Societies die from many causes, of which internal corruption — of rulers and the people — is among the most common. Slow and hidden, it sometimes briefly emerges into view.
- “Are you an idiot to keep paying your mortgage?“, Kathleen Pender, San Francisco Chronicle, 16 November 2008 — The long-term corrupting effect of bailouts.
- The Senate’s tribute to convicted felon Ted Stevens, Matthew Yglesias, 20 November 2008 — The deep corruption of our rulers made manifest.
Excerpts
“Are you an idiot to keep paying your mortgage?“, Kathleen Pender, San Francisco Chronicle, 16 November 2008 — The long-term corrupting effect of bailouts.
Should you keep paying your mortgage? If you have significant equity in your home, absolutely.
If you don’t, it’s getting harder to answer that question, especially when our government keeps giving people who owe more than their homes are worth so many reasons not to pay. Last week, the government announced a program that will substantially lower payments for many homeowners who have little or no equity, but only if they are at least 90 days delinquent.
… Peter Schiff, president of Euro Pacific Capital, predicts that many homeowners who have little or no equity will stop paying their mortgage and then reduce their income to get the biggest payment cut possible. They could stop working overtime or, if two spouses work, one could quit. After the modification, they could try to boost their income again. “This is a once-in-a-lifetime opportunity,” Schiff says. “People are going to feel like complete morons if they don’t participate. The people getting punished are the ones who never made an irresponsible decision to buy a house they couldn’t afford.”
The government is offering loan servicers $800 for every homeowner they get into the plan. Schiff predicts that loan agents “will be cold-calling people trying to get them into it. Just like they encouraged people to overstate their income to get a bigger loan in the first place, now they will encourage them to understate their income to qualify for a smaller loan.”
The Senate’s tribute to convicted felon Ted Stevens, Matthew Yglesias, 20 November 2008
Watching these Ted Stevens tributes unfold is really shocking. He’s not some veteran Senator retiring after a long and distinguished career. He’s a criminal. He was booted from office by the voters of his state. They did this, in part, because he was convicted by a jury of his peers of serious crimes. Crimes directly connected to his conduct in office. His conduct alongside this bipartisan group now saluting him.
It’s sickening to watch. For all the cynicism that unfolds on the Hill, every once in a while members really do put political expedience aside and just do what they think is right. Unfortunately, what they think is right is to lavish praise on their good friend the senator/crook Ted Stevens.
zic Says: Maybe they’re being so nice in hopes that they’ll get the same treatment if they’re so booted in office. You know, “there but for the grace of God go I.”
Just maybe Steven’s colleagues recognize they’re all pretty close to convictions if they’re scrutinized closely enough?
mars Says: This is vile, and video of it will no doubt populate many a documentary decades from now as historians try to explain just how far the US went off the rails at the turn of the century.
Afterword
If you are new to this site, please glance at the archives below. You may find answers to your questions in these.
Please share your comments by posting below. Per the FM site’s Comment Policy, please make them brief (250 words max), civil, and relevant to this post. Or email me at fabmaximus at hotmail dot com (note the spam-protected spelling).
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To read other articles about these things, see the FM reference page on the right side menu bar. Of esp relevance to this topic:
Posts on the FM site discussing the American spirit, the American soul:
- Diagnosing the eagle, chapter IV – Alienation, 13 January 2008
- Americans, now a subservient people (listen to the Founders sigh in disappointment), 20 July 2008
- de Tocqueville warns us not to become weak and servile, 21 July 2008
- A philosphical basis for the Batman saga, 23 July 2008
- The American spirit speaks: “Baa, Baa, Baa”, 5 August 2008
- We’re Americans, hear us yell: “baa, baa, baa”, 6 August 2008
- The intelligentsia takes easy steps to abandoning America, 19 August 2008
- Symptoms of a fever afflicting America’s culture, 5 November 2008
Without getting too curious, I wonder what surprises would unfold if you could see where all of that ridiculous CEO compensation is going…
“Citigroup shares leap on reports of firm’s sale“, BusinessWeek.
“In the end, there can be only one!” — The Highlander.
The Lord, thy Bank, is a jealous Bank. Thou shalt have no other banks before, err, IT?”
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Fabius Maximus replies: This is more properly seen as a shift of the financial center of gravity to Asia. There are still many banks, and will be many banks after the western banks are consolidated. They will just be names new to Americans.
It never made sense that the US remained a financial center after it shifted from global creditor to global debtor. That meant we borrowed from foreigners, repacked capital, and invested/lent it. There is no need for a US institution in the middle. Asia sells cars to us, and can just as easily loan us money.
An interesting quote from an article in the Oil Drum, An Overlooked Detail – Finite Resources Explain the Financial Crisis:
With a flat or declining economy, long-term debt no longer makes sense. The likelihood that borrowers will be able to repay loans with interest becomes quite low, because the economic system as a whole is not growing and producing a surplus that can be used toward interest payments. It is much easier for a borrower to repay a 20-year mortgage with interest when he is getting promotions and salary increases than when his employer is downsizing and cutting hours.
This sort of circumstance completes a circle that began in the Renaissance, when bankers began to charge interest. This beginning, with the attending cultural and intellectual changes, is discussed in the book, Medici Money: Banking, Metaphysics, and Art in Fifteenth-Century Florence (Enterprise) (Enterprise) by Tim Parks.
On a deep level, what I think is now happening is that the Renaissance itself is being unwound.
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Fabius Maximus replies: I do not understand how anyone can say this is an “overlooked detail.” As I explain in “Debt – the core problem of this financial crisis, which also explains how we got in this mess“, our situation is easily understood in terms of conventional economic theory. Irving Fisher explained it nicely in 1933.
The folks at the Oil Drum produce so much flawed analysis because they apply a Christian view of the physical world: linear, moralistic, simplistic. Economic events tend to be cyclical, as in this case: accumulation of excess debt, collapse in the 1930’s, accumulation of excess debt, collapse in the 2000’s.
“With a flat or declining economy, long-term debt no longer makes sense.”
Not so. It is the amount of debt, not the nature of it, that is significant. If I have a steady income or am starting a business, long-term debt makes sense. But the economy can support only so much debt, limits that we have exceeded.
This Oil Drum article is an excercise in theology, attributing the economic crisis to finite resources without a shred of evidence (and ignoring history of past cycles) — a tribute to today’s green religion. Much like during the medieval era plagues would be attributed to people’s sins against the Christian God.
Engineers like me would say it’s not even the amount of debt, it’s the stupidity of how the borrowed capital is deployed. If you borrow up to your ears to build a flat panel TV plant that whacks out tons of product people love to own, no problem. If you borrow up to your ears and use the capital to build stupid tract homes in Modesto, you’re screwed, and all the bank restructuring in the world won’t change that.
bc:
The basis for my differing from you is as follows: No matter how how well engineered your flat panel TV’s, you won’t be able to sell very many of them in Darfur.
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Fabius Maximus replies: I don’t get it. How does the “Darfur” analogy fit into your comment, or the post at TOD, about the current financial crisis?
Change just come
Keep your dignity
Take the high
Take it like a man
Wake up son of mine
Momma got somethin’ to tell you
Change is come
Life will have its way
With your pride, son
Take it like a man
Hang on son of mine
Storm’s blowin’ up your horizon,
Change just come
Keep your dignity
Take the high
Take it like a (like a like a) man
Momma said like the rain
Like a kidney stone
Take it like a man
Momma said like the rain
: from Momma Sed, by Puscifer