I was fascinated by the article. I don't know how he ever thought he was going to pull off that mortgage with an alimony payment like that. Four grand a month!? "Sorry this relationship didn't work out. I"ll just give you more than 2/3rds of what I bring home every month for the rest of my life." That was just brutal. Then the first thing he does is get another stay at home wife and her kid. (I know she tries to get a job every once in a while but they just don't seem to stick, huh.) After basic monthly expenses, it sounded like his take home was enough for a one bedroom. In NJ. And that would be stretching it.

on a traders message board, one of the astute members posted a link to a Satyajit Das article.

http://www.eurointelligence.com/article.581+M553774d2c37.0.html

LESSONS OF THE GLOBAL FINANCIAL CRISIS: 1. THE END OF PONZI PROSPERITY

We Are All Keynesians Now!

a little while latter another message was posted, this time by a retired economist--

"I'm gonna give you guys the economic facts of life for the ninetieth time:

(1) We never stopped being Keynesians. The Laffer Curve was just back door Keynesian stimulus. Whether you run a budget deficit due to spending increases or tax decreases, the effect is the same. A rose by any other name...

(2) There is no prosperity other than Ponzi prosperity, because growth is just reprocessed inflation. Think the sausage factory analogy and get over it."

is that a hoot or what?

Edmund Andrews is correct that the bad judgement of institutions superseded that of the millions of individuals who pursued terrible mortgage products. However, the most egregious mis-judgement of all probably lies with the Federal Reserve. For too many years, the Fed kept interest rates so low despite a healthy economy. These low rates created a demand within banks for loans that could generate higher returns--thus a market for high risk mortgages (whose holders could be charged higher interest rates) was created--"the worse (the risk) the better," as Andrew Sullivan notes.

This American Life and Planet Money, in their Peabody-winning piece, helped give the 360 view more than this article/book.

At the disaster's most basic core, there was a drug dealer and a drug user. Both were incented to ignore the "consequences" of the bogus transaction (dealer got lots of money with zero risk, since s/he immediately sold the bad mortgage to someone else; user got a big house or equity payouts to refurb the kitchen or buy a boat).

Both sides were grossly irresponsible and both sides deserve blame. Of course, since in a typical transaction the "user" knows vastly LESS about the world of finance than the "dealer," one could argue they are even more to blame. But it's a pointless intellectual game.

I don't find it hard to believe that Andrews could screw up his personal finances while doing a fine job reporting on the same issues. Psychological therapists are as likely as anyone to have messed-up personal lives; that doesn't make them any less helpful.

He was in love with someone. That's as good a reason as I need to imagine him capable of ignoring every rational thought he may have had.

What shocked me most about this story was his admission that he hadn't paid his mortgage in 7 months, but he was still living in his house. At the same time, renters who never missed a payment have been tossed out with almost no notice or recourse, because their landlords were foreclosed on. People keep saying "not everyone should buy a home" but it seems like home owners get a lot of breaks while renters have almost no rights in most states. Would a renter be left alone if they didn't pay their rent for 7 months?

A right wing troll with shit for brains will come along and refute this:

I happen to agree with that statement. Through his reporting, Andrews definitively makes the case that Wall Street's insatiable hunger for mortgages of any quality -- in fact, the worse the better! -- that could be bundled up into securities and then resold, provided the critical incentive encouraging the subprime mortgage sector to explode to such huge dimensions.

With a single, simple statement: BbBbBUTTT!! BAWNEY FRANK!!!!

As I read this fascinating NYTimes article, I couldn't help thinking that if a sophisticated, well-educated, savvy guy like this could get mangled in the subprime mortgage mess, poor, ignorant, inexperienced home buyers didn't have a prayer. Andrews was talked into a series of terrible financial blunders by an "advisor" who told him what he wanted to hear: "You can afford it. Here's how."

This told me that it's not just me. We all make the decision that seems best at the moment, and if we're wrong several times in a row, the accumulation of error can be just about irrevocable.

And before we start castigating those who have made what seem in retrospect to be stupid mistakes, maybe we should go back to that moment of decision and see-- why? What was their reasoning at that moment?

But it's scary, really scary, how you can consider and think and reason, and still make mistakes, and how hard it is to unmake them.

I was thinking about that the other day, when I spilled something on the rug, and grabbed some wetwipes to clean it up, only afterwards realizing I'd grabbed the ones with chlorine in them (for cleaning the countertops)... and of course, my oxblood carpet now has a big white splotch.

Mistakes do accumulate, and while they're accumulating, we might not be in the best frame of mind to make the right decisions. :(

I find that out when I first applied for a mortgage and the mortgage broker told me I could afford 100K. Since I was barely getting along with a 400 a month rent I was baffled. I had to redo the numbers in front of him several times to prove to him there was no way I could afford over 40K. After that I knew they were just used car salesman .

Unfortunately we seem to think that someones specialty makes them special - it doesn't.