Shiller View on the Foreclosures Problem

[limo_888]

Here is the link

[Bugs]

I don’t believe that licensing mortgage brokers nationwide would have had much effect. Mortgage brokers are licensed in California (although their subordinate agents don’t have to be) and yet California is widely regarded as being the hub of the worst loan origination practices in the nation.

The effectiveness of licensing programs is no better or worse than the enforcement of those rules and regulations. Merely instituting education and qualifications requirements and extracting annual licensing fees is a waste of time unless the licensing agency is empowered and enabled to wield the big stick.

Unfortunately, the big stick of effective enforcement programs is very costly, both in terms of effort and time. Because license revocation amounts to depriving the individual of the right to earn a living in that occupation the burden of proof and the due process it takes to pull that trigger are both pretty high.

Moreover, the one thing that the most grievious offenders have in common is their proclivity to use the legal system to their advantage. And there’s enough money involved to make it worth their while to take the risks. They will appeal the administrative revocation of a license in court, where the rules of evidence create a very high burden of proof. A lowly state licensing board can quickly find itself outclassed by expensive lawyers retained by multi-millionaire offenders.

Loan originators themselves are a very transient group, too, moving from one venue to another. It’s a lot of heads moving around, and keeping track of them would be a monumental task. I’m not suggesting that we should just let them slide because it’s hard to regulate them, but I am suggesting that it’s very doubtful our society has the will to pay the costs it will take to do this effectively.

The banks and other direct lenders are already charged under existing laws, rules and regulations with the responsibility of due diligence. The federally regulated banks more so than the mortgage houses like Countrywide or Ameriquest. As far as I can see our failures primarily stem from allowing these lenders to run rampant.

None of the really bad loans would have ever been made had the lenders not encouraged them by devising loan programs and underwriting criteria that literally enabled them.

If the direct lenders had exercised even the most rudimentary levels of due diligence the NINJA loans would have never been made; the overvalued appraisals would have never been accepted; and the crooked loan originators and appraisers would have been barred at the lender level from doing any more damage without having to wait a year for a state licensing board to go through their paces. It takes a lender about 10 minutes to add a name to their “Do Not Accept” lists, and that effectively solves that problem.

Ounce of prevention vs. the pound of cure.

But the lenders didn’t do their job and the feds allowed them to get away with it by turning a blind eye. The feds have a ton of leverage on the regulated institutions and only slightly less leverage on the mortgage houses, but they didn’t use it.

IMO, licensing all mortgage brokers and their subordinate agents is a necessary step, but it’s no panacea. Their misconduct is a symptom with really nasty side effects, but it’s not the underlying cause. It’s the direct lenders who are the real problem.

[Bugs]

I don’t believe that licensing mortgage brokers nationwide would have had much effect. Mortgage brokers are licensed in California (although their subordinate agents don’t have to be) and yet California is widely regarded as being the hub of the worst loan origination practices in the nation.

The effectiveness of licensing programs is no better or worse than the enforcement of those rules and regulations. Merely instituting education and qualifications requirements and extracting annual licensing fees is a waste of time unless the licensing agency is empowered and enabled to wield the big stick.

Unfortunately, the big stick of effective enforcement programs is very costly, both in terms of effort and time. Because license revocation amounts to depriving the individual of the right to earn a living in that occupation the burden of proof and the due process it takes to pull that trigger are both pretty high.

Moreover, the one thing that the most grievious offenders have in common is their proclivity to use the legal system to their advantage. And there’s enough money involved to make it worth their while to take the risks. They will appeal the administrative revocation of a license in court, where the rules of evidence create a very high burden of proof. A lowly state licensing board can quickly find itself outclassed by expensive lawyers retained by multi-millionaire offenders.

Loan originators themselves are a very transient group, too, moving from one venue to another. It’s a lot of heads moving around, and keeping track of them would be a monumental task. I’m not suggesting that we should just let them slide because it’s hard to regulate them, but I am suggesting that it’s very doubtful our society has the will to pay the costs it will take to do this effectively.

The banks and other direct lenders are already charged under existing laws, rules and regulations with the responsibility of due diligence. The federally regulated banks more so than the mortgage houses like Countrywide or Ameriquest. As far as I can see our failures primarily stem from allowing these lenders to run rampant.

None of the really bad loans would have ever been made had the lenders not encouraged them by devising loan programs and underwriting criteria that literally enabled them.

If the direct lenders had exercised even the most rudimentary levels of due diligence the NINJA loans would have never been made; the overvalued appraisals would have never been accepted; and the crooked loan originators and appraisers would have been barred at the lender level from doing any more damage without having to wait a year for a state licensing board to go through their paces. It takes a lender about 10 minutes to add a name to their “Do Not Accept” lists, and that effectively solves that problem.

Ounce of prevention vs. the pound of cure.

But the lenders didn’t do their job and the feds allowed them to get away with it by turning a blind eye. The feds have a ton of leverage on the regulated institutions and only slightly less leverage on the mortgage houses, but they didn’t use it.

IMO, licensing all mortgage brokers and their subordinate agents is a necessary step, but it’s no panacea. Their misconduct is a symptom with really nasty side effects, but it’s not the underlying cause. It’s the direct lenders who are the real problem.

[Bugs]

I don’t believe that licensing mortgage brokers nationwide would have had much effect. Mortgage brokers are licensed in California (although their subordinate agents don’t have to be) and yet California is widely regarded as being the hub of the worst loan origination practices in the nation.

The effectiveness of licensing programs is no better or worse than the enforcement of those rules and regulations. Merely instituting education and qualifications requirements and extracting annual licensing fees is a waste of time unless the licensing agency is empowered and enabled to wield the big stick.

Unfortunately, the big stick of effective enforcement programs is very costly, both in terms of effort and time. Because license revocation amounts to depriving the individual of the right to earn a living in that occupation the burden of proof and the due process it takes to pull that trigger are both pretty high.

Moreover, the one thing that the most grievious offenders have in common is their proclivity to use the legal system to their advantage. And there’s enough money involved to make it worth their while to take the risks. They will appeal the administrative revocation of a license in court, where the rules of evidence create a very high burden of proof. A lowly state licensing board can quickly find itself outclassed by expensive lawyers retained by multi-millionaire offenders.

Loan originators themselves are a very transient group, too, moving from one venue to another. It’s a lot of heads moving around, and keeping track of them would be a monumental task. I’m not suggesting that we should just let them slide because it’s hard to regulate them, but I am suggesting that it’s very doubtful our society has the will to pay the costs it will take to do this effectively.

The banks and other direct lenders are already charged under existing laws, rules and regulations with the responsibility of due diligence. The federally regulated banks more so than the mortgage houses like Countrywide or Ameriquest. As far as I can see our failures primarily stem from allowing these lenders to run rampant.

None of the really bad loans would have ever been made had the lenders not encouraged them by devising loan programs and underwriting criteria that literally enabled them.

If the direct lenders had exercised even the most rudimentary levels of due diligence the NINJA loans would have never been made; the overvalued appraisals would have never been accepted; and the crooked loan originators and appraisers would have been barred at the lender level from doing any more damage without having to wait a year for a state licensing board to go through their paces. It takes a lender about 10 minutes to add a name to their “Do Not Accept” lists, and that effectively solves that problem.

Ounce of prevention vs. the pound of cure.

But the lenders didn’t do their job and the feds allowed them to get away with it by turning a blind eye. The feds have a ton of leverage on the regulated institutions and only slightly less leverage on the mortgage houses, but they didn’t use it.

IMO, licensing all mortgage brokers and their subordinate agents is a necessary step, but it’s no panacea. Their misconduct is a symptom with really nasty side effects, but it’s not the underlying cause. It’s the direct lenders who are the real problem.

[Bugs]

I don’t believe that licensing mortgage brokers nationwide would have had much effect. Mortgage brokers are licensed in California (although their subordinate agents don’t have to be) and yet California is widely regarded as being the hub of the worst loan origination practices in the nation.

The effectiveness of licensing programs is no better or worse than the enforcement of those rules and regulations. Merely instituting education and qualifications requirements and extracting annual licensing fees is a waste of time unless the licensing agency is empowered and enabled to wield the big stick.

Unfortunately, the big stick of effective enforcement programs is very costly, both in terms of effort and time. Because license revocation amounts to depriving the individual of the right to earn a living in that occupation the burden of proof and the due process it takes to pull that trigger are both pretty high.

Moreover, the one thing that the most grievious offenders have in common is their proclivity to use the legal system to their advantage. And there’s enough money involved to make it worth their while to take the risks. They will appeal the administrative revocation of a license in court, where the rules of evidence create a very high burden of proof. A lowly state licensing board can quickly find itself outclassed by expensive lawyers retained by multi-millionaire offenders.

Loan originators themselves are a very transient group, too, moving from one venue to another. It’s a lot of heads moving around, and keeping track of them would be a monumental task. I’m not suggesting that we should just let them slide because it’s hard to regulate them, but I am suggesting that it’s very doubtful our society has the will to pay the costs it will take to do this effectively.

The banks and other direct lenders are already charged under existing laws, rules and regulations with the responsibility of due diligence. The federally regulated banks more so than the mortgage houses like Countrywide or Ameriquest. As far as I can see our failures primarily stem from allowing these lenders to run rampant.

None of the really bad loans would have ever been made had the lenders not encouraged them by devising loan programs and underwriting criteria that literally enabled them.

If the direct lenders had exercised even the most rudimentary levels of due diligence the NINJA loans would have never been made; the overvalued appraisals would have never been accepted; and the crooked loan originators and appraisers would have been barred at the lender level from doing any more damage without having to wait a year for a state licensing board to go through their paces. It takes a lender about 10 minutes to add a name to their “Do Not Accept” lists, and that effectively solves that problem.

Ounce of prevention vs. the pound of cure.

But the lenders didn’t do their job and the feds allowed them to get away with it by turning a blind eye. The feds have a ton of leverage on the regulated institutions and only slightly less leverage on the mortgage houses, but they didn’t use it.

IMO, licensing all mortgage brokers and their subordinate agents is a necessary step, but it’s no panacea. Their misconduct is a symptom with really nasty side effects, but it’s not the underlying cause. It’s the direct lenders who are the real problem.

[Bugs]

I don’t believe that licensing mortgage brokers nationwide would have had much effect. Mortgage brokers are licensed in California (although their subordinate agents don’t have to be) and yet California is widely regarded as being the hub of the worst loan origination practices in the nation.

The effectiveness of licensing programs is no better or worse than the enforcement of those rules and regulations. Merely instituting education and qualifications requirements and extracting annual licensing fees is a waste of time unless the licensing agency is empowered and enabled to wield the big stick.

Unfortunately, the big stick of effective enforcement programs is very costly, both in terms of effort and time. Because license revocation amounts to depriving the individual of the right to earn a living in that occupation the burden of proof and the due process it takes to pull that trigger are both pretty high.

Moreover, the one thing that the most grievious offenders have in common is their proclivity to use the legal system to their advantage. And there’s enough money involved to make it worth their while to take the risks. They will appeal the administrative revocation of a license in court, where the rules of evidence create a very high burden of proof. A lowly state licensing board can quickly find itself outclassed by expensive lawyers retained by multi-millionaire offenders.

Loan originators themselves are a very transient group, too, moving from one venue to another. It’s a lot of heads moving around, and keeping track of them would be a monumental task. I’m not suggesting that we should just let them slide because it’s hard to regulate them, but I am suggesting that it’s very doubtful our society has the will to pay the costs it will take to do this effectively.

The banks and other direct lenders are already charged under existing laws, rules and regulations with the responsibility of due diligence. The federally regulated banks more so than the mortgage houses like Countrywide or Ameriquest. As far as I can see our failures primarily stem from allowing these lenders to run rampant.

None of the really bad loans would have ever been made had the lenders not encouraged them by devising loan programs and underwriting criteria that literally enabled them.

If the direct lenders had exercised even the most rudimentary levels of due diligence the NINJA loans would have never been made; the overvalued appraisals would have never been accepted; and the crooked loan originators and appraisers would have been barred at the lender level from doing any more damage without having to wait a year for a state licensing board to go through their paces. It takes a lender about 10 minutes to add a name to their “Do Not Accept” lists, and that effectively solves that problem.

Ounce of prevention vs. the pound of cure.

But the lenders didn’t do their job and the feds allowed them to get away with it by turning a blind eye. The feds have a ton of leverage on the regulated institutions and only slightly less leverage on the mortgage houses, but they didn’t use it.

IMO, licensing all mortgage brokers and their subordinate agents is a necessary step, but it’s no panacea. Their misconduct is a symptom with really nasty side effects, but it’s not the underlying cause. It’s the direct lenders who are the real problem.

[NotCranky]

“Because homeowners facing foreclosure must bear the brunt of the pain, they naturally feel indignation when all of these other parties continue to lead comfortable, even affluent lives. Trying to enforce mortgage contracts may thus have a perverse effect: instead of teaching homeowners that they should respect the contracts they sign, it may incline them to take a cynical view of the whole mess.

But instead of having sympathy for these homeowners, many people blame them for their predicaments. That isn’t surprising. It’s an example of a general tendency that was documented by social psychologists decades ago.

In his 1980 book, “The Belief in a Just World: A Fundamental Delusion,” Melvin Lerner, a social psychologist, argued that people want to believe in the inherent justice of the economic system in which they live, and want to believe that people who appear to be suffering are in fact responsible for their own situations. He provided empirical evidence, derived from experiments, that after an initial pang of sympathy, people tend to develop negative views toward others who are suffering. That negative tendency seems to be at work today.

Second, it is important to consider the psychological trauma of foreclosure. No one is likely to starve or sleep on the streets as an immediate result of a foreclosure, and the authorities no longer dump a family’s furniture on the sidewalk when it happens. Nonetheless, there is deep trauma.

Home ownership is fundamental part of a sense of belonging to a country. The psychologist William James wrote in 1890 that “a man’s Self is the sum total of all that he CAN call his, not only his body and his psychic powers, but his clothes and his house, his wife and children, his ancestors and friends, his reputation and works, his lands and horses, and yacht and bank account.”

Homeownership is thus an extension of self; if one owns a part of a country, one tends to feel at one with that country. Policy makers around the world have long known that, and hence have supported the growth of home ownership.

MAYBE that’s why President Bush’s “Ownership Society” theme had such resonance in his 2004 re-election campaign. People instinctively understand that home ownership conveys good feelings about belonging in our society, and that such feelings matter enormously, not only to our economic success but also to the pleasure we can take in it.

But we are now seeing the president’s Ownership Society plan operate in reverse. Already, the home ownership rate has fallen — from 69.1 percent in the first quarter of 2005 to 67.8 percent in the first quarter of 2008. That’s almost back to the 67.5 percent level where it stood when Mr. Bush took office in 2001. And it is likely to fall further.

The pain of this reverse movement could leave a psychological scar that will be with all of us for the rest of our lives.

Robert J. Shiller is professor of economics and finance at Yale and chief economist of MacroMarkets LLC.”

I can’t believe Mr. Shiller is speaking this psychobabble like it is pertinent fact. The statement about the foreclosed upon becoming cynical is amazing. People of all housing situations are pretty cynical about the bubble mechanics of the last several years and the results of same. Did he address the cynicism and moral hazard bailouts cause? Work and sacrifice are not related to having things that you want or a just society but that should not make you cynical?

A person sense of self worth comes from owning a yacht? I can’t even spell it and I know it wouldn’t do anything for any deep sense of self worth. So many arrogant useless bastards own yachts. You would think all that self worth would make them be better people? I guess we better throw in a nice luxury liner with principle reduction and interest rates that half the population can’t get because they didn’t fall for the American dream and instead just shuffled along with a poor self image for a decade.

I don’t even want a goddamn Yacht. Can I have more stimulus instead?My self worth needs it.

Rant off!

[NotCranky]

“Because homeowners facing foreclosure must bear the brunt of the pain, they naturally feel indignation when all of these other parties continue to lead comfortable, even affluent lives. Trying to enforce mortgage contracts may thus have a perverse effect: instead of teaching homeowners that they should respect the contracts they sign, it may incline them to take a cynical view of the whole mess.

But instead of having sympathy for these homeowners, many people blame them for their predicaments. That isn’t surprising. It’s an example of a general tendency that was documented by social psychologists decades ago.

In his 1980 book, “The Belief in a Just World: A Fundamental Delusion,” Melvin Lerner, a social psychologist, argued that people want to believe in the inherent justice of the economic system in which they live, and want to believe that people who appear to be suffering are in fact responsible for their own situations. He provided empirical evidence, derived from experiments, that after an initial pang of sympathy, people tend to develop negative views toward others who are suffering. That negative tendency seems to be at work today.

Second, it is important to consider the psychological trauma of foreclosure. No one is likely to starve or sleep on the streets as an immediate result of a foreclosure, and the authorities no longer dump a family’s furniture on the sidewalk when it happens. Nonetheless, there is deep trauma.

Home ownership is fundamental part of a sense of belonging to a country. The psychologist William James wrote in 1890 that “a man’s Self is the sum total of all that he CAN call his, not only his body and his psychic powers, but his clothes and his house, his wife and children, his ancestors and friends, his reputation and works, his lands and horses, and yacht and bank account.”

Homeownership is thus an extension of self; if one owns a part of a country, one tends to feel at one with that country. Policy makers around the world have long known that, and hence have supported the growth of home ownership.

MAYBE that’s why President Bush’s “Ownership Society” theme had such resonance in his 2004 re-election campaign. People instinctively understand that home ownership conveys good feelings about belonging in our society, and that such feelings matter enormously, not only to our economic success but also to the pleasure we can take in it.

But we are now seeing the president’s Ownership Society plan operate in reverse. Already, the home ownership rate has fallen — from 69.1 percent in the first quarter of 2005 to 67.8 percent in the first quarter of 2008. That’s almost back to the 67.5 percent level where it stood when Mr. Bush took office in 2001. And it is likely to fall further.

The pain of this reverse movement could leave a psychological scar that will be with all of us for the rest of our lives.

Robert J. Shiller is professor of economics and finance at Yale and chief economist of MacroMarkets LLC.”

I can’t believe Mr. Shiller is speaking this psychobabble like it is pertinent fact. The statement about the foreclosed upon becoming cynical is amazing. People of all housing situations are pretty cynical about the bubble mechanics of the last several years and the results of same. Did he address the cynicism and moral hazard bailouts cause? Work and sacrifice are not related to having things that you want or a just society but that should not make you cynical?

A person sense of self worth comes from owning a yacht? I can’t even spell it and I know it wouldn’t do anything for any deep sense of self worth. So many arrogant useless bastards own yachts. You would think all that self worth would make them be better people? I guess we better throw in a nice luxury liner with principle reduction and interest rates that half the population can’t get because they didn’t fall for the American dream and instead just shuffled along with a poor self image for a decade.

I don’t even want a goddamn Yacht. Can I have more stimulus instead?My self worth needs it.

Rant off!

[NotCranky]

“Because homeowners facing foreclosure must bear the brunt of the pain, they naturally feel indignation when all of these other parties continue to lead comfortable, even affluent lives. Trying to enforce mortgage contracts may thus have a perverse effect: instead of teaching homeowners that they should respect the contracts they sign, it may incline them to take a cynical view of the whole mess.

But instead of having sympathy for these homeowners, many people blame them for their predicaments. That isn’t surprising. It’s an example of a general tendency that was documented by social psychologists decades ago.

In his 1980 book, “The Belief in a Just World: A Fundamental Delusion,” Melvin Lerner, a social psychologist, argued that people want to believe in the inherent justice of the economic system in which they live, and want to believe that people who appear to be suffering are in fact responsible for their own situations. He provided empirical evidence, derived from experiments, that after an initial pang of sympathy, people tend to develop negative views toward others who are suffering. That negative tendency seems to be at work today.

Second, it is important to consider the psychological trauma of foreclosure. No one is likely to starve or sleep on the streets as an immediate result of a foreclosure, and the authorities no longer dump a family’s furniture on the sidewalk when it happens. Nonetheless, there is deep trauma.

Home ownership is fundamental part of a sense of belonging to a country. The psychologist William James wrote in 1890 that “a man’s Self is the sum total of all that he CAN call his, not only his body and his psychic powers, but his clothes and his house, his wife and children, his ancestors and friends, his reputation and works, his lands and horses, and yacht and bank account.”

Homeownership is thus an extension of self; if one owns a part of a country, one tends to feel at one with that country. Policy makers around the world have long known that, and hence have supported the growth of home ownership.

MAYBE that’s why President Bush’s “Ownership Society” theme had such resonance in his 2004 re-election campaign. People instinctively understand that home ownership conveys good feelings about belonging in our society, and that such feelings matter enormously, not only to our economic success but also to the pleasure we can take in it.

But we are now seeing the president’s Ownership Society plan operate in reverse. Already, the home ownership rate has fallen — from 69.1 percent in the first quarter of 2005 to 67.8 percent in the first quarter of 2008. That’s almost back to the 67.5 percent level where it stood when Mr. Bush took office in 2001. And it is likely to fall further.

The pain of this reverse movement could leave a psychological scar that will be with all of us for the rest of our lives.

Robert J. Shiller is professor of economics and finance at Yale and chief economist of MacroMarkets LLC.”

I can’t believe Mr. Shiller is speaking this psychobabble like it is pertinent fact. The statement about the foreclosed upon becoming cynical is amazing. People of all housing situations are pretty cynical about the bubble mechanics of the last several years and the results of same. Did he address the cynicism and moral hazard bailouts cause? Work and sacrifice are not related to having things that you want or a just society but that should not make you cynical?

A person sense of self worth comes from owning a yacht? I can’t even spell it and I know it wouldn’t do anything for any deep sense of self worth. So many arrogant useless bastards own yachts. You would think all that self worth would make them be better people? I guess we better throw in a nice luxury liner with principle reduction and interest rates that half the population can’t get because they didn’t fall for the American dream and instead just shuffled along with a poor self image for a decade.

I don’t even want a goddamn Yacht. Can I have more stimulus instead?My self worth needs it.

Rant off!

[NotCranky]

“Because homeowners facing foreclosure must bear the brunt of the pain, they naturally feel indignation when all of these other parties continue to lead comfortable, even affluent lives. Trying to enforce mortgage contracts may thus have a perverse effect: instead of teaching homeowners that they should respect the contracts they sign, it may incline them to take a cynical view of the whole mess.

But instead of having sympathy for these homeowners, many people blame them for their predicaments. That isn’t surprising. It’s an example of a general tendency that was documented by social psychologists decades ago.

In his 1980 book, “The Belief in a Just World: A Fundamental Delusion,” Melvin Lerner, a social psychologist, argued that people want to believe in the inherent justice of the economic system in which they live, and want to believe that people who appear to be suffering are in fact responsible for their own situations. He provided empirical evidence, derived from experiments, that after an initial pang of sympathy, people tend to develop negative views toward others who are suffering. That negative tendency seems to be at work today.

Second, it is important to consider the psychological trauma of foreclosure. No one is likely to starve or sleep on the streets as an immediate result of a foreclosure, and the authorities no longer dump a family’s furniture on the sidewalk when it happens. Nonetheless, there is deep trauma.

Home ownership is fundamental part of a sense of belonging to a country. The psychologist William James wrote in 1890 that “a man’s Self is the sum total of all that he CAN call his, not only his body and his psychic powers, but his clothes and his house, his wife and children, his ancestors and friends, his reputation and works, his lands and horses, and yacht and bank account.”

Homeownership is thus an extension of self; if one owns a part of a country, one tends to feel at one with that country. Policy makers around the world have long known that, and hence have supported the growth of home ownership.

MAYBE that’s why President Bush’s “Ownership Society” theme had such resonance in his 2004 re-election campaign. People instinctively understand that home ownership conveys good feelings about belonging in our society, and that such feelings matter enormously, not only to our economic success but also to the pleasure we can take in it.

But we are now seeing the president’s Ownership Society plan operate in reverse. Already, the home ownership rate has fallen — from 69.1 percent in the first quarter of 2005 to 67.8 percent in the first quarter of 2008. That’s almost back to the 67.5 percent level where it stood when Mr. Bush took office in 2001. And it is likely to fall further.

The pain of this reverse movement could leave a psychological scar that will be with all of us for the rest of our lives.

Robert J. Shiller is professor of economics and finance at Yale and chief economist of MacroMarkets LLC.”

I can’t believe Mr. Shiller is speaking this psychobabble like it is pertinent fact. The statement about the foreclosed upon becoming cynical is amazing. People of all housing situations are pretty cynical about the bubble mechanics of the last several years and the results of same. Did he address the cynicism and moral hazard bailouts cause? Work and sacrifice are not related to having things that you want or a just society but that should not make you cynical?

A person sense of self worth comes from owning a yacht? I can’t even spell it and I know it wouldn’t do anything for any deep sense of self worth. So many arrogant useless bastards own yachts. You would think all that self worth would make them be better people? I guess we better throw in a nice luxury liner with principle reduction and interest rates that half the population can’t get because they didn’t fall for the American dream and instead just shuffled along with a poor self image for a decade.

I don’t even want a goddamn Yacht. Can I have more stimulus instead?My self worth needs it.

Rant off!

[NotCranky]

“Because homeowners facing foreclosure must bear the brunt of the pain, they naturally feel indignation when all of these other parties continue to lead comfortable, even affluent lives. Trying to enforce mortgage contracts may thus have a perverse effect: instead of teaching homeowners that they should respect the contracts they sign, it may incline them to take a cynical view of the whole mess.

But instead of having sympathy for these homeowners, many people blame them for their predicaments. That isn’t surprising. It’s an example of a general tendency that was documented by social psychologists decades ago.

In his 1980 book, “The Belief in a Just World: A Fundamental Delusion,” Melvin Lerner, a social psychologist, argued that people want to believe in the inherent justice of the economic system in which they live, and want to believe that people who appear to be suffering are in fact responsible for their own situations. He provided empirical evidence, derived from experiments, that after an initial pang of sympathy, people tend to develop negative views toward others who are suffering. That negative tendency seems to be at work today.

Second, it is important to consider the psychological trauma of foreclosure. No one is likely to starve or sleep on the streets as an immediate result of a foreclosure, and the authorities no longer dump a family’s furniture on the sidewalk when it happens. Nonetheless, there is deep trauma.

Home ownership is fundamental part of a sense of belonging to a country. The psychologist William James wrote in 1890 that “a man’s Self is the sum total of all that he CAN call his, not only his body and his psychic powers, but his clothes and his house, his wife and children, his ancestors and friends, his reputation and works, his lands and horses, and yacht and bank account.”

Homeownership is thus an extension of self; if one owns a part of a country, one tends to feel at one with that country. Policy makers around the world have long known that, and hence have supported the growth of home ownership.

MAYBE that’s why President Bush’s “Ownership Society” theme had such resonance in his 2004 re-election campaign. People instinctively understand that home ownership conveys good feelings about belonging in our society, and that such feelings matter enormously, not only to our economic success but also to the pleasure we can take in it.

But we are now seeing the president’s Ownership Society plan operate in reverse. Already, the home ownership rate has fallen — from 69.1 percent in the first quarter of 2005 to 67.8 percent in the first quarter of 2008. That’s almost back to the 67.5 percent level where it stood when Mr. Bush took office in 2001. And it is likely to fall further.

The pain of this reverse movement could leave a psychological scar that will be with all of us for the rest of our lives.

Robert J. Shiller is professor of economics and finance at Yale and chief economist of MacroMarkets LLC.”

I can’t believe Mr. Shiller is speaking this psychobabble like it is pertinent fact. The statement about the foreclosed upon becoming cynical is amazing. People of all housing situations are pretty cynical about the bubble mechanics of the last several years and the results of same. Did he address the cynicism and moral hazard bailouts cause? Work and sacrifice are not related to having things that you want or a just society but that should not make you cynical?

A person sense of self worth comes from owning a yacht? I can’t even spell it and I know it wouldn’t do anything for any deep sense of self worth. So many arrogant useless bastards own yachts. You would think all that self worth would make them be better people? I guess we better throw in a nice luxury liner with principle reduction and interest rates that half the population can’t get because they didn’t fall for the American dream and instead just shuffled along with a poor self image for a decade.

I don’t even want a goddamn Yacht. Can I have more stimulus instead?My self worth needs it.

Rant off!

[BuyerWillEPB]

“The Scars of Losing a Home.”
————————————————

How about the “Scars of Being Priced Out Forever?” What about the psychological damage done to the next generation who now has no chance of buying a home because of the Housing Bubble?

What about the young people who now have to move across the country (or out of the country) to find affordable housing because the whole system, public and private, needs to keep fraudulently inflated prices high in order to keep our Ponzi economy running?

Mr. Shiller says, “The pain of this reverse movement could leave a psychological scar that will be with all of us for the rest of our lives.”

My response is, the pain of this reverse movement NEEDS to leave a psychological scar with you for the rest of your lives, because YOU CAUSED this whole mess. What you are proposing in all these “homewoner” bailouts, in typical Baby Boomer fashion, is to let yourselves have all the gain and make the next generations pay for it, again.

[BuyerWillEPB]

“The Scars of Losing a Home.”
————————————————

How about the “Scars of Being Priced Out Forever?” What about the psychological damage done to the next generation who now has no chance of buying a home because of the Housing Bubble?

What about the young people who now have to move across the country (or out of the country) to find affordable housing because the whole system, public and private, needs to keep fraudulently inflated prices high in order to keep our Ponzi economy running?

Mr. Shiller says, “The pain of this reverse movement could leave a psychological scar that will be with all of us for the rest of our lives.”

My response is, the pain of this reverse movement NEEDS to leave a psychological scar with you for the rest of your lives, because YOU CAUSED this whole mess. What you are proposing in all these “homewoner” bailouts, in typical Baby Boomer fashion, is to let yourselves have all the gain and make the next generations pay for it, again.

[BuyerWillEPB]

“The Scars of Losing a Home.”
————————————————

How about the “Scars of Being Priced Out Forever?” What about the psychological damage done to the next generation who now has no chance of buying a home because of the Housing Bubble?

What about the young people who now have to move across the country (or out of the country) to find affordable housing because the whole system, public and private, needs to keep fraudulently inflated prices high in order to keep our Ponzi economy running?

Mr. Shiller says, “The pain of this reverse movement could leave a psychological scar that will be with all of us for the rest of our lives.”

My response is, the pain of this reverse movement NEEDS to leave a psychological scar with you for the rest of your lives, because YOU CAUSED this whole mess. What you are proposing in all these “homewoner” bailouts, in typical Baby Boomer fashion, is to let yourselves have all the gain and make the next generations pay for it, again.

[BuyerWillEPB]

“The Scars of Losing a Home.”
————————————————

How about the “Scars of Being Priced Out Forever?” What about the psychological damage done to the next generation who now has no chance of buying a home because of the Housing Bubble?

What about the young people who now have to move across the country (or out of the country) to find affordable housing because the whole system, public and private, needs to keep fraudulently inflated prices high in order to keep our Ponzi economy running?

Mr. Shiller says, “The pain of this reverse movement could leave a psychological scar that will be with all of us for the rest of our lives.”

My response is, the pain of this reverse movement NEEDS to leave a psychological scar with you for the rest of your lives, because YOU CAUSED this whole mess. What you are proposing in all these “homewoner” bailouts, in typical Baby Boomer fashion, is to let yourselves have all the gain and make the next generations pay for it, again.

[Author]

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