The undeserving poor

Following up on Rick Santelli's concern that any effort to aide aid families facing foreclosure will wind up "rewarding bad behavior," here are some recent pics from the Associated Press.

This is Mary Ann Herrera, photographed in front of her San Antonio home Monday by AP photographer Eric Gay. She asked her brother to paint this plea for help on the side of her house, which she's about to lose to foreclosure.

<sarcasm> As you can see, she's been living the high life in her swanky McMansion. If you peek through the windows in that picture, you can just make out the granite countertops in the state-of-the-art kitchen. And now she wants the government to compel taxpayers to subsidize her life of luxury. The nerve.

This Oakland, Calif., house, photographed by the AP's Paul Sakuma, is so huge that it doesn't even fit in the frame of the picture. Clearly, these homeowners were looking for a shortcut and irresponsibly agreed to a mortgage they couldn't afford for what anyone can see is Too Much House.

Just look at the expansive and expensive Xanadu next door and you can see all you need to know about this jet-setting neighborhood. I can just imagine the former homeowners kicking back on their leather sofas, lighting their imported cigars using $100 bills and laughing at all the hard-working taxpayers who are being asked to subsidize their extravagance. </sarcasm>

I don't really understand why Santelli thinks that allowing judges to restructure these homeowners' mortgages would actually cost me or the government any money. Replacing a write-off with a smaller, but sustainably profitable mortgage would actually save the banks -- and thus taxpayers too -- a ton of money. And reducing the number of foreclosures in any given neighborhood helps keep everybody's home values there from plummeting.

So quite seriously I can't fathom the prefab outrage that Santelli and his ilk have decided to pretend to feel over the possibility that some families who might otherwise lose their homes might be helped to keep them after all.

Santelli just seems like the kind of guy who would watch Smile Pinki and walk away complaining that the kid was just a freeloader taking advantage of the redistributionist fools who run Smile Train. I don't care for that kind of guy.

Comments

[The Black Rabbit of Inlé]

Uh... "aide"?

[Personal Failure]

I am a secretary at a law firm that represents local banks. The firm has been around for 35 years, and has weathered recessions before just fine. For the first time ever, the banks are now the customers "slow paying" us. Santelli is a tool.

[Naked Bunny with a Whip]

The banks have already gotten ungodly gobs of money because of this mortgage nonsense, and this new bailout will now give some money to....the banks as well. It's not like mortgage holders will be getting $20,000 checks or anything, it will just give the banks an incentive to do what they should have done in the first fucking place to preserve their existence. Who is getting rewarded for bad behavior? Where is the moral hazard? It's not with those people above.

Regarding the Santelli clip specifically: It amazes me that a guy can stand on a stock-trading floor and, in essence, bitch to his friends about the risk of speculators making money through questionable means. Um, hello?

[Jim Lard]

I know comparatively little about the American mortgage situation so I'm not commenting on that directly.

But in general, the thought that someone I gave money to - a charity, a beggar, a friend - might not really need that money, or might abuse it, depressed me for many years, and made me unwilling to help others. Eventually though, I turned the question around in my head - maybe that person isn't really hungry, I used to think. Now I think, maybe they really are.

[Not Really Here]

Here's a good documentary about how the "undeserving poor" got themselves into such straits through their own "bad behavior."

The bulk of this film deals with the credit card industry, but it also has a few kind words about sub-prime mortgages.

Seems some of these "irresponsible" people were poor, and uneducated, and didn't understand the thick legalese of the mortgage documents they were signing. Some of them didn't know that their interest rates, and thus their mortgage payments could increase, in some cases nearly doubling.

It wasn't just people taking out loans they couldn't afford. In a lot of cases, the mortgage officer who made the loan mislead or even outright lied to them about what they were getting themselves into.

I keep hearing about how these folks who are being foreclosed on by taking out mortgages on homes they couldn't affort, but very little on how the banks were irresponsible in loaning money to people they knew had little likelihood of being able to pay it back.

[Naked Bunny with a Whip]

People assume that banks just hate giving out loans to people, but in reality many loan officers have quotas to meet, or are even given commissions. They have an incentive to minimize the risk to loan recipients, and I have personal experience with loan officers telling me that "we'll be able to refinance that balloon payment away".

[mike.timonin]

The problem is that you're approaching these photos with logic and common sense. I. however, have just spent the better part of week with my conservative father-in-law and his equally conservative sister ("don't talk to me about unions, it's their fault we're in this mess!"), and some of the conservative has clearly rubbed off - another couple of showers ought to take care of it, I hope. So, second hand conservative response

[conservative]
But those people don't deserve money. I mean, that first woman, she huge! If she spent her money on paying down the mortgage instead of stuffing herself with food, she wouldn't be in this fix. Plus, she's brown, which disqualifies her right off the bat. And that second house? Totally run down and falling apart! People who want money for their houses should take better care of their investments - no one is too poor for soap and a little paint.

(Note that, if either of the houses were nicely painted, the rational would be "why are they spending money on paint? Pay off the mortgage, and THEN make the house pretty. Besides, a painted house means they either hired someone to do it - which means they have money - or they took time to do it themselves - when they should have been out looking for a job to pay off their mortgage.")
[/conservative]

The problem is that people who toss around concepts of "deserving/undeserving poor" don't actually believe that there is any such thing as the deserving poor. The only people who would get money, in their minds, are people who need it but are too proud to ask for it - in which case, how are we to know they needed it?

[Froborr]

@mike: It's the inherent perversity of that pernicious, vile myth, the American Dream.

"Anyone can make it, if they're virtuous and hardworking!" is logically equivalent to "If you're not making it, you must be lazy, wicked, or both."

[John Small Berries]

"Anyone can make it, if they're virtuous and hardworking!" is logically equivalent to "If you're not making it, you must be lazy, wicked, or both."

Which is patently absurd, because I'm sure everyone can point to plenty of lazy, wicked people who are doing quite well for themselves.

[Richard Crawford]

I find it appalling that there are still folks like Santelli who continue to bring up the boogeyman of the "welfare queen" and such. In my (admittedly limited) experience working with welfare recipients, such folks, while they exist, are few and far between. It's a cop-out for people who want to justify to themselves why they don't want to give to charity or to the homeless guy on the streetcorner.

I did used to worry about this myself, but then I realized that it's not up to me to judge whether someone is worthy of my charity or not. There's only One who is allowed to make that judgment, and it isn't me.

[Mark Baker-Wright]

I don't think that this post give proper recognition of the conservative mindset. No conservative accuses the "undeserving poor" of "living the high life" (as the post sarcastically suggests). A conservative seeing the picture above would take one look at the woman and say "the reason she's having trouble paying for her mortgage is because she won't cut back on the Twinkies!"

Cruel, yes. But let's get the kind of cruelty we're talking about correct.

[emjaybee]

I can only attribute the insanity and cruelty of this mindset to fear; it's a denial response. Just as closeted gay people can sometimes exhibit serious homophobia, so I think these types of Republicans are scared by the insecurity of our economy, and so demonize the people who are suffering the fate they most fear.

Making them "the other" and "bad" is a way of attempting to draw a thick line between them and you, so their bad luck won't infect you. Compassion is too dangerous, because then you'd both feel guilty for not helping them and have to acknowledge how easy it is to end up in their shoes despite your best efforts.

[Lori]

Mike Timonin and Mark Baker-Wright said exactly what I thought. The kind of people we're discussing would jump right to attacking that woman about her weight. I've heard it more times than I care to remember. Everyone knows that fat people are fat because they're lazy. Everyone also knows that poor people are poor because they're lazy. And brown people are lazy & shiftless. Therefor, she obviously never deserved that house in the first place and her losing it is just things returning to their natural order. Certainly not one thin dime of their precious money should be spent helping a person who obviously spend all her money on Twinkies.

[Jens]

Wow. What truly deluded minds both liberals and conservatives have. Both of you "know" so much about the other, when neither of you actually have the slightest inkling of a clue how similar you actually are. That house in Oakland? It probably cost about $300,000-$400,000! Yes, even in shabby condition. How do I know this? Because most of my life was spent in the bay area. There are plenty of people who couldn't afford the payments in the real world, but let themselves get sucked into what the brokers told them.
It is sad, but the truth. When I was making $15 and hour, my broker was trying to teach me how to buy a $300,000 house! It is all so ridiculous. "Make it fair for all" some cry. Well, how about the people who want it to be fair, actually do something about it! There are hundreds of cities in this country, in which a house can be affordably purchased. So if you don't like it where you are, can't make it, move! Change your mindset, change your life! I have pity for the people who are losing their homes, and have no problem with the idea that their loan gets restructured, but ultimately that is the bank's choice. I think the lot of them (banks), should simply be hung out to dry. Let them clean up their own messes, and they will find out that cutting a persons loan in half, makes way more sense than auctioning it off in foreclosure for a quarter. Oh, but they get tax breaks for a loss. They created the possibility for a loss! Let them rot!

[Tonio]

I can only attribute the insanity and cruelty of this mindset to fear

Perhaps a Human Theory of Everything would be that all suffering caused by humans can be traced to an faulty handling of fear. Whether or not such a sweeping idea would have any credibility, it's interesting that fear keeps coming up when we discuss horrid claims such as Santelli's.

[mike.timonin]

Jens - hopefully we haven't quite got to the point where people are abandoning houses and moving aimlessly from one place to another - but if we don't do something to prevent these foreclosures, that's exactly where we're headed. And we've done that before. "Pick up and move" sounds very basic and sensible, but moving across the country to where houses a cheap is a luxury many people cannot afford. There are things holding them where they are - a job, a family member in hospital, a college degree not quite finished - which outweigh the push (loss of house) and the pull (possibly cheaper houses, maybe better jobs) somewhere else. Now, when things get really bad, those things holding people where they are will dissolve, and we'll have roving bands of hitch-hikers and rail-riders seeking employment where they can find it. Maybe this time, the Poor People's Army will actually topple the government - is this a chance we want to take?

[Naked Bunny with a Whip]

So if you don't like it where you are, can't make it, move!

Thank you, Jen, for illustrating Froborr's point. It's great to imagine that everybody starts on a level playing field, but the fact is not everyone has the same opportunities, the same education, the same emotional capability, and so on. But that's demonstrably and painfully false.

Moving to another city, quite possibly leaving your family and friends -- your entire support system -- behind is difficult with the best of opportunities, but taking risks often results in failure, and failing with no backup is difficult to recover from financially. Add to that the tendency in the US to shame people who need to ask for help, and most people don't see any reason to try, so they go on eking out their existences because it's better than the very probable alternative.

[Naked Bunny with a Whip]

What truly deluded minds both liberals and conservatives have. Both of you "know" so much about the other, when neither of you actually have the slightest inkling of a clue how similar you actually are.

By the way, if you want people to listen to what you have to say, I suggest you tone down the smug self-righteousness. You're not some objective third party who's above the fray, despite your claim here.

[inge]

Mike: moving across the country to where houses a cheap is a luxury many people cannot afford

This. Also, the reason houses are cheap in some places? No jobs. Often, no infrastructure. "Cheap" isn't, when it costs you your means of paying.

[Consumer Unit 5012]

"So if you don't like it where you are, can't make it, move! Change your mindset, change your life!"

...Because moving is free, nobody has any community roots they'd hate to sever, and there are places in this country that aren't being affected by the economic downturn!

(Am I doing this right?)

[Lauren]

I have pity for the people who are losing their homes, and have no problem with the idea that their loan gets restructured, but ultimately that is the bank's choice. -Jens

The problem is, it is NOT the bank's choice any more. Banks are UNABLE to restucture mortgages because the mortgages have been cut up and sold as derivatives, and it requires a supermajority of the derivative holders to restructure the mortgage. Most of derivatives, in turn, are held by mutual funds and trust funds, so there is no one who is actually authorized to speak for the owners and authorize restructuring. The mortgage goes into forclosure not because the banks CHOOSE foreclosure, but because forclosure is the default.

Also, the really big national mortgage companies simply don't have enough people on staff to handle all the restructuring and short-sale requests. Home owners spend days or weeks trying to get somebody to authorize a short sale or lower a payment, and by the time the authorization comes, it is too late. At least, that was the case 6 months ago, maybe that situation has improved by now.

[Lori]

It would seem that there is some confusion about the law of supply & demand. If everyone moves to areas where housing is cheap, the housing will cease to be cheap.

[Izzy]

Oh, Jens.

The ability to pack up and move anywhere in the country for free and, once there, to find a job and transportation you can afford while still paying for rent and health insurance and food, is a pretty nifty power. The ability to automatically know when someone's trying to sucker you and never get taken in? Also nifty. I'm envious.

Exactly how many points of Humanity did you have to sell off to buy those?

[jamoche]

Well, there are places where the housing will still be relatively cheap, just because there's the space to put more houses. The Bay Area is not one of them, but since people tend not to go to where the houses are but where the jobs are, people will still be coming here; we don't seem to be hit as badly.

[mike.timonin]

Also, the reason houses are cheap in some places? No jobs. Often, no infrastructure. "Cheap" isn't, when it costs you your means of paying.

Exactly. As an example, I'm in Binghamton, in upstate New York. (actually, lower upstate New York, but, you know, further north than NYC, and so...). Houses are way cheap here, and have been for at least the past 5 years; such that our friends in NYC and DC and elsewhere have said "Oh, I should totally come there and buy a house!", except they have not done so, because, once here, there's nothing to do to earn money, unless you want to sling hash or sell retail. Or, you know, teach or take college classes. Low house prices =/ a good place to live.

Also, it may be premature, but I'd like to propose that Izzy win at least part of the thread...

[Froborr]

Which is patently absurd, because I'm sure everyone can point to plenty of lazy, wicked people who are doing quite well for themselves.

Which isn't a logical contradiction. "If A, then B" is not negated by "B but not A", only by "A but not B". Of course, we've got tons of "A but not B" -- hard-working, virtuous people who can't get out of the bottom layers of society.

As for where hatred of the poor comes from, yeah, fear and racism are definitely major factors. I'd like to suggest another possibility: learning the wrong lesson from empathy. When you see someone suffer, it causes you to suffer; this is an instinctive human response. Maybe some people blame the original sufferer? Like all of us, they don't like the way they feel when encountering someone in pain, but instead of responding by trying to ease the suffering, they blame the sufferer?

[Keith]

It's pretty simple: Santelli hates poor people. The modern day GOP does too. They are good only for moralizing to vote every 2 years but otherwise need to shut up and be happy that it isn't like the good old days when you could just toss your peasants out into the wilderness if you wanted to knock down their hut and extend your castle walls a bit.

[Hawker Hurricane]

"Lazy, Wicked people doing quite well for themselves on the government's dime" - why does the name "Ken Lay" keep coming to mind?

[Stellar Jay-eff]

So if you don't like it where you are, can't make it, move!

In addition to the comments above, may I remind everyone just how well that worked for the "Oakies"?

[Blue Jay-ssica]

Though it's not Thursday, everyone is jumping on Jens. Not being the most virtuous person, I will too:

It's not easy just to up and move wherever housing is cheapest.

You're right that the tenement in Oakland probably is a $300K home.

The problem is that some of us work in fields (like biotech) that don't exist all over the country. Biotech people pretty much *have* to live in SoCal, the bay area, or New England. Don't like it? Too bad. You're stuck with the degree, the student loans, the family, the whole nine yards. And you've got to make ends meet.

I'd love to move somewhere like St. Louis or Toledo or Portland and expect to get a job that's actually going to cut it, and live in a mansion for pennies a day. Except I can't because that's not very realistic. Yes, for what I pay in rent, I could have a three story, 9 bedroom house somewhere else in the country, except I'd also be unemployed.

So shut your mouth if you don't know what you're talking about.

[Tonio]

Like all of us, they don't like the way they feel when encountering someone in pain, but instead of responding by trying to ease the suffering, they blame the sufferer?

That might be related to the phenomenon that this study found...

Conservative states spend most on adult entertainment

States where a majority of residents agreed with the statement "I have old-fashioned values about family and marriage," bought 3.6 more (adult entertainment) subscriptions per thousand people than states where a majority disagreed. A similar difference emerged for the statement "AIDS might be God's punishment for immoral sexual behaviour."

"One natural hypothesis is something like repression: if you're told you can't have this, then you want it more," Edelman says.

[histrogeek]

It's a trope in ethics debates that it's better for 10 guilty people to go free than that 1 innocent person should be imprisoned (or killed or punished in whatever the debate is about). Conservative asswipes like Santelli though seem to see things exactly the opposite. It's better that 10 innocent people should be tossed out on the street and eat cat food than 1 undeserving person should get a nickel of taxpayer money.
Note however this only applies to poor, or otherwise unimportant, people.

[Consumer Unit 5012]

Tonio: Or maybe it's just that people in red states are less likely to know how to download free porn?

[Lori]

@Tonio: When I saw the report about red states & online porn I wondered if they made any attempt to allow for differential access to other sources. I suspect that some of the difference in online consumption has to do with the fact that people in less conservative areas tend to have more choices when it comes to getting their freak on and can therefor spread their dollars more widely. Having lived in both red & blue states I would also say that overall those in conservative areas are far more dependent on the anonymity provided by the internet. In short, I suspect that the lure of the forbidden is only part of the story.

[Lori]

@Consumer Unit 5012: I admit that I thought the same thing. Who pays for porn on the net?

[Shannon]

As for where hatred of the poor comes from, yeah, fear and racism are definitely major factors. I'd like to suggest another possibility: learning the wrong lesson from empathy. When you see someone suffer, it causes you to suffer; this is an instinctive human response. Maybe some people blame the original sufferer? Like all of us, they don't like the way they feel when encountering someone in pain, but instead of responding by trying to ease the suffering, they blame the sufferer?

That's the kindest explanation for an odd phenomenon I'm experiencing at the moment that this post reminded me of. I'm a social work major taking prerequisite classes at a large junior college in a wealthy part of the state. My experience with social workers is that they tend to be, well, socially liberal. And yet, there is at least one girl in my class this semester who has trotted out both the welfare queen living the high life on the taxpayer's dime and now these same arguments against anyone getting any help from the government in this mortgage crisis. It completely baffles me, and I find myself hoping she never ends up working with truly at-risk people when she gets her degree, because God help them.

I don't actually know what the procedure is for applying for help with this kind of situation, but I also think that proving you can't pay your mortgage and that you deserve the money has to be, like getting any other help with anything else, inherently not good for one's sense of dignity, self-worth and privacy. Which, you know, aren't really helped either by people telling you that you're obviously stupid for not reading fine print and that you don't deserve help because of it.

And no, moving across the country away from one's support system isn't an easy thing to do. I did it as my great act of rebellion against the world when I was in my early twenties, and those three years were among the least pleasant in my life. And I didn't have a family to support, either. Needless to say, I moved back to my hometown, and I don't have any plans to leave anytime soon, unless there are definite benefits that outweigh the costs, like, say, a guaranteed job, which... isn't likely to happen.

[Stellar Jay-eff]

I admit that I thought the same thing. Who pays for porn on the net?

If you like a particular "aspect" of porn, you may pay producers of it -- otherwise, they'll go out of business and you won't be able to find your "aspect".

[Lori]

If you like a particular "aspect" of porn, you may pay producers of it -- otherwise, they'll go out of business and you won't be able to find your "aspect".

True enough.

[cereselle]

Or if you find a particular sub-aspect that you like, and it's only, or most easily, available in pay format, and the rate isn't that expensive. I could see someone paying then.

[mike.timonin]

Who pays for porn on the net?

Some people must, or "they" would stop trying to have people trade money for porn.

As an alternative response, anyone who wants to see more than the first 3 seconds of whatever it is they were watching. Or so I've heard.

[Becky]

@Tonio: When I saw the report about red states & online porn I wondered if they made any attempt to allow for differential access to other sources. I suspect that some of the difference in online consumption has to do with the fact that people in less conservative areas tend to have more choices when it comes to getting their freak on and can therefor spread their dollars more widely. Having lived in both red & blue states I would also say that overall those in conservative areas are far more dependent on the anonymity provided by the internet.

Lori, that's a good point about availability of porn in blue states.

Something that I haven't seen touched on in any of the discussions about the porn report is how having traditional marriage and family values relate to having respect for women. I don't think that porn is automatically demeaning to women, but there does seem to be a correlation between porn consumption and being in favor of strict, traditional gender roles.

[MercuryBlue]

Becky: Define 'porn'. Because most of my experience of porn comes from fandom, in which traditional gender roles are pretty much ignored.

(Granted that's in large part because most of the porn is m/m. But nobody pays much attention to traditional gender roles in m/f either.)

[Tonio]

Having lived in both red & blue states I would also say that overall those in conservative areas are far more dependent on the anonymity provided by the internet.

I don't think that porn is automatically demeaning to women, but there does seem to be a correlation between porn consumption and being in favor of strict, traditional gender roles.

Also, most of the politicians caught in the recent gay sex scandals have been Republican who publicly railed against "the homosexual agenda." The pattern for all three of these seems to be that sex is bad. This would apply to the gender roles because those roles in part repressed female sexuality.

[wintermute]

I don't think that this post give proper recognition of the conservative mindset. No conservative accuses the "undeserving poor" of "living the high life" (as the post sarcastically suggests).

Did you ever hear of the "welfare queen" stereotype? That was a favourite of Reagan's (I understand he self-identified as a conservative), and It's remained popular on the right ever since.

[McJulie]

Just to pile on Jens a bit more: ending half your sentences with exclamation points is not the best way to convince others of your sober intellectual seriousness on the topic.

[Becky]

Becky: Define 'porn'. Because most of my experience of porn comes from fandom, in which traditional gender roles are pretty much ignored.

(Granted that's in large part because most of the porn is m/m. But nobody pays much attention to traditional gender roles in m/f either.)

MercuryBlue, that might take a while! I think the study was focusing on porn that people were paying for, which to me implies very explicit pictures and videos. Most pornographic writing -- whether fandom or not -- is free, I think. And I suspect that fandom porn is kind of an outlier when it comes to theme and content.

(Er. I should say that I have absolutely no experience with paying for porn, and not much experience with porn outside of fandom. So I'm kind of spitting in the wind, here.)

[Marie]

Considering that there's a new mortgage rescue plan every week it seems, I'll admit that I haven't been keeping up to date with the minutiae of each new proposal.

But I do have a quibble with the "all or nothing" stance of both sides.

The alternative to owning a home isn't living in a cardboard box. It's renting. It's what more than 30% of Americans do. I'm not sure why this is a fate so cruel that renters are being asked to subsidize mortgage-holders to prevent them from becoming renters. Many of these debates pit "current" homeowners vs the potential foreclosure victims as a "haves vs have nots", completely ignoring that there's an entire swath of other "have nots".

Secondly, the decline of housing prices isn't necessarily bad. In the bubble areas of the country, we realy, really need housing prices to drop. I live in Los Angeles, and the houses here are completely out of reach for people making even 3x the median salary. Houses in my neighborhood average $900k-$1mil, and no, I don't live in Beverly Hills or Brentwood. If housing prices decline, that means that regular people will be able to afford homes without have to rely on Option ARMs and other exotic mortgages. Which means we won't have to repeat this nightmare in another 10 years.

I guess the base line is: A lot of people didn't buy a house because they couldn't afford it. A lot of people did buy a house, even though they couldn't afford it. Now group A is being asked to save group B.

[Nick Kiddle]

The alternative to owning a home isn't living in a cardboard box. It's renting.

"Living in a cardboard box" is probably hyperbole, but if your living situation collapses and you have to start again as a renter, you could easily end up crashing on your mate's sofa. I'm in social housing myself, so I don't know much about renting except that no-one would rent to me, but I'm guessing rented accommodation would also be affected by the financial crisis? What happens to buy-to-lets when the landlord can't make the mortgage payments?

[pecunium]

Jens: The median home price in Oakland is about 375,000 Which means those houses (even at the inlfated values of the present market) are probably worth a fair bit less than that. None of which adresses how it is the prices in that market manage to be so high, given a median wage of 47,000.

The price has dropped, from it's 2007 peak of about 500,000l; so it's probable the homes there were more overvalued when bought.

But the real question isn't how much the buyers were in over their heads, it's how much the lenders were willing to give to people who had no reasonable chance of getting out from under. The only way that could work would be for them to buy the house, and then sell it before the ballooning rates of the ARM (or the sudden addition of principle) caught them.

Which would mean finding someone willing to pay more than they paid. There was no way that could go on forever. The buyers aren't the people to blame. They aren't in the business of assessing that risk; the bankers are.

As to "affordability" elsewhere... moving costs money. It requires either a job to go to, or the assets to be able to afford time in a new location without work. When the banks are advertsing loans (as I saw them doing in San Luis Obispo, Calif.) with, "no money down, 2 years interest only, how is the family paying 1,500 a month for an apartment supposed to know the 1,750 they are being told is a decent payment is a scam?

Marie: The problem isn't that one is against renting (though home ownership as a means for the working class to accumulate wealth and pass it on to their children is an important sub-text in this, but I digress), it's that the economy was pinned to an ever expanding housing market. If that market goes belly up, then the rest of the economy goes down with it. The last time this pattern (loosening of banking regulations, massive speculation in the belief land was always going to go up, and then a contraction in credit) manifested was in 1870. The depression was worse than the one in the 1930s, and completely changed a lot of the world's power balance. That, more than WW1 is what did in the Austro-HUngarian Empire, and led to the rise of the US as a major player on the world scene (we were playng the part China seems to be playing now; this time around it looks as though we are the Austro-Hungarians).

Nick Kiddle: Bad things happen when the landlord is foreclosed on. More to the point, as houses are taken off the market, there are more people looking for rental units, with a concommitant increase in demand/price, and a further contraction of money in circulation.

[McJulie]

The alternative to owning a home isn't living in a cardboard box. It's renting.

Yes, and as a renter, I would like to avoid a sudden massive influx of potential renters putting upward pressure on my rent.

Social assistance isn't so much about preventing any particular person from losing their house, it's about mellowing out the shocks to the economy and society that happen when everyone loses their houses at the *same time*.

Yeah, it means that people who had more money to start with might get something I didn't get, and I suppose I could start to resent that. But I still think I benefit from the stabilization to the economy overall that comes from keeping people in their houses.

The alternative seems too much like it's heading in the direction of a Detroit-style urban meltdown. Gutted neighborhoods of empty properties, urban blight, crime and violence. I guess I would rather live with my petty resentments than have all my stuff stolen by crack addicts.

Secondly, the decline of housing prices isn't necessarily bad. In the bubble areas of the country, we realy, really need housing prices to drop.

Yes. Absolutely. But I'm not sure it really happens that way in real estate -- demand drops, supply goes up, and prices go down -- that seems like the logical capitalist outcome, right? But, when I look at what *actually happens* in a contracting market, it seems that non-resident owners, like banks and investors, prefer to sit on empty spaces rather than sell them at a loss, or drop the rent to something people can afford to pay, or whatever.

I could be completely wrong about this -- somebody who follows real estate more closely can correct me -- but it seems like real estate prices never actually go down by all that much -- not enough to really match drops in demand. The prices just stop where they are for ten or twenty years until the rest of the economy catches up. And in the meantime a lot of property sits empty.

Anyway, I do think it's important to benefit resident owners and *not* non-resident owners.