job and not being able to find new employment is a whole other issue. Normally what a bank does is exercise some form of forebearance, but that lasts... six months.

our federal government is asking the financial system to fix itself with our tax dollars. How much do you need? what will the deal be? Is it fair? Will the American taxpayer be looked after? these are the questions asked to those who screwed the system now empowered to fix it. Gee, Mr. Wolf, when you done with the renovations will my house stand in the face of a huff and a puff?

Sure Mr. Piggy, when we are done your house will be fine.

http://www.nytimes.com/2009/10/18/business/economy/18gret.html

It’s worth noting that many members of the Clinton economic team, including Lawrence Summers, Timothy Geithner and Gary Gensler, now hold pivotal policy-making positions in the Obama administration.

Derivatives regulation has been on the nation’s financial reform agenda for months. Undoing the Clinton-era law that exempted swaps from oversight is seen as imperative, except perhaps by big banks that deal in the contracts. It’s worth noting that many members of the Clinton economic team, including Lawrence Summers, Timothy Geithner and Gary Gensler, now hold pivotal policy-making positions in the Obama administration.

In August, the White House sent its derivatives proposal to Congress, recommending that all standardized contracts trade on an exchange. But big banks dealing in swaps don’t want exchange trading, where pricing and the identities of participants would be more publicly transparent. Savvier swaps customers would soon pay less on their transactions and bank profits would fall.

Some swaps buyers also dislike exchange trading because it would require them to put up a cash cushion — or margin — before a transaction. This is to help prevent counterparty failures, but participants in the market prefer not to pay this freight. They’d rather taxpayers foot the bill for a possible collapse later on, as they did with A.I.G.

Another questionable exemption says that if a swap is to be exchange-traded, it must be deemed “clearable” by facilities known as clearinghouses. Some of these are partially owned by banks. If a clearinghouse decides that the swap can be cleared, then it can trade on an exchange.

Gee, do you think the banks might be a tad hesitant to punt a very lucrative line of business onto less profitable exchanges? Do you think they might have an incentive to say that the most profitable swaps simply aren’t clearable?

But the stakes for taxpayers who might have to take on yet another wave of financial bailouts in the future are even higher. And allowing the very institutions that imperiled our economy to weaken derivatives reform would be a grave insult to those whose rescue money is being used, even today, to generate bank profits and a recent round of outsize bonuses.

stop it. if we want to read the new york times, we know where to go and how to do it.

stop.

they are trying to keep the system from crashing. complete and utter chaos. i'm no apologist for the administration and the banks, but i can't even envision what another 6-10 million foreclosures would mean for our society, our economy, our emotional and financial health.

they are focusing on loans that were purchased by the GSEs and the fed, trying to get them not to default.

yes, it is unfair to prop up property values. but most of these loans are for properties in areas where values have already fallen 40%. yes, due to the tax credit and the administration backlogging the foreclosure process many first time owners are being victimized again. yes, due to very low interest rates and purchasing of rmbs the powers that be are artificially lowering mortgage rates, and yes due to very low interest rates there are few places to park any money and make any return conservatively.

but this is all because things STILL suck. and i don't think any of us would like to see what would happen if these measures weren't being taken. only a couple of banks are making any real money, despite all the free money they are being given. next month she-bair is going to hit them up for $45 billion. so the FDIC can resume its merry march of death for the regional banks. if the banks can't shore up their capital levels before the next wave of credit defaults hit, we'll be right back where we were in september.

so i don't know what to think. as elizabeth warren said, i'm kind of past the issue of whether or not people "deserve" a decent loan mod. we don't have close to enough time to process the loans, much less consider the "merits." possibly close to 10 million foreclosures. sad.

Me thinkz 1 year out is plent of time for people to have gotten their house in order, banks and individuals. If you did not lock in 30 yrs and/or sold things you could never have carried, then it's the onerous is on you to deal with the consequnces.

Stop the bailouts for corps and individuals and let's let things settle out. By allowing this reflation stop gap measure we are only creating a bigger bid ask spreads on all manner of goods and sevices and decrease the utilization of our economy to a point where true wealth and progress takes a step back for the USA.

One other thing, i'd throw in a few dollars to blow up that 'signature' chase loan sign and pastes to a billboard truck to drive around in circles at their midtown headquarters. Anyone else wanna chip in?

i would like to side with you, w67th, morally. but i don't think it's possible. a complete explosion is on the way otherwise. the reflation can't work. prices have to align themselves with incomes. obviously. but i think allowing this to occur naturally and quickly could be uglier than you think. and do recall, we the people own those shitty loans now. if they become utterly worthless it's our loss, not the banks.

now, how to do this while discouraging risky behavior.

but i'm in on the billboard truck.

Redefault rate on impaired borrowers is quite high. w67 is on to sometihng. Sure it will suck if our home prices go down, but in the end lower home prices increases home affordability. The banks need to start downsizing and borrowing at normal rates. The zero fed funds rate really hurts savers like the elderly.

One big reason institutions piled into risky assets was because Greenspan told them to, when he lowered rates to near zero after tech bubbble.

Aboutready, I just got off the phone with my mother in laws rental agent. He wants me to put in a lowball good faith bid in so that the 'owner' can go to the bank and say take it or leave it, even though she is vacationing in Paris at the moment and has 10 other 'investment properties' in southern california. I don't know what she does for a living, but I think she's had and continues to have a good time in Paris while strategically putting this to us taxpayers. It's gotta stop. The moral hazard argument is real and is occurring.

Like steroids, you must put a line in the sand or what do I teach my children? Be like Geitner?

rs, you know why redefaults are high. the mods are awful.

obviously, as time goes on and more and more people lose employment, and get further and further behind, it is becoming increasingly difficult to find loans appropriate to modify. but they do exist, albeit in declining numbers.

rs, i'm talking about the utter destruction of communities. will it happen here? likely not. but that doesn't mean it won't and isn't happening elsewhere. every option sucks. every single god damned one. we just have to look at what will cause the least amount of pain. of course you see the pain as just desserts, but i bet if it started affecting your precious existence you might think otherwise.

rs, you know why redefaults are high. the mods are awfu

I can agree with that to an extent....

w67th, i love anecdotes. truly i do. but i don't think you can extrapolate that across our society.

you may wish to draw that line in the sand, but that line may just detonate a bomb. it's great to have a morally superior position, but if you wind up cutting off your own appendages in the process, it's not very effective.

and how does it help to have blighted cities and towns, vacant property, homelessness, etc.? at some point we have to ask ourselves more complicated public policy questions than who was right and who was wrong. 50% of mortgage holders are anticipated to be or become underwater. do you really think they were all scamming the system?

It's because 50% of all homeowners are expected to be underwater that we need to stop these stop gap measures. All it does is prolong the process of people holding onto homes they should never have coveted and never could have "earned" into.

To me the instant they said well you are a dog walker and made $85K last year, let's just project that out 15 years and assume 10% growth rate and POOF! here is your $1MM mortgage is the day this system went to shit.

It used to be that people's earnings and wealth was a reflection of hard work, diligent savings and sacrifices. We need people to solve and live their OWN financial situation. If you can't hang and will never be able to earn into your home, then sell and rent (as you are doing). This whole slant to homeownership is MTV's Cribs gone too far.

As hard as it may try, the gov't's job is not to play musical credit bubbles... it is to provide a backstop for homelessness, real food hungers and opportunities for learning for children who want it. All we are trying to do is say ya, keep your Rolexes, your 2nd homes, keep running up the credit cards and enjoy your 4 week vacations. FYI, my parents took NO vacations in my early childhood... from 7 yo to 21. In fact, they felt so bad, paid another family to take me and the sibs to Disney Land for 4 days (we drove there from NYC in an econline.) That was my first AMERICAN vacation in a HoJo outside of Kissimmee with 5 kids and 2 adults.

many of these people could easily afford these homes before they lost their jobs. 17% U6 isn't very forgiving. THERE'S NOBODY LEFT TO SELL TO. selling and renting is not an option, except in NY, and the people aren't catching on too quickly here, either, despite the ample evidence from other bubble markets.

the gov't already played musical credit bubble. you do realize that the median home purchase during the bubble was still a three bedroom with one bathroom? have you seen the real estate values in detroit? tell me that the people there are looking to keep their Rolexes. methinks you've let the media and the right wing cloud your usually excellent judgment. there is no one who agrees with you more about the ridiculous push for home ownership. a means to completely mask the fact that as a country we were unable to produce a thing. but get beyond all that and just consider the scope of human suffering you are advocating for.

what's going to happen to you childrens' future if we allow a depression to occur? do you really think that's what america needs to learn its lesson? if you do, i'm afraid i simply don't agree.

To me the fact the original depression occurred is not onto itself a bad thing, but the fact there were no services and indeed we had rampant disintegration of families, rampant physical hunger, lack of medicines etc etc etc....

I believe even in our current "condition" we are far more able to handle this "depression" than in the past. Remember, by all measures we are a "wealthier" economy.... it's like a depression for a Trust Fund kid vis-a-vis a depression for a guy with a ruck-sak and mis-matched shoes.

Too many new hummers, too many McMansions, too many Abercombie and Fitch, too many Crate and Barrels, too many Apple Stores, too many salad shooters, too many Prada shoes. As americans we spend $7000/yr per citizen on Healthcare... like $5 in Somaia.... me thinkz we'll be okay with 50% of population letting of their "2nd homes."

well, AR, we do need to learn to not spend more than we earn & to save money & that everybody cannot live like a millionaire & given that people are stupid, I think that a good bit of pain is the only way that is going to happen; but you're right, things can & possibly will get a lot more ugly. One of the things that I'm still growling about is that 'we' gave the banks all that money but apparently with no strings attached; I'm simply horrified!

i would say time will tell, but it won't. it will forever be impossible to tell what might have occurred had certain measures been implemented. we did ourselves a great disservice when we taught the banks just how little culpability they have.

it is wealthier in some ways, but in others, not so much. the middle class has been losing ground since the '80s. it is not occupying mcmansions, and buying prada shoes. somalia probably isn't the comparison we'd like to see here. but i'll let this die, because we're destined not to agree.

"THERE'S NOBODY LEFT TO SELL TO"

i again have to disagree with you. mostly because there's NEVER ***NO ONE*** left to sell to, because at the right price, there's always enough investors to suck up any amount of properties the market spews forth. i keep making this same example, but it's because it applies: back in the early 90's when "you can't sell studios", I sold 100's. But it's because the price was right.

Look, this is what is happening all across the country (from the way I'm reading the reports): there's tons of overpriced RE being foreclosed on and being sold at the "right price" or not being foreclosed and being short sold at the "right" price. Even if the world ends and we hit 30% unemployment, it doesn't mean NO ONE can buy: there's people who did the right thing and saved for years and could still buy even being unemployed, there's the 70% still employed, there's the other income in the 2 income household which hasn't lost his/her job, there's investors, etc.

Now, that aside, I think that there's an EXCELLENT chance that (as w67 points out) all the stop gap measures currently buoying the economy and RE are in teh long run going make the crater deeper and take longer to fill back up. I think that Obama is being TOTALLY played by his Wall Street advisers at the ultimate expense of teh American people. I think that anything which doesn't work to change the FUNDAMENTAL problems in the economy is just a band aid on an arterial cut. BUT, BUT, BUT...... for now it's "working": banks have record profits and will hand out record bonuses. And it's very funny you mention "tell me that the people there are looking to keep their Rolexes". For years I've gone to auctions held by the various houses in NY. I tend not to go to the "fine" one's at Sotheby's, etc. but pay particular attention to these two: The estate and unclaimed at Tepper galleries and the Provident Loan Society sales at William Doyle. I look at both the volume and prices of a few different items (but the number one on the list is Rolexes), and I'm not seeing an indication from this particular metric that there is the behavior in existence which you seem to think. (for example, check out the results of the July 29th sale results at Doyle)

so can i have some $ for the sign... cause I do agree the media has not paid enough attention to how lax the lending standards were... but where were the regulators and our officials (which in itself is just a proxy for the US citizens, no)

; )

Oh if the stars align, I will have some time for cupcakes and hot chocolate.... pls bring alanhart, CC and anyone you'd like... it's gotta be outdoors ( i know it's cold), but I am in charge of kids as nannies are away and wife is in the park ALL THE TIME... can't wait for the NYC marathon to be over.

will do 30yrs. It's funny but like I said, I sold my rolex collection awhile back... it seemed a little noveau riche and I got older the "import" of having Rolexes just vanished.... I keep one solid IWC ( a gift from wife) and that's that.

Did you see that piece on Bill Moyer's show on PBS some time back? The fellow was touting his book & he said that the bankers are the oligarchs & the government needs to stand up to them & exert some control; instead they have backed down from this & told the bankers/oligarchs that we cannot possibly let them fail so, therefore, they've put the bankers/big money people/ special interests in control. I'm no PhD in Economics so I'm just feeling my way here, but I thought that was the situation in a nutshell.

yes, 30yrs, you can short sell. but you can't just put your property on the market, sell it at no loss, and then rent. i'm talking about the dislocation of families.

i think obama's advisors are a joke, at his and our expense, and have always said so.

but i'm happy to hear you disagree with me again. disagreements lead to discourse.

w67th, when?

oct 22-nov 4? : )

excellent.

and just because the populist in me can't help herself, i present for you a rather sobering read. i realize detroit is an extreme case, but there are more and more cities that are heading that direction, and i don't think we have close to enough resources to deal with it on a local or national level.

http://www.msnbc.msn.com/id/33357311/ns/us_news-life/

AR, you certainly are correct about the US not having the resources to deal with our mounting problems; we still haven't gotten New Orleans going after Katrina but there's always P L E N T Y of money for another war. Again I ask you, what's the matter with this country?

30yrs, i was talking about people who are losing their homes in detroit not having rolexes. you telling me they're selling them in NY?

Interesting, I just watched Mrs. Miniver & this fellow played the son & then went on to be a financial advisor; he had a degree in economics from Columbia.

http://www.hermes-press.com/neyint.htm

Seems to fit into what we've been saying.

we never learn. although post depression we avoided financial panics through use of regulation for awhile. bailout nation by barry rithotz is a good, breezy read delineating our mounting history of not allowing failure, and the changes in regulatory policy that allowed the failures to continue and grow.

i haven't picked up andrew ross sorkin's newly released too big to fail, although i read somewhere that it weighs more than two pounds, ironically.

w67th, you've got mail.

It all comes back to the fact that the U.S. standard of living is not sustainable. Emperor has no clothes. The first warning bell was sounded in the 60s & 70s by the emergence of post-war Japanese & German economies producing superior goods at competitive prices and the emergence of trade deficits. Due to the peculiarities of this society (diversity, terrible legacy of slavery, etc.), the things that people were screaming about 30+ years ago haven't changed. New Orleans is but a symptom of greater society malaise.

From Michael Panzer (i know, obvious bias, but it's just a quote and i'm too lazy to source it elsewhere), from recent Buttonwood Gathering:

Niall Ferguson, Laurence A. Tisch Professor of History, Harvard University, William Ziegler Professor of Business Administration, Harvard Business School:

"The problem of being a declining empire doesn't have a solution." (Referring to the suggestion that a great many, if not all, of America's problems are fixable.)

AR: I read that Detroit article. It is extremely distressing to read about youths in bad situations like that. The system is broken. 12 years olds (!) having children, bringing them up, it's more than just economic poverty. Call me callous - but I wonder what would happen if you could find a way to postpone average child-bearing until 21. Yet they're tied to Detroit or whatever inner city we're talking about. None of those kids have the ability to break out of it - in so many ways, they're worst off than Mexican migrants who risk their lives to cross the border.

"yes, 30yrs, you can short sell. but you can't just put your property on the market, sell it at no loss, and then rent. i'm talking about the dislocation of families."

Now I know we were definitely talking past each other: I was looking from the perspective of people who have already gone through that point, not being "trapped under water" one's. I'm talking more about a total market of people post apocalypse, not individuals waiting for the axe to fall. But I still think to some extent you are underestimating the finances of those in that position: there are tons of "strategic defaulters", and in addition I don't think people wait until they have spent their last nickel before they default: I think most semi-intelligent people see it coming and put the payments into the bank rather than make them to the bank. Remember how long it takes to foreclose: usually plenty of time to sock a LITTLE away before the marshall shows up at your doorstep.

it's awful. and the solution they are seeking, or at least it seems to be the only one really possible, is a way to keep rec centers open longer? i know that's critical, keeping kids off the streets, but the youth unemployment rate is over 50%. some youth rec centers would be nice, but not exactly the solution.

i don't have an answer for the teen childbirth issue. i had read that it was down, earlier, but obviously in situations such as this it is even a greater albatross for the young parents. and without much purpose in their young lives, i could see it paradoxically rising again.

AR, 30yrs - yes, you're totally talking at cross-purposes. I think that AR's point is not whether there's a market clearing price for RE. This time around, the collapse of the RE bubble is different because there might be a general societal collapse due to sheer number of dislocations. People forced to leave their homes = the 21st C version of "Grapes of Wrath" Okie migrants.

AR - I'm not sure if Detroit's problems are fixable or rather, whether that type of inner-city poverty is fixable. Kinda reminds me of the problems on native (Indian) reservations in the far north, and the failure thus far of the Cdn gov't to fix it in any way despite money.

AR: it's more than just finding a way to keep kids off the streets. This sounds patronizing, but it's a whole parallel society there with a completely different moral compass. Is it just poverty? Is it cultural? If you could spirit every single child out of there, and resettle their immediate families somewhere else, would it be different. It's not a car industry thing.

I know people in their late 30s/early 40s who are gparents, and while not knowing the exact family dynamics (and of course this will sound terribly patronizing), some common factors that promote teen pgs seem to be:
1) Single-parent households
2) A sort of fatalistic attitude - if your kid comes home pg, there isn't as much shame & anger as there would be in
some other family - more of a "let's just deal with it"
3) Parents of teenage parents were themselves very young parents

30yrs, the whole conversation was about loan mods. i agree that we see plenty of strategic defaulters here. but with 6-10 million foreclosures predicted, and 50% of mortgages expected to be underwater, i think the economic impact will be devastating. and remember, we the people own a large amount of the toxic loans now. prices go down, taxes go up. shitty position we've been placed in.

i'm talking about the implications of destroyed cities, abandoned buildings, etc. i read on npr earlier today that detroit, a city of 900,000 people, has 80,000 abandoned buildings. if you assume a population density of 3 people per single-family structure, which is just a guess but sounds about right, that represents space for 240,000 people. i know it's an extreme case, but the rate of default is increasing.

i don't have any good answers. i've heard some good ideas for pieces of the problem. and i know that the banks must be downsized or split up, regulated and obama needs to kick GS and JPM out of bed. but in terms of housing, i am completely torn down the middle. and i was one of the prudent ones.

10023, if you haven't already read it, pick up a copy of LaBlanc's Random Family. she paints a picture that is horrifying. and one of the characters is a mail runner at one of the large manhattan law firms.

i have to keep hoping, because that's the kind of girl i am, but it is indeed daunting.

I don't think I want to, AR. Too much depressing stuff out there. Mailrooms at large law firms have interesting demographics. I'm not going to be mealy-mouthed here. It's the legacy of slavery. I'm not a bible thumper, but oh, the wages of the sins of the father.

when you talk about the problem with the youth in our society, I think we have to address the issue of these hateful rap lyrics & the sad fact today that it's not cool to be a scholar but, oh man, an athlete or a rapper is WAY KOOL ! ! But who is addressing this issue? There are very few voices out there saying that this is nonsense. It's like we've all gone completely INSANE.

That's too facile, drdrd. Rap is a symptom, not a cause. And it's not "youth in our society" - we are talking about inner city poverty here, economic & cultural.

10023, we are also seeing rapid deterioration in some more rural communities. Palin's meth capitol, for example. i agree that the inner-city poverty is the worst, and has the greatest ties to long-term societal woes, but we seem to be failing large groups of youths these days.

Yeah, I was thinking about the meth kids & the glue-sniffing kids. Don't know too much about that demographic. I don't know for a fact if overall numbers are worse now than they've ever been. I am not one of these people who goes around wringing her hands and going, oh, the youth, the youth. What's discouraging about inner-city poverty is the enduring nature of it.

It started with Bush and the Dems who voted for his bailout - and it continues now - we are consistently subsidizing bad behavior.
In an effort to try and be all things to all people we continue to spend money we don't have. My hope is that someone starts a new political party called the "we can't afford it party." The theory - housing for everyone is a great idea - but... we just can't afford it. Spending $7K per person per year on healthcare is great - but.... we just can't afford it. Giving people $8K to buy a house - $4K to buy a car -$1K to buy a fridge - $1,500 to buy windows - $25B to avoid bankruptcy - fighting wars - you get the idea....

"i'm talking about the implications of destroyed cities, abandoned buildings, etc. i read on npr earlier today that detroit, a city of 900,000 people, has 80,000 abandoned buildings. if you assume a population density of 3 people per single-family structure, which is just a guess but sounds about right, that represents space for 240,000 people. i know it's an extreme case, but the rate of default is increasing."

I think using Detroit is a bad example because it was a disaster 15 year ago. The number look terrible, but they've looked terrible for a long time.

"30yrs, the whole conversation was about loan mods. i agree that we see plenty of strategic defaulters here. but with 6-10 million foreclosures predicted, and 50% of mortgages expected to be underwater, i think the economic impact will be devastating. and remember, we the people own a large amount of the toxic loans now. prices go down, taxes go up. shitty position we've been placed in."

I don't disagree. And I think there will be a lot of pain. But the market always finds it's level. yes, there will be tremendous paper losses and (far less0 real losses. But I don't see the results being a "Grapes of Wrath" dislocation of families, ESPECIALLY in NY. I see poor areas getting worse as lower middle class and middle class people who were forced in the past few years to live in some really horrific situations vis-a-vis what i personally think should have befitted their station in life. But while I'm probably just as pessimistic as you are when it comes to what is going to happen financially, I am more optimistic about what will arise out of the ashes. the example I like to use is "you know all those people living in Rent Stabilized and Rent Controlled classic 7's on West End Ave paying nothing? Do you think those buildings were built based on that scenario?"

What I'm saying is that I see the possibility of NY being the beneficiary at least to some extent of all this carnage. Other cities were the last go around, because they were where the greatest losses came and the Gov't (i.e. "the People's) money ended up. Right now, if you think about it, there's been a shift of $ away from NYC and to California and other places where the bailout money has gone. If things head South here, LOTS of "high" (using that term very loosely) quality housing goes belly up and MUST get sold at prices which can make sense in terms of what NYC residents can pay, we may actually end up with an unintentional "affordable housing" for middle class people. A great example is the first building (I think) that got Related into the NY maket - Tribeca Tower. It was built as a condo, failed, got bought Cheap from NatWest by Related, related rented the properties for relative bargains ( a guy in my office at that time and his BF strategically defaulted on a Coop at Turtle Bay Towers and moved to Tribeca Towers). Looking at a bunch of the larger buildings in Brooklyn, I can see them going out, getting bought and end up being the best "affordable housing even though market" program in Brooklyn ?ever?.

As long as any of these building is reasonably complete, they won't be totally abandoned. And i do think you will see people looking at living in them vs their current situation, pulling the plug - and being able to pull the plug - on whatever their current situation is, and in the end having an overall benefit. And - oddly enough - in addition, I think that people being able to live at lower housing costs as a result will lessen unemployment, because i know a LOT of current unemployment in NY is teh result of "wages being sticky downwards".