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October 26, 2011

Oakland
Posted by Patrick at 11:27 AM * 268 comments

As you may or may not be aware, at 4 AM yesterday morning, local time, several hundred police officers from the Oakland, California police department and a large number of police from surrounding jurisdictions turned up at the Occupy site in downtown Oakland and proceeded to deploy massive force, destroying the camp and arresting over half of its inhabitants. This was accomplished with rubber bullets, flash grenades, tear gas, and overwhelming numerical superiority.

From the San Jose Mercury-News: “A spokeswoman for the mayor, Karen Boyd, said Friday that the protesters had shown themselves incapable of self-governance. ‘As a collective, they cannot maintain the plaza in a safe condition,’ she said.” One presumes the municipal government of Oakland knows a lot about being unable to maintain public space in a safe condition, having notably failed to do so itself for many decades now. Indeed, such failure is endemic among exactly the institutions and classes that the Occupiers are criticizing: failure to safeguard the environment, to resist being bought by the super-rich, to provide employment for those willing to work, to even muster a whisper of response to the growing danger that sometime in the next several decades we’re all going to be boiled alive. The entire story of our modern elites is a story of such failures.

In the wake of yesterday morning’s eviction, there have been further protests, and at this point it appears that the city government and police department of Oakland are in a series of continuing pitched battles with their citizens. This will of course end well, with the protestors cured of their unfortunate cynicism about the police and convinced that the authorities are interested only in improving public health. A a new day of trust and understanding will dawn between the governors and the governed. Because that’s always how this stuff works out.

Comments on Oakland:
#2 ::: liveparadox ::: (view all by) ::: October 26, 2011, 12:43 PM:

The police attacks on the Occupy Oakland camps break my heart. Although I should know better than to expect anything else out of the OPD, I am deeply ashamed that this is happening in one of the cities I call home. My fiancé lives within easy walking distance from downtown Oakland, I'm headed there next week, and it all makes me sick to my stomach.

#3 ::: fidelio ::: (view all by) ::: October 26, 2011, 12:45 PM:

The final picture, with associated comments, in this post by the one and only TBogg is not all that far off here, I fear.

#4 ::: MichaelC ::: (view all by) ::: October 26, 2011, 01:31 PM:

There goes Oakland's reputation as a tourist destination. Wait, what?

#5 ::: Larry Brennan ::: (view all by) ::: October 26, 2011, 01:31 PM:

Just another example of the militarization of the police, and their increasing view of the public as the enemy. Here's a news item about a recent rant by a Seattle PO in the police union's paper. Note that the union paper itself has pulled the article because of the firestorm it caused.

#6 ::: Larry Brennan ::: (view all by) ::: October 26, 2011, 01:35 PM:

Sorry - linked the wrong article. This one's better.

#7 ::: Xopher HalfTongue ::: (view all by) ::: October 26, 2011, 02:03 PM:

Let me see, is this the same police force that shot that guy in cold blood on BART last year (or whenever that was)? Where the excuse was that he meant to grab his taser (as if it would have been OK to tase someone already subdued and lying on the ground)?

It certainly wouldn't be surprising if the population of Oakland regards THEM as an occupying enemy army.

#8 ::: Lizzie ::: (view all by) ::: October 26, 2011, 02:11 PM:

This is not the same police force who shot Oscar Grant in the gun/taser mix up thing while he was subdued on the ground. That was a BART police officer.

#9 ::: Xopher HalfTongue ::: (view all by) ::: October 26, 2011, 02:15 PM:

Ah, thanks, Lizzie. I guess the BART police are distinct from the SF and Oakland police, just as the Port Authority police are from the NYC police. Mea culpa, and thanks for the correction.

So it's just the comments of that one cop and the behavior at the Occupy demonstration that makes them seem like an army of hostile conquerors.

#10 ::: D. Potter ::: (view all by) ::: October 26, 2011, 02:22 PM:

Monday, when I went downtown, the camp looked peaceful.

Early yesterday morning (like 5 am) there was a helicopter hovering over my neighborhood, which is usually a sign that there's been an ugly accident on the nearby highway. The morning radio newscast, however, dispelled that hypothesis and noted that people had vowed to move the base of operation to the main public library.

On the way from San Francisco, there were curious announcements of bus detours, including one hilariously ill-advised one involving articulated buses and a short 1.5 lane street. There were, when I arrived home, 3 copters hovering over the are, with 2 more buzzing around to the south.

We have intermittent helicopters this morning. (Yes, sunny with intermittent helicopters and chance of contrails, that's the weather report.) And the agents provocateurs have been busy.

Local report from yesterday (promised update has not happened yet).

#11 ::: Lizzy L ::: (view all by) ::: October 26, 2011, 02:36 PM:

Stupid, stupid, stupid, stupid, stupid. Aargh.

#12 ::: Xopher HalfTongue ::: (view all by) ::: October 26, 2011, 02:36 PM:

Here's an update on the TBI suffered by an Iraq vet at the hands of the Oakland Police.

#13 ::: Melissa Singer ::: (view all by) ::: October 26, 2011, 02:49 PM:

In Atlanta, 50+ people were arrested, without violence, when Occupy protesters were cleared from the park they had been living in. Most have been released on $100 signature bonds.

The Mayor of Atlanta said, in an interview about why he decided to order the park cleared (after going back and forth on the issue several times in recent days): "I made the decision that this protest was not being conducted in a manner that was consistent with the history of Atlanta's protests. Candidly, these individuals were moving toward a more significant event to attract more and more attention."

Um, well, yes, that _is_ the point--to attract more attention.

It sounds to me like he threw them out of the park for "not doing it right."

(the quote is from the NYTimes website.)

#14 ::: Constance ::: (view all by) ::: October 26, 2011, 02:50 PM:

zungzungu's blog is one of the best sources for what is going on in Oakland -- which is awful, as living in a police state is pretty much awful pretty much of the time ....

Question -- why does anyone any longer think NPR is a useful source to learning about events like this one?

Love, C.

#15 ::: Tom Whitmore ::: (view all by) ::: October 26, 2011, 03:43 PM:

"Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the government for a redress of grievances."

Oh wait. That doesn't say the states can't individually make laws to abridge the rights of people peaceably to assemble, so what's happening in Oakland is totally okay, right?

#16 ::: Julie L. ::: (view all by) ::: October 26, 2011, 04:02 PM:

The SF local affiliate, KQED, had a call-in radio hour this morning about the Oakland events; mp3 audio here.

#17 ::: Tom ::: (view all by) ::: October 26, 2011, 05:06 PM:

Re BART police vs. OPD - according to KPFA (local radio station), the assault on the camp was a coordinated action involving no fewer than seventeen different police forces (Oakland, Berkeley, UC Berkeley, Emeryville, etc.). If this is true it seems likely that BART police was one of them.

#18 ::: Charlie Dodgson ::: (view all by) ::: October 26, 2011, 05:15 PM:

Tom@15:

From the 14th amendment, "No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws."

#19 ::: Dave Bell ::: (view all by) ::: October 26, 2011, 05:29 PM:

The only people who consistently benefit from invoking the US Constitution seem to be the lawyers.

#20 ::: Paul Duncanson ::: (view all by) ::: October 26, 2011, 06:17 PM:

Melbourne has had its day of violence with many protesters arrested while slamming their faces against the fists of innocent police officers. The reason for the use of force was expertly explained by our mayor. He said it was time to give the City Square back to the people of Melbourne. To this end he ordered the erection of a large fence around the space, with police and other security personnel posted to make sure we didn't miss the irony.

#21 ::: The Raven ::: (view all by) ::: October 26, 2011, 06:21 PM:

The Guardian reports that an Iraqi war veteran who was hit with a police weapon at Occupy Oakland is now in critical condition at Highland Hospital.

#22 ::: j h woodyatt ::: (view all by) ::: October 26, 2011, 08:23 PM:

Charlie @18, I've heard it quite seriously explained to me that the 14th Amendment shouldn't count because it was supposedly "signed under duress" or something like that. Yes, I know that doesn't make any goddamn sense.

#23 ::: Constance ::: (view all by) ::: October 26, 2011, 10:23 PM:

The Zucotti Park Occupy Wall Streeters are currently marching along all the streets of where we live in solidarity protest with Oakland.

The helicopters are swarming like wasps, and have been for what feels like hours.

You can keep up with the events on the livestream feed here.

Love, C.

#24 ::: P J Evans ::: (view all by) ::: October 26, 2011, 10:44 PM:

10
The report I saw last evening was that the police moved in at a quarter to five in the morning, and destroyed the tents of the OWS people as well as the rest of it.
The police claimed yesterday that frying pans were thrown at them. If that's true (I don't know), it was probably when they showed up with bullhorns. (It does make me wonder if any of the police have ever tried to throw one.)

#25 ::: Patrick Nielsen Hayden ::: (view all by) ::: October 26, 2011, 10:44 PM:

We've been down to Occupy Wall Street a couple of times now -- once after marching in the October 5 demo (the one all the unions turned out for), and a couple of weeks later to donate a few books to their library. (Little Brother, For the Win, and Ken MacLeod's Fall Revolution books.) Our general impression was very positive. Not only does it seem like a lot is going on, one gets the impression that more is going on than immediately meets the eye.

#26 ::: cofax ::: (view all by) ::: October 26, 2011, 10:49 PM:

Oakland's history of the last few years is likely to be taken as justification by the authorities for the gross over-reaction to the protests. Oakland tends to riot, and not just over things like the Oscar Grant shooting, but also over things like losing the Superbowl. It's an area with a history of civil disobedience that isn't always civil.

That said, the police did totally over-react. I work right in downtown and there was no evidence that I ever saw of any particular problems at the plaza. And even if there were, it would have been much easier (and politically savvier) to station some cops to do some community policing within the camp, rather than evict them--because anyone who knows the activist community around here knows they weren't going to just fold up their signs and go home.

Instead of playing it cool and defusing the situation, OPD and the other police forces apparently intentionally amped it up, arriving in force, fencing off much of downtown (and incidentally making it difficult for a lot of office workers to get home), and forcing a confrontation that, in the end, was unnecessary.

It was a show of force, and an act of boneheaded stupidity by a mayor who should have known better. Hell, within the last few years, Jean Quan was herself on the streets with the protestors, putting herself between the cops and the activists. Why she thought this was a good idea is beyond me.

I'm sorely disappointed, and disgusted, and just sad.

#27 ::: Bruce Cohen (Speaker to Managers) ::: (view all by) ::: October 27, 2011, 12:43 AM:

Via email from Moveon.org:

Last night, Scott Olsen, a Marine who served two tours in Iraq, was struck in the head by a "nonlethal" projectile fired by the Oakland police. The round fractured his skull, leaving him in critical condition.

Olsen had joined with other members of Occupy Oakland to peacefully protest the group's eviction that morning. When a group gathered to help Olsen after he was hit, a police officer threw a flash bang grenade into the group from a few feet away.
Deeply disturbing video of the incident was captured by a local news crew ...
#28 ::: Nicole Fitzhugh ::: (view all by) ::: October 27, 2011, 01:11 AM:

Has anyone been able to confirm or deny reports that violence was committed by OWS/Oakland protesters on each other, and that medical responders were not permitted into Ogawa Plaza to treat them? That was the justification I heard.

#29 ::: Avram ::: (view all by) ::: October 27, 2011, 01:35 AM:

Nicole Fitzhugh @28, from what source did you hear this justification? Were there any specifics? If this was a news story, did the story cite named sources? Mention specific times and places?

I'm asking because, well, remember the gangland-style execution of Jean Charles de Menezes by London police on the Underground six years ago? Remember how, immediately after the killing, various exculpatory rumors circulated, claiming that de Menezes had jumped the turnstiles, and that he'd been wearing an unseasonably heavy jacket? And remember how those exculpatory rumors turned out, upon closer examination, to have been bullshit?

Well, in the immediate aftermath of any sort of aggressive police action, when I hear vague rumors that seem to make the action seem more reasonable, that's what I think of.

#30 ::: Linkmeister ::: (view all by) ::: October 27, 2011, 03:07 AM:

Hunter at Kos:

"The Occupy Wall Street movement apparently has inadvertently (or, at this point, intentionally?) managed to stumble upon the one thing that is absolutely most intolerable to local government officials throughout the nation: protest all you want, but for the love of God don't camp. Who knew? For decades protesters have been holding up signs, marching down streets, singing songs, making giant puppets or what-have-you, but they never figured out that if they really wanted attention, all they had to do was sit their ass down on a sleeping bag and all the hellfire of the American political and law enforcement infrastructure would come down upon their heads."
I posted that at Google + and Ray Radlein reminded me of The Bonus Army. Fair enough, but who remembers that episode? Hell, people forgot that MacArthur was the guy who broke that up after his "heroics" during the war.

#31 ::: Pyre ::: (view all by) ::: October 27, 2011, 04:15 AM:

I'm beginning to think the police academy textbooks inadvertently printed the First Amendment (with its "peaceably assemble and petition the government" clause) in the Penal Code section, so every officer thinks that's actually a crime.

A Constitutionally-defined crime, like treason.

#32 ::: Yarrow ::: (view all by) ::: October 27, 2011, 06:36 AM:

Pyre @31: First Amendment jurisprudence in the U.S. would make perfect sense if the Constitution said "conveniently to assemble, and to petition the Government for a redress of grievances".

#33 ::: David Harmon ::: (view all by) ::: October 27, 2011, 07:33 AM:

Pyre #31: Well yes... authorities of all stripes are perfectly willing to let citizens blow off a little steam -- waving signs and chanting for the white folks, burning down their own neighborhoods for the black.

But it's a different story when they actually taking up residence in "public" space, and imply that they're going to insist on change -- as in "we're not going anywhere until...".

That, that's a threat to "public order": the sense of order that says the government owns the cities, and mere citizens only remain there on sufferance.

#34 ::: Nicole Fitzhugh ::: (view all by) ::: October 27, 2011, 09:03 AM:

Avram @29--
here's a link where the city administrator mentions this. http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/10/27/MNMD1LMMA0.DTL

Just to be clear, this is not *my* justification. This is the authorities who clearly have a vested interest in it being true saying it, and they are the only ones who have said it. I was wondering if anyone had offered anything concrete against it. The only reports of serious injuries I've heard about is the former Marine Scott Olsen who is now in critical condition due to blunt force trauma-- and further reports say *his* treatment may well have been interfered with by police throwing tear gas canisters at people trying to help him!

#35 ::: Gerald Fnord ::: (view all by) ::: October 27, 2011, 09:48 AM:

Pollyanna: maybe it means the Occupiers are on the right track, or is at least an emblem thereof.

#36 ::: rm ::: (view all by) ::: October 27, 2011, 10:11 AM:

After reading #27 and #28 together, I have formed this provisional theory: (1) police fracture Scott Olsen's skull, (2) people gather round Olsen to help him, (3) police define this as an attack on Olsen (because protestors are chaotic and violent, natch), (4) police set off small bomb in the crowd to pacify them, (5) police report that the protestors attacked.

#37 ::: johnofjack ::: (view all by) ::: October 27, 2011, 10:25 AM:

Nicole @32:
Did you watch the video linked in Bruce's comment @ 27? There is no "may" to it.

#38 ::: johnofjack ::: (view all by) ::: October 27, 2011, 10:27 AM:

Sorry, that's Nicole @ 34 (maybe). I could have sworn it was 32 before I posted that comment, but either I read it wrong or there were comments being held for approval.

#39 ::: The Raven ::: (view all by) ::: October 27, 2011, 12:02 PM:

Esquire blog post on the militarization of US police forces. I am struck by the way the decision of police to undertake action against OWS seems to bear no relationship to the conduct of the protesters. OWS seems to be a kind of Rorschach blot for local governments: they see what they want in it, and act accordingly. I suspect that Mayor Quan was in fact shut out from the decision making process or given deceptive information: she is out of town.

As I've been saying for a while, this is the authoritarian interregnum and the existence of and response to Occupy is a huge sign of it.

#40 ::: Constance ::: (view all by) ::: October 27, 2011, 01:24 PM:

Again, anyone who wants to know about Oakland from from a trustworthy eyewitness go to zunguzungu's blog.

In the meantime though, everyone else can occupy public space including the sidewalks and increasingly the streets, and keep out and off the public as they please: NYU, restaurants, bikers, movie crews, banks, vendors, etc.

Love, C.

#41 ::: Mary Aileen ::: (view all by) ::: October 27, 2011, 01:27 PM:

Nicole Fitzhugh (28) (and following):

Today's Newsday* reported Oakland's justification for the raid, without any attribution or details:

In Oakland, officials initially supported the protests, but tensions reached a boiling point after a sexual assault, a severe beating and a fire were reported and paramedics were denied access to the camp, according to city officials. Demonstrators disputed the city's claims.

*The article on the website is dated yesterday, but it's in the physical paper today.

#42 ::: Neil in Chicago ::: (view all by) ::: October 27, 2011, 01:52 PM:

rm @ 36
Probably not.
They fuck up whoever they feel like, and later repeat the rote excuses.

#43 ::: Bruce Cohen (Speaker to Managers) ::: (view all by) ::: October 27, 2011, 02:12 PM:

Of course it's impossible to read motives from a video of actions, but I got the impression that when the protesters moved to help Olsen the first grenade, which may have been intended to stop the attempt at help, triggered other cops into tossing grenades as well (I think I saw 3 grenades thrown into that group), as a reflex. In any case, it's clear to me that fire discipline with those grenades was very lax; it looks like the cops had lost sight of the objective of clearing the crowd out (if that ever really was the objective) and were just dealing out punishment. Not at all good command and control by whoever was running things, and not good tactical control at the sharp end. Again, assuming that what happened wasn't intended by the police and/or city officials.

#44 ::: Constance ::: (view all by) ::: October 27, 2011, 03:28 PM:

#39 ::: The Raven

The point of this is to impress upon the U.S. public that dissent and protest of any kind will get you in trouble. That is the distillation of the police state.

Love, C.

#45 ::: Xopher HalfTongue ::: (view all by) ::: October 27, 2011, 04:03 PM:

I think we're all overanalyzing.

You want to punish people who are doing something that annoys you, so you hurt one of them, and then when people gather around to help him, you bomb them too.

It's an Al Qaeda tactic. The Oakland police have adopted it. One doubts they'd be comfortable with this comparison, but they deserve it.

#46 ::: SamChevre ::: (view all by) ::: October 27, 2011, 04:18 PM:

It's maybe worth noting that official forceful suppression of effective dissent has been going on for rather a long time in the US. We've got McArthur and the Bonus Army, the 101st Airborne at Little Rock, the FACE law, and I'm sure others that I'm not thinking of.

In each case, dissent is fine so long as it's completely ineffective at its goals; when it starts having an effect, the government makes sure to remind everyone that it has the bigger guns.

#47 ::: Earl Cooley III ::: (view all by) ::: October 27, 2011, 04:43 PM:

The "hit the responders" tactic predates Al Qaeda.

#48 ::: Xopher HalfTongue ::: (view all by) ::: October 27, 2011, 04:45 PM:

Yes, Earl, I have no doubt it does.

Can you think of an organization known for the tactic who the Oakland police would less like to be compared to?

#49 ::: MacAllister ::: (view all by) ::: October 27, 2011, 05:56 PM:

Here in small-city, Washington state, we've noticed the sudden appearance of armed private security guards standing at the front of banks, downtown stores, and just inside the local Rite-Aid where we stopped to pick up some benadryl, today. My initial thought was that perhaps there'd been a rash of robberies -- downtown B'ham isn't the best of neighborhoods, even in broad daylight.

One of the regular clerks, when I queried, muttered something vaguely unhappy about management worrying about the "Occupy protests" getting out of hand, and that he really wasn't allowed to say anything more. Then he asked if we'd heard about Oakland.

The guard at the Rite-Aid smiled pleasantly and greeted us when we entered and nodded cheerfully when we left, again, purchase in hand. It gave me the heebie-jeebies.

#50 ::: Avram ::: (view all by) ::: October 27, 2011, 06:49 PM:

SamChevre @46, could you clarify how you see the Freedom of Access to Clinic Entrances Act -- which allows peaceful protest, but prohibits violence, vandalism, and threats -- as fitting into a list of "official forceful suppression of effective dissent"?

#51 ::: Debra Doyle ::: (view all by) ::: October 27, 2011, 07:18 PM:

Avram@50: I could be wrong, but I would guess that SamChevre's point has something to do with the idea that the armed hand of the government can act and has in the past acted to suppress both instances of dissent that we (for local values of "we") might approve of and instances that we don't.

#52 ::: Stefan Jones ::: (view all by) ::: October 27, 2011, 07:55 PM:

Dalia Lithwick's editorial is indeed wonderful.

They aren’t holding up signs that say “I want Bill O’Reilly’s stuff.” They aren’t holding up signs that say “I am animated by toxic levels of envy and entitlement.” They are holding up signs that are perfectly and intrinsically clear: They want accountability for the banks that took their money, they want to end corporate control of government. They want their jobs back. They would like to feed their children. They want—wait, no, we want—to be heard by a media that has devoted four mind-numbing years to channeling and interpreting every word uttered by a member of the Palin family while ignoring the voices of everyone else.

"F" yes.

#53 ::: SamChevre ::: (view all by) ::: October 27, 2011, 07:58 PM:

Avram @ 50

could you clarify how you see the Freedom of Access to Clinic Entrances Act -- which allows peaceful protest, but prohibits violence, vandalism, and threats...

It also prohibits (and was intended to prohibit) mass protests if they interfere with free access, even if they are entirely non-violent. Lying in all the entrances (a common Operation Rescue tactic), for example, is illegal.

#54 ::: Xopher HalfTongue ::: (view all by) ::: October 27, 2011, 08:15 PM:

Sam, that's because free speech guarantees the right to express yourself, but not the right to force others to listen, and especially not the right to prevent them from doing anything or force them to do anything.

There may be other rights that allow those things in certain circumstances, but blocking access to a clinic is definitely not covered by the First Amendment. Why would it be?

#55 ::: SamChevre ::: (view all by) ::: October 27, 2011, 08:23 PM:

Xopher @ 54

I'm not specifically First Amendment focused. I'm not seeing any clear distinction, though, between lying in the driveway of a business and sitting at a restaurant table after being asked to leave--and the latter (so long as it don't unsettle the elites too much--if it did, the powers that be would probably suppress it) is a well-established and legitimate kind of non-violent protest.

#56 ::: Xopher HalfTongue ::: (view all by) ::: October 27, 2011, 08:29 PM:

You really don't? If you're sitting at a table in a restaurant, you may prevent others from accessing that table, but you don't prevent anyone from using the restaurant as a whole.

And what you're really talking about is the equivalent of barricading the doors of the restaurant. You're acting like Operation Rescue was complaining that they were being denied clinic services!

#57 ::: SamChevre ::: (view all by) ::: October 27, 2011, 08:33 PM:

And, in hopes of getting back to the OCcupy Movement and the police, here's what's happening in my neck of the swamps.

Tea Party sends city $10,000 bill, on grounds that when they protested in the same park, they had to pay the city $10,000.

And it wasn't called part of Occupy, but the Monroe Park Occupation could be seen as a precursor. I live on the same block as some of the people involved, and know a fair number of the others.

#58 ::: Xopher HalfTongue ::: (view all by) ::: October 27, 2011, 08:37 PM:

Well, Sam, somebody had to clean up the soggy tea bags. The Occupy people clean up after themselves! (They really do in NYC.)

I'd love to invite the Richmond Tea Party to go fuck themselves, but then that's pretty much my attitude toward the Tea Potty in general.

#59 ::: j h woodyatt ::: (view all by) ::: October 27, 2011, 08:56 PM:

SamChevre @ 46 ::: "In each case, dissent is fine so long as it's completely ineffective at its goals; when it starts having an effect, the government makes sure to remind everyone that it has the bigger guns."

I'm gonna outsource my response against that sentiment to the brilliant Corey Robin, author of The Reactionary Mind: Conservatism from Edmund Burke to Sarah Palin who recently wrote on his weblog an article entitled Fear, American Style: What the Anarchist and Libertarian Don’t Understand about the US.

The whole article is very good, but the nut is this sentence:

There’s a reason so much of American repression is executed not by the state but by the private sector: the government is subject to constitutional and legal restraints, however imperfect and patchy they may be.

The relevance of Mr. Robin's point to the discussion we're having here is that the main animating grievance of the #OWS movement is the impunity enjoyed by the malefactors of great of private wealth in the USA and the corrupting effect it has on the democratic processes in our government.

Shorter jhw: let's not lose track of who's writing the checks here.

#60 ::: P J Evans ::: (view all by) ::: October 27, 2011, 10:17 PM:

I understand that Olsen is now listed in 'fair' condition and is breathing on his own.

#61 ::: chris ::: (view all by) ::: October 27, 2011, 10:39 PM:

It's maybe worth noting that official forceful suppression of effective dissent has been going on for rather a long time in the US.

I was just thinking "at least they didn't kill anybody this time", compared to Kent State. Rubber bullets are actually a step forward compared to *bullet* bullets.

Of course there's also the forceful suppression of parts of the Civil Rights movement.

#62 ::: edward oleander ::: (view all by) ::: October 27, 2011, 11:06 PM:

A friend of mine, a Navy veteran, upon graduating from a four-year law enforcement program, accepted a job with the Oakland PD right out of college... He lasted six weeks, and the experience was so traumatizing that he walked away from law enforcement forever. He said the corruption was so endemic that he felt physically unsafe in the presence of his fellow officers, because he wouldn't immediately go on the take...

#63 ::: Jacque ::: (view all by) ::: October 28, 2011, 12:24 AM:

I'm going to be fascinated to see how this issue plays out:

City of Boulder Ballot Question No. 2H - Amendment to Abolish Corporate Personhood

Shall the People of the City of Boulder, Colorado, call for reclaiming democracy from the corrupting effects of corporate influence by amending the United States Constitution to establish that:

1) Only human beings, not corporations, are entitled to constitutional rights; and 2) Money is not speech, and therefore regulating political contributions and spending is not equivalent to limiting political speech.

Not that it'll make any discernable difference even if it does pass.

#64 ::: Dave Bell ::: (view all by) ::: October 28, 2011, 01:52 AM:

SamChevre @46

I saw what you did there.

#65 ::: Earl Cooley III ::: (view all by) ::: October 28, 2011, 02:49 AM:

So, which governor is most likely to call out the National Guard first? And, when that happens, will they pass the Tiananmen Square Test?

#66 ::: Dave Bell ::: (view all by) ::: October 28, 2011, 03:55 AM:

I find myself thinking that the behaviour of people when things get out of hand often reflects on their training. There are a few stories about the differences between cops and soldiers for instance.

The way they used flashbangs in Oakland, I wonder if they had any training at all.

#67 ::: KayTei ::: (view all by) ::: October 28, 2011, 04:33 AM:

I'm just so pleased that with the end of the Bush administration, I no longer have to live in a police state that completely disregards civil liberties and human rights... Words cannot express.

I find the increasingly violent governmental response baffling. I honestly never thought I would see this kind of violent, reactionary government suppression of free speech in the United States in my lifetime. Especially not when tea partiers can show up to their protests waving guns and spouting openly and violently revolutionary rhetoric, which far outclasses anything I've heard from the Occupy movement, which has been strongly advocating respectful and nonviolent forms of protest. That's a thing that belongs in history books, along with all the other things that we look at and say "Yes, well, we know better now."

I realize that power always acts to preserve its current configuration. It doesn't stop me from being completely disconcerted by this development.

#68 ::: KayTei ::: (view all by) ::: October 28, 2011, 04:45 AM:

In other news, the ACLU has posted a link to Oakland's policy on policing civil demonstrations, which I found somewhat interesting, in light of the events under discussion.

(The link is buried in a larger article; It's the link in the fourth paragraph, before the bullets.)

#69 ::: Rob Hansen ::: (view all by) ::: October 28, 2011, 06:56 AM:

From the book I'm currently reading:

It always embarassed Samuel Vimes when civilians tried to speak to him in what they thought was 'policeman'. If it came to that, he hated thinking of them as civilians. What was a policeman, if not a civilian with a uniform and a badge? But they tended to use the term these days as a way of describing people who were not policeman. It was a dangerous habit: once policemen stopped being civilians the only other thing they could be was soldiers.

...from SNUFF by Terry Pratchett

#70 ::: Nancy Lebovitz ::: (view all by) ::: October 28, 2011, 08:42 AM:

The earliest mention I can think of for "hit the responders" is a two-part bomb in Babel 17. It seems unlikely that Delany invented the idea. I'm also uncertain about whether the second bomb could be adequately protected from the effects of the first bomb.

Is it possible that the Tea Party was cut more slack because the people in charge rightly thought that the Tea Party is less serious? People aren't going to be as dedicated to doing something about the national debt as they are about massive direct damage to their quality of life.

#71 ::: Melissa Singer ::: (view all by) ::: October 28, 2011, 08:51 AM:

A woman I went to high school with joined the Transit Police right after college (the Transit Police were, at the time, a separate organization from the NYPD. that is no longer true iirc).

She said that it was inevitable that police officers quickly felt separated from the civilian population because she saw how it happened with her.

First, she always carried a gun and always had to be aware of that--she had to know where her weapon was, if it was on her person or somewhere else (like in the pocket of her coat, which was hanging in a closet in a friend's home while she attended a party--actually, she usually asked that her coat be put somewhere where no one else would have access to it).

Second, and more importantly, she quickly began to see that everyone around her was a potential criminal. People she knew well--friends and family--drank too much and drove, smoked pot, shoplifted, and did other things that were illegal, even if they weren't serious crimes. They would even do these things right in front of her.

And once she began to live with that knowledge, she began to think that everyone had the potential to do worse things. After all, she couldn't predict that the guy sitting on the middle bench in the subway wouldn't suddenly stand up and stab her (which happened), so how could she trust that her cousin wouldn't "graduate" from shoplifting to armed robbery?

It didn't happen overnight, but quickly enough there was a distinct shift in her personality and behavior. Her social circle shifted to pretty much become all other cops and their families (though this was often limited to other unmarried cops because some of the wives were unhappy about a woman being partnered with their husbands [this was around 1980]), so the division between "us" and "them" became even more pronounced.

Working undercover actually made it worse; she was often disguised as a homeless person or a prostitute, people who are generally not treated well by others. By the time she made detective, she'd withdrawn from most of the people she'd known prior to becoming a police officer.

So I have to say that I can understand how the cops can start to feel that people are "civilians" and that civilians are the enemy.

Not that that excuses the behavior or mindset.

#72 ::: Constance ::: (view all by) ::: October 28, 2011, 01:11 PM:

@70

The teabags are given the respectful, non-invasive, non-surveillance treatment they are provided because they part and parcel of the Murdoch-Koch Bros. systemic takeover of the media and the government in favor of the corporate oppressors / 1%. -- and also as part of their determination to steal the 2012 election if they don't win it -- that is if you don't believe that is a tinfoil conspiracy foolishness.

The Occupy movement has neither billionaire corporate support nor long and deep pocketed network of media from neo con think tanks and publications to Faux noose behind them. Also the corporations here in NYC have been 'donating' millions of dollars to the NYPD.

That's why. Otherwise gun-wavers would sure as hell have been arrested, but you do notice the teabag gun carriers and wavers were not arrested, nor were they even removed, as they threatened the dem Town Halls the summer before last.

Love, C.

#73 ::: Neil in Chicago ::: (view all by) ::: October 28, 2011, 01:15 PM:

Bruce @ 43
no
Xopher @ 45; j h woodyatt @ 59
yes

Nancy @ 70
The "Tea Party" supports the oligarchs. duh

Earl Cooley @ 65
There are several unverifiable versions of Tiananmen Square '89. One is that there were actually few casualties clearing the square itself -- but that there was steady bloodshed for the three days it took the army to make its way through the city to the square, as Ordinary People resisted . . .

#74 ::: Mycroft W ::: (view all by) ::: October 28, 2011, 01:33 PM:

48 Xopher: ...the VC?

known for "Kill a Marine, you take one out of the fight. Wound a Marine, you take 5 - and you might get some of those, too." and "mean lifespan of a medevac chopper pilot in Vietnam is one month".

Not that that wasn't the right thing for them to do under the circumstances, but unless Oakland PD is actually fighting a guerilla war of independence from the foreign "occupiers"...

#75 ::: Xopher HalfTongue ::: (view all by) ::: October 28, 2011, 02:32 PM:

Yes, that's the point. The Oakland PD is acting like a hostile occupying army. Unacceptable in America...but then so are a lot of things I've had to accept.

#76 ::: Bruce Cohen (Speaker to Managers) ::: (view all by) ::: October 28, 2011, 02:45 PM:

Neil in Chicago @ 73:

What does your response "no" my comment mean?

#77 ::: E ::: (view all by) ::: October 28, 2011, 02:54 PM:

I could have called it the Kent State Test as well.

#78 ::: FaultyMemory ::: (view all by) ::: October 28, 2011, 02:57 PM:

Xopher@75: The Oakland PD has been acting like an occupying force for several decades now. Events of earlier this week are the norm in police interaction. Only the media attention is an aberration.

#79 ::: Xopher HalfTongue ::: (view all by) ::: October 28, 2011, 03:08 PM:

FaultyMemory, then I hope that sunlight proves to be a disinfectant in this case, though a mass purge of the OPD seems unlikely.

#80 ::: Earl Cooley III ::: (view all by) ::: October 28, 2011, 04:28 PM:

From what I've heard, the OPD wasn't the only tribe of LEO on site during The Incident. That could give the OPD enough plausible deniability to say 'twarn't their fault.

#81 ::: Earl Cooley III ::: (view all by) ::: October 28, 2011, 04:31 PM:

Hmmm, I wonder if an O.P.D. pastiche of Naughty By Nature's O.P.P. would work....

#82 ::: abi ::: (view all by) ::: October 28, 2011, 04:47 PM:

I have a lot of fondness for Oakland. I grew up just outside of (or rather, entirely surrounded by) it. It's a horrifically messy place, both in its people and in its officials. It's been the awkward sibling in the dysfunctional family of the Bay Area for a good century. It's not the financial and social wreck that Detroit and East LA are, or that New York was in its nadir, but it's the next step down on the podium.

So on the one hand, I entirely believe that the Oakland Police were right in the thick of pretty much everything that went wrong Tuesday night. I've seen individual officers deal with problematic situations with near-saintly forbearance, but like teenagers and locusts, Oakland cops are very different in crowds than they are singly. I wouldn't cross them unless I really believed in the cause, enough to get hurt in its pursuit.

On the other hand, I also believe that Occupy Oakland is not one of the movement's shining examples. The people I know who are involved aren't really the well-organized, on-message, self-controlled types. I also entirely believe the factual (as opposed to editorial) elements of this story about the mayor's experience of trying to address the crowd.

(What I would love is for Oakland not to be in the hole it's in, you know? It's one of the places that need these changes, that have needed these changes so long they can't get it together to protest effectively. The country I want America to be contains a very different Oakland than this.)

#83 ::: FaultyMemory ::: (view all by) ::: October 28, 2011, 05:07 PM:

Unfortunately, the Oakland that exists in the reality which we do share is an Oakland which has been under judicial order to reform itself for nearly nine years now. OPD initially had a five-year deadline, but they blew it and got an extension. Several extensions, in fact. The prior police chief of Oakland resigned rather than be on watch while a judge put the force in receivership.

At least some local reaction to last Tuesday's Occupy incident is, essentially, that there is nothing new under the sun.

#84 ::: Ralph Robert (Rob) Moore ::: (view all by) ::: October 28, 2011, 05:35 PM:

My wife and I turned on the TV, saw this chaos, and assumed it was footage from Libya. Depressing to find out it was footage from right here, in America.

#85 ::: Bruce Cohen (Speaker to Managers) ::: (view all by) ::: October 28, 2011, 06:03 PM:

As much as I hate seeing the wheel turn back to the 1960's like this, it's really good to see that some of the mainstream media has finally reached its limit on ignoring what's happening here. The New York Times, which has been pretty much pretending to be all three of the "-no-evil" monkeys for most of the last 10 years is finally reporting that Americans are demonstrating against the current regime, and are being attacked for their trouble.

#86 ::: Bruce Arthurs ::: (view all by) ::: October 28, 2011, 08:06 PM:

The video of the attack on people trying to respond to the injured veteran seems to meet the (or at least my) criteria for "state-sponsored terrorism".

Because the whole point of the OPD's actions Tuesday night was to intimidate and terrify, not just the people present at the scene, but future demonstrators and people like... oh, what's the appropriate word?... us.

As for the demonstrators jeering Mayor Quan off the stage... can you blame them? She shoved on-site responsibility for the raid onto corrupt, unaccountable police officials and left town. Is she duplicitous? Incompetent? Or was she the victim of, effectively, a coup, where the police ignored her wishes (she's only, y'know, a woman) and staged the raid they wanted, rather than the raid they should? In any of those scenarios, she's rendered herself ineffective and irrelevant.

#87 ::: P J Evans ::: (view all by) ::: October 28, 2011, 09:48 PM:

82
You grew up in 'mountain foot', I gather.

#88 ::: Kip Manley ::: (view all by) ::: October 29, 2011, 09:20 AM:

The Livestream Ended: How I Got Off My Computer And Onto The Street At Occupy Oakland is a must-read essay about what happened during, and next, and because of.

#89 ::: abi ::: (view all by) ::: October 29, 2011, 10:14 AM:

PJ Evans @87:

Yep. Lower mountainfoot, but mountainfoot.

#90 ::: abi ::: (view all by) ::: October 29, 2011, 10:18 AM:

Bruce Arthurs @86:
As for the demonstrators jeering Mayor Quan off the stage... can you blame them? She shoved on-site responsibility for the raid onto corrupt, unaccountable police officials and left town. Is she duplicitous? Incompetent? Or was she the victim of, effectively, a coup, where the police ignored her wishes (she's only, y'know, a woman) and staged the raid they wanted, rather than the raid they should? In any of those scenarios, she's rendered herself ineffective and irrelevant.

I don't like choking off channels of communication, particularly with elected representatives. Like it or not, she is the voice of a certain slice of the power structure, whether she's a leader or a mouthpiece.

More generally, I think that a failure to listen to what others have to say is the root of more evil than it is productive of good.

So yes, I do blame them. Disagreement is one thing. Refusal to listen is something else entirely.

#91 ::: Bruce Arthurs ::: (view all by) ::: October 29, 2011, 05:48 PM:

In a much more encouraging vein: New York Cops Defy Order to Arrest Hundreds of ‘Occupy Albany’ Protesters

(This would also be appropriate to post in the "Cops" thread)

#92 ::: albatross ::: (view all by) ::: October 30, 2011, 02:36 AM:

abi:

I see your point, but the only way to stop crap like the head-busting clearing out of demonstrators in Oakland is to make sure that elected officials who have fhe power fo order or forbid such things know that sending goons out to bust heads pretty much ends your political career. That needs to happen very visibly, to encourage all the other ultimately democratically elected decisionmakers to reflect on how much more time they will have to spend with their grandkids, once they order the police to forcibly suppress an annoying political protest. I am very much in favor of the mayor who ordered this done having a sick feeling in the pit of her stomach, as she sees whole lot of voters who clearly will never even consider voting for her again. That is worth some rudeness, to me.

#93 ::: abi ::: (view all by) ::: October 30, 2011, 05:03 AM:

albatross @92:

There are plenty of ways to show disrespect or disapproval of a speaker without shutting them up. A time-honored tradition is turning one's back, for instance. Booing and hissing after they've had their say also has a long and reputable history.

Shouting someone down in those circumstances feels to me like a public book burning. Those rarely actually destroy every copy of the book (and Mayor Quan still had access to a microphone). But they are a public refusal to even accept input of the information in question: an explicit rejection of the protocols of dialog, debate and the quest for mutual understanding.

#94 ::: David Harmon ::: (view all by) ::: October 30, 2011, 10:15 AM:

I am planning to visit the local occupation today -- I don't know much about it, but Charlottesville is a fairly liberal university town (surrounded by much more conservative districts).

#95 ::: Gray Woodland ::: (view all by) ::: October 30, 2011, 01:42 PM:

abi @ 93: With you here. Yes, politicians need to know that they will pay full measure for official wickedness on their watch - among other reasons, to discourage them from running a gangster state upon lines of deniable authority.

Such firmness, even when it extends to active contempt, gains nothing by making said delinquents look like the good guys. And change worth having, especially opposed by a violent and heavily armed power-faction, is unlikely to be expedited by acting from the get-go as though the time for talking and listening is past. That hardly plays to the strengths of anybody on either side who is going to take things anywhere good.

As Lenin once famously failed to get, the worse things are, the worse they really bloody well are!

#96 ::: David Harmon ::: (view all by) ::: October 30, 2011, 06:22 PM:

So, Occupy Charlottesville was a dozen or so tents at the local part. My drum circle just moved its meeting there from a local bookstore. We broke up at our usual time, but amidst extra mutters that the police were monitoring noise levels, and might be planning to use those to clear the park.

#97 ::: Lenore Jean Jones/jonesnori ::: (view all by) ::: October 30, 2011, 10:34 PM:

So a young friend on FaceBook is complaining that the OWS people are refusing food to the homeless. Any idea what she's on about?

#98 ::: Naomi Parkhurst ::: (view all by) ::: October 30, 2011, 11:52 PM:

Lenore Jean Jones/jonesnori @97 I suspect it's related to this? (The situation is variable from city to city, so far as I know from my fairly superficial reading of Twitter and such, so maybe it's something else.)

#99 ::: P J Evans ::: (view all by) ::: October 30, 2011, 11:56 PM:

Some of the OWS groups are asking for food donations, too: they don't have enough.

#100 ::: Lenore Jean Jones/jonesnori ::: (view all by) ::: October 31, 2011, 04:42 AM:

Naomi @98 - thanks - that seems to be a good, balanced treatment. All my friend apparently saw was homeless people being unwelcome, and not the complexity shown in this article (rather a surprise to me for a Daily News piece, but they seem to have risen to the occasion).

#101 ::: Naomi Parkhurst ::: (view all by) ::: October 31, 2011, 07:48 AM:

Lenore @100 Of course, it's still possible that it's been misrepresented, but it seems plausible.

#102 ::: fidelio ::: (view all by) ::: October 31, 2011, 10:08 AM:

In Nashville Goveror Haslam (the least crazy of the Republicans who ran for governor of Tennessee last year; I hate to think what Zach Wamp would have done in this situation) is embarrassed by the judge again.

Having protestors arrested twice, and the arrests thrown out twice, is so detrimental to your position as a strong leader.

#103 ::: SamChevre ::: (view all by) ::: October 31, 2011, 02:20 PM:

Occupy Richmond was broken up by the police last night.

Full disclosure: I've known Preston and Ian for close to 10 years.

It does seem to have been handled reasonably well (other than arresting Ian, which was just dumb.) (Not that I'm saying it should have been done, but it seems that everyone--cops and protesters--was trying to keep it non-violent and succeeded.)

#104 ::: praisegod barebones ::: (view all by) ::: October 31, 2011, 03:23 PM:

Melissa Singer @ 71

Parts of the process you describe in that post strike me as uncannily similar to the ways in which cults (and arguably cult-like organisations like the SWP) detach their members from their wider social support networks.

I'm not quite sure where to take that thought, except to say that having had it shortly after you posted (and having tried and failed to add it to the conversation at the time) the events that Patrick is posting about in the next thread strike me as less surprising than they might otherwise have done.

#105 ::: Chris Quinones ::: (view all by) ::: October 31, 2011, 05:01 PM:

Angus Johnston of Student Activism amplifies on the Daily News article Naomi @97 linked to here. He wonders if the police are pulling a move out of the "Hamsterdam" episode of The Wire (which I haven't seen).

#106 ::: Xopher HalfTongue ::: (view all by) ::: October 31, 2011, 07:40 PM:

Just posted over on Scalzi's blog:

Remember Logan's Run? The 1976 movie where everyone was allowed to live to be 30 years old, and then went to the arena to be "Renewed"? They were told they might get another 30 years of life if they were Renewed. Only a small percentage of people were Renewed, they were told, but everyone had a chance. Everyone attended these Renewal sessions and shouted "Renew! Renew!" They were cheering for the people they hoped and believed would achieve Renewal, and lived in hope of it themselves.

Of course, no one was Renewed. The device in the arena just killed them all.

That's what I think of when I see people who are not in the 1% and never will be, but who deeply believe they have a chance. They cheer on the people who ARE in the 1% because they hope to join them.

You're not going to join them. Almost no one who isn't born into that class gets there. Certainly no one who makes their money doing manual labor will get there. You're just going to work, living in this false hope, until you die.

There's no Sanctuary, either, in case you were wondering.

#107 ::: Stefan Jones ::: (view all by) ::: October 31, 2011, 07:59 PM:

#106: I wish that were just it.

I've seen, on several online fora, a nasty sense of resentment and contempt to those further down the socioeconomic ladder.

I'm not talking about a forum for millionaires, mind you.

I get the sense that it's less important that bankers are getting away with looting millions than some slob getting $90 in food stamps.

#108 ::: Nancy C. Mittens ::: (view all by) ::: October 31, 2011, 09:58 PM:

I have seen this attitude with my mother, who was offended that someone might get monetary encouragement to buy a more fuel efficient car, when she had had the sense to buy one a few years ago, and nobody had helped her.

Angry that someone else is getting something she didn't.

#109 ::: shadowsong ::: (view all by) ::: October 31, 2011, 11:09 PM:

I wonder if that attitude goes along with a resistance to believe in general that people are innocent until proven guilty? There definitely appears to be an ideological divide along left/right lines between those who think making sure the guilty are punished is most important, and those who think making sure the needy are helped is most important.

Well - at least in terms of poor people, that is. Perhaps it only comes into effect when considering people who might be both needy AND guilty, and that's why people worried about welfare queens aren't concerned about greedy bankers.

#110 ::: Yarrow ::: (view all by) ::: November 01, 2011, 12:01 AM:

SamChevre @ 103: Sur, Greg and the two Joshes are still in jail, denied bail on misdemeanor charges because of the magistrate's opinion that if released they'll occupy again. It's absurd that they're charged with a class one misdemeanor and a possible year in jail (for trespassing, the same charge as Ian), rather than the traffic-ticket offense of being in the park after sundown; it's doubly absurd that they're being held without a trial (illegally though under the color of law), not because they might be flight risks but because they might try again to exercise their first amendment rights to peaceably assemble.

That's not even to speak of the absurdity of bulldozing a bunch of tents after giving people 15 minutes to remove them.

#111 ::: FaultyMemory ::: (view all by) ::: November 01, 2011, 12:38 AM:

Nancy@108:

I, too, am angry that people are getting what I didn't get.

I bought a house on which I could afford the payments. I kept it through a period in which I was substantially unemployed for fifteen months, during the Bush II administration. I'm angry that people who overextended themselves, and bought houses they can't afford, are being offered bailouts to keep their houses.

I was responsible, and didn't buy a McMansion I can't afford. Where is my bailout? Why are my taxes subsidizing their indiscretions?

#112 ::: Lee ::: (view all by) ::: November 01, 2011, 12:50 AM:

FaultyMemory, #111: You also were not strongly pushed by your bank to buy more house than you could afford, on terms which were bound to blow up in your face, simply because that would increase the bank's (largely fictional, as it turned out) bottom line.

Also, if you know of anyone making less than $250,000/year who's being given a bailout to keep their house, I'd be very interested in hearing about such a program. The only bailouts I've seen to date have been given to the banks.

Personally, I think the bailouts SHOULD have been given to anyone who bought (1) a primary residence (2) anytime since about 2005, which was when the whole bank-mortgage-fraud system started heating up. That way the banks get their money back, and the people they screwed over get something resembling justice. Which currently is not happening, unless (again) you know something I don't.

#113 ::: FaultyMemory ::: (view all by) ::: November 01, 2011, 01:07 AM:

Lee@112:

Every time I've bought a house, I've been encouraged to borrow more than I thought prudent. The times I've refinanced houses, I've been encouraged to borrow against equity during the refi.

I've been making regular mortgage payments for two decades now. Banks wanting people to borrow more than is reasonable is not a new phenomenon.

#114 ::: Lee ::: (view all by) ::: November 01, 2011, 01:11 AM:

FaultyMemory, #113: I see you read my first paragraph. Do you have anything to say about the second? I'm still very interested in finding out about these bailouts for people who are losing their houses, partly because there are people right here at ML who could really benefit from such a program.

#115 ::: Lenora Rose ::: (view all by) ::: November 01, 2011, 01:27 AM:

FaultyMemory: But are there people who make less than $250,000 a year getting bailouts? I think that's the more important question than correcting or complaining about Lee's assumptions.

Also: In what way would people who were screwed over by their banks getting something like justice hurt You because you were more prudent. Did you not get and keep your share, regardless of what comes of them? Or do you fear that in some way offering someone else recompense will take something away from you?

In a perfect world, nobody would be fooled into thinking their banker has their best interest at heart, or at least some legal limit to their fraudulence.

This world isn't perfect.

To say that the victims of a fraud deserve punishment for not being smart enough to see through a fraud is to blame the victim.

I am glad you were not another victim. But surely there's no harm in sympathy for those who were?

#116 ::: FaultyMemory ::: (view all by) ::: November 01, 2011, 02:03 AM:

Lee, Lenora:

1) Try here for possible helpful info. Also, recent changes in loan-to-value limits may make some existing programs available to people who previously could not qualify for them; see here for one brief writeup.

2) The current administration shoveled bucketfuls of cash into the pockets of basically everyone who was friends with Geithner and Bernanke. As taxpayers, we're all ultimately the ones tapped for those bucketfuls of money. The reason given for shoveling the cash was that people who couldn't afford their mortgages needed the help. As a taxpayer, and as a prudent purchaser, I'm not pleased that I get to pay the bill for a party enjoyed by people living beyond their means.

3) To the extent that there was fraud involved in the pricing and sale of houses in the last decade, those perpetrating the fraud should be the ones making the victims whole. Appraisers, I'm lookin' at you.

4) I'm having a hard time being sympathetic towards people who got into ARMs in the mid-2000s. There just was no sense getting an adjustable-rate mortgage when rates were at their lowest point in a generation. By all reasonable expectation, the only direction in which those rates would adjust was up.

#117 ::: SamChevre ::: (view all by) ::: November 01, 2011, 08:42 AM:

The thing with the houses and "others getting stuff I didn't" I can sympathize with.

In 2006, I bought a piece of land and built a house, which I finished in 2007. At that point, I had put about $50k of savings into the house and land, which were worth $140k.

In 2009, the company I worked for closed their office in the area.

In 2010, after being out of work for 18 months, I got a job offer that required relocating.

If I could sell the house for enough to cover the mortgage, the realtor's fees, and the cost of fixing it up to be saleable, I'd be wildly happy.

Here's the thing, though; it would be a little hard to see the people who borrowed $135k on comparable houses get principal reductions, and be ineligible for any myself because I put 6 years of savings into my house purchase.

This is why I'd rather just give everyone a sum of money, regardless of their house ownership. (Yes-I'm in the "free money for the rest of us" camp.)

#118 ::: fidelio ::: (view all by) ::: November 01, 2011, 09:14 AM:

I've had this conversation with a friend who bought her house in the 1990s, after carefully shopping, calculating what sort of payment she could handle, and putting her foot down very firmly with realtors and mortgage people.

I told her she was wise and careful, but that she had an advantage some of those first-time homebuyers did not--she was raised by parents who were homeowners, who were there to talk things over with if she needed disinterested advice about how the process worked and what the pitfalls were. She also bought her house before every Tom, Dick, and Martha out there was either pushing real estate or mortgages, without reference to reality or ethical behavior.

I can understand why mortgage bailouts for homeowners in trouble are seen as "not fair"--everyone who was careful, and thoughtful, and cautious, and read the fine print and is ot in trouble (and there are those who did these things and are in trouble anyway, as more extreme cases of what SamChevre has gone through--a severe decline in property values across the board, in their area) feels like others are rewarded for bad decisions--whether overbuying* without seriously considering the risks, failing to take all necessary steps to understand the terms of their mortgage, failing to fight for a type of mortgage that was not pure looneytunes, not understanding that the nice helpful person at the bank wasn't really on their side--while they have to pay for that reward via their taxes.

The reason for doing this is not that it's fair. It'e because it will make a major difference to the health of the national economy. The Earned Income Tax Credit is not entirely fair either--but it's a program that has helped many of the working poor, and I am not going to suggest that we ditch it because I'm not getting any of that money. Sometimes, it is prudent for us, as a country, to do things because the long-term outcome is to our benefit as a nation, whether some of us, as individuals, will directly benefit from it or not. I have had similar discussions over whether it's fair to pay taxes to support the local public schools when one either has no children, or one's children are grown. I think adequately-funded public schools are a beneft to society as a whole, and to me indirectly, even though I have no children of my own, and my siblings' children and grandchildren live elsewhere, and so would not benefit from anything I might pay locally.

I didn't benefit directly from the Detroit bailout, but I think it was a wise choice. I think some sort of bailout for the banks in 2008 was needed, but that the one we got was handled badly--too little accountability, too few strings tied to the money handed out. Back when Ned McWherter was governor of Tennessee, my tax dollars paid for a lot of improved roads in places I'm never likely to visit--but those roads were built in the hope of improving local economies, and in many cases, they did make a difference.


*Although if everything in your area is aky-high, I can see how avoiding overbuying can become rather difficult.

#119 ::: Lori Coulson ::: (view all by) ::: November 01, 2011, 11:13 AM:

Faulty Memory @116: You are failing to take into account the fraud that was practiced by the mortgage industry as a whole -- they were pushing "no income, no jobs, no assets" loans to people whose families had NEVER been homeowners.

The cause was the appetite in the INVESTMENT world for Mortgage Backed Securities hereafter known as MBS. And research has shown that the banks on one hand deliberately mislead home buyers who would have qualified for regular 30 year fixed loans into more exotic mortgages, while on the other hand they mislead the buyers of MBS as to the potential performance of the bonds, and these same banks bet against that performance thereby making MORE money (CDS).

The mortgage industry basically was on the take from everyone -- the newbies who didn't really qualify for mortgages, the buyers who would have qualified for a 30-year fixed, the investors who bought the bonds, the county title agencies that the banks' creature, MERS, robbed of title tranfer fees resulting in millions of clouded titles, and the American tax payer who bailed out the banks.

Those banks should have been allowed to fail and been nationalized and turned into public utilities.

#120 ::: Nancy Lebovitz ::: (view all by) ::: November 01, 2011, 01:26 PM:

In the nature of things, half of people have below average intelligence. Half have below average assertiveness. Half have below average knowledge.

I don't think you gain anything by wanting a society where such people (especially if theyhave two or three of those problems) are viewed as deserving to be mistreated.

People can work on their assertiveness and their knowledge, and possibly on their intelligence, but I don't think there's a general victory possible so far as fraud is concerned.

#121 ::: Syd, slightly disguised ::: (view all by) ::: November 01, 2011, 03:09 PM:

You know, I was going to indulge in a bit of a rant. I was going to point out to certain other posters that sometimes people work with (putative) experts because they do not, themselves, have all the requisite knowledge to avoid being taken advantage of.

Hence, when some of us were looking to refi in late 2004/early 2005 (I know, no sympathy there), and we were referred to a mortgage broker who came highly recommended as an ethical professional, we actually believed he was ethical in our direction. We were up front as to why we were looking for a new mortgage (was starting a freelance business, for example, and wanted to lower payments to save money). We expected that said ethical professional would disclose all the ramifications of the pay option ARM he was offering as our Best! Option! EVAR!--including the one that would have said, quite clearly, that there was no way in hell that was a good loan for many of us, that it was in fact the completely wrong loan.

A fact some of us might have been able to determine on our own, and others of us would not, because even people who track (in the back-office sense) other people's money for a living can make mistakes about their own.

Cutting off the rant, I will just point out that some of us are losing our homes, not due to overbuying or being profligate with our money, but because the government regulations were set up in such a way that we could wind up on the short end of a very messy stick, especially when you combine such mortgage practices with an economic free-fall that wiped out much of our savings (along with the savings of whole scads of other people) and a job market that's in the toilet, if not the sewer.

There's a whole string of of-onlies I could indulge in, but none of them means anything at this point--I am where I am through a combination of factors that includes in place number one the fact I trusted a recommended professional because I knew I didn't know enough about mortgages to be my own expert. Just as I have to hope, when I take my car to a new mechanic, that said mechanic is knowledgeable and honest, because I don't know enough to be my own expert here, either.

Going strictly by the terms of my mortgage, then yes, I suppose I deserve to lose my home because I can't afford the payments. But I'm having trouble seeing it as a fair outcome.

I apologize for the cranky-pants-ness of this comment.

#122 ::: Syd, slightly disguised ::: (view all by) ::: November 01, 2011, 03:19 PM:

To the moderators at large, re: me at 121: I'm getting less happy with that post the more I think about it. If said moderators find it to be without substantive value to ongoing Fluorospherian discourse, please feel free to delete.

#123 ::: Lori Coulson ::: (view all by) ::: November 01, 2011, 03:24 PM:

Syd -- we refi'd about that time too (to get lower payments). Our lender kept trying to entice us to do an ARM, but we told them the only thing we wanted was a 30 year fixed.

So we still have the house, and are very grateful to have dodged that particular bullet.

But the pressure from the lender was unreal -- and they're so slick that I can see how other borrowers got talked into these mortgages. And it still makes me angry.

#124 ::: SamChevre ::: (view all by) ::: November 01, 2011, 03:27 PM:

Syd,

I very much hope that I didn't come across as patronizing; if I did, it was most certainly not my intent.

My point is more this: when you have an economic free-fall that wiped out much of our savings (along with the savings of whole scads of other people) and a job market that's in the toilet, absolutely no wrong-doing on anyone's part, and absolutely no stupidity, are required for things to go very badly.

1) I'm not denying either wrong-doing nor stupidity.

#125 ::: abi ::: (view all by) ::: November 01, 2011, 03:39 PM:

Syd @122:

On the contrary, I think that you have made a very useful and substantive contribution to the conversation.

Furthermore, you very kindly remind the community that the "them" of any conversation may very well actually include some of "us", right here in the discussion. And, furthermore, that simple judgments may underestimate complex reality, and easy unsympathy miss good reasons.

#126 ::: Syd, slightly disguised ::: (view all by) ::: November 01, 2011, 03:46 PM:

SamChevre @ 124, no, I didn't read anything in your comments that struck me as patronizing. I can even understand why the whole idea of bailouts, to any entity, might be problematic--I might have found it so, had circumstances been different. But we're stuck with what happened, and I can't clearly see a way out of it that's completely fair and unbiased and unlikely to get several bunches of knickers in a twist.

Lori Coulson @ 123, one of my if-onlies would have resulted in my keeping my previous mortgage (fixed rate). Would have saved me a lot of money, not to mention that, all other events having happened as they did in reality, I might still be living off my savings--but I'd still have enough to keep the house for a while during my job search.

#127 ::: Syd, slightly disguised ::: (view all by) ::: November 01, 2011, 03:51 PM:

abi @ 125, thank you. Just...thank you.

I hope you've made it home by this time. ;)

#128 ::: Avram ::: (view all by) ::: November 01, 2011, 08:15 PM:

Nancy Lebovitz @120: In the nature of things, half of people have below average intelligence.

I hear this a lot, but it's not actually true, unless your definition of "average" is so precise that it obscures the point of measuring intelligence.

Most human qualities that vary among individuals do so with a bell-shaped curve distribution. In other words, most people are roughly "average".

As far as I can tell from reading stuff on the Internet, most psychometricians consider an IQ test in the range of 90-110 to be "average" or "normal". About half the population falls into that category. A quarter of the population (we're talking about the adult population, not kids) is below average, and a quarter above.

The same pattern should hold for things like assertiveness, even if we don't have tests designed to assign numbers to those things.

Now, when it comes to things like the sub-prime mortgage crisis, well, mortgages are complicated things. Finance is a complicated thing. It's one of those things one hires an expert to handle, even if one is of average intelligence. The habit of having expertise in fields outside of one's chosen career is a habit of those with above-average intelligence. So really, it's not just the 25% below-average IQ people who were in position to be taken advantage of; it's the 75% who weren't in the above-average category, plus maybe some above-average people who hadn't gotten around to learning about finance.

(I'm not even taking into account the multi-variant quality of what we call "intelligence". I know people who are brilliant in one field of endeavor but sucktastic in another. And some who are generally bright across a wide variety of fields, but also have strong emotional attachments to crank theories.)

#129 ::: Xopher HalfTongue ::: (view all by) ::: November 01, 2011, 09:51 PM:

Avram, I think what's meant by that is that half the population falls below the numeric mean. Yes, 60% of the numbers are within one standard deviation of the mean (that's what a normal distribution IS), and you can consider anyone within one SD of the mean "average," but it's not exactly wrong to say half the population is below average either.

#130 ::: P J Evans ::: (view all by) ::: November 01, 2011, 10:08 PM:

And, following up on the mortgage thread, the investment capitalists are doing the same thing with used cars: the LA Times is doing a series on 'buy here, pay here' car lots and their sins (which are many and grievous), but the investment guys are buying them up because these car loans can be sliced, diced, and sold as 'securities', just like mortgages. (The loans tend to have APRs over 20%, and the cars, as you would expect, get repossessed and resold fairly quickly, some of them eight times already.) Also, some of the loans are outright fraudulent, with stuff like written terms that don't match the actual terms.

#131 ::: Lee ::: (view all by) ::: November 01, 2011, 10:43 PM:

FaultyMemory, #116: So how come these programs aren't being trumpeted thru all the major media? Why did I have to hear about them from somebody who's spouting right-wing talking points? More importantly, why aren't the people who NEED that help -- like all the folks in Florida who were illegally foreclosed on and forced out of their homes in the last 5 years -- being able to get it?

Oh, and for the record, when I was buying a condo in the late 80s, I wanted a fixed-rate mortgage and could not get one from any source available to me. The best offer I could get was one with a rate-adjustment cap, which at least meant my payment wasn't going to double from one year to the next. Don't even BEGIN to condescend to me about how stupid it is for anyone to get an ARM; when that's all you're being offered, that's what you end up having to take.

#132 ::: P J Evans ::: (view all by) ::: November 02, 2011, 12:20 AM:

There were people refinancing their houses for money to pay bills. Should they have not refinanced, so they could go bankrupt then? (Not everyone overbought. A lot of this was the economy going bad in three presidents. It was the third one who was pushing buying stuff.)

#133 ::: FaultyMemory ::: (view all by) ::: November 02, 2011, 12:38 AM:

Lee@131:

I wrote of taking on ARMs in the mid-2000s, not taking on ARMs generally. I am aware that the availability of money has varied considerably over our lifetimes.

I'm not spouting anybody's talking points. I'm voicing my opinion. You don't have to agree with it, but our level of discourse is not helped by the unfounded accusation that I'm anyone's mouthpiece.

I am not personally the major media, nor am I connected in any way with the major media. I cannot address anything regarding your issues with their editorial choices.

#134 ::: Avram ::: (view all by) ::: November 02, 2011, 01:16 AM:

Xopher @129, yeah, I know that's what most people mean. It's just not a meaningful way of talking about intelligence.

#135 ::: abi ::: (view all by) ::: November 02, 2011, 02:22 AM:

Back to the subthread about the culture in Zuccotti Park: it looks like they're setting up a local security detail to enforce a code of ethics for the protest.

Don't read the comments to the article, of course.

#136 ::: Avram ::: (view all by) ::: November 02, 2011, 02:38 AM:

The photo's awesome!

#137 ::: Carrie S. ::: (view all by) ::: November 02, 2011, 08:41 AM:

I wrote of taking on ARMs in the mid-2000s, not taking on ARMs generally.

Some of us made the faulty assumption that, if they were willing to give us a loan, it was one we'd be able to repay.

I was buying a house for the first time. I had no idea what was going on in the mortgage market. Given the way Getting A Mortgage is portrayed in the media, I thought that if they were giving me a loan at all it was because they really thought I'd be paying it back.

And you know? I was. It was crippling me, but I was paying it.

These days, I have a different lender, with terms I can afford, but that's because I'm lucky.

#138 ::: Nancy Lebovitz ::: (view all by) ::: November 02, 2011, 09:04 AM:

#128 ::: Avram :

After I'd made my post, I was thinking that those bell curves are awfully flat in the middle range...

Still, I think my general point stands-- that some fraction of the population is going to be more vulnerable than most to fraud, and that it's probably impossible, even in theory, to prevent fraud by just making that fraction more capable. I'm inclined to think that making people in general more capable would also mean making fraudsters more capable, though it might be possible to lower the proportion of highly vulnerable people.

In fact, while better education about finance and some self-assertiveness training would probably help, even those aren't being tried.

Does anyone know whether the self-assertiveness training that kids sometimes get in regards to refusing pressure towards sex and drugs is apt to get transferred to other parts of life?

#139 ::: KayTei ::: (view all by) ::: November 02, 2011, 10:05 AM:

FaultyMemory @ 116

Yeah, those are cute programs, if you qualify. My mom tried for one of those, but they didn't approve it. They did try to stick her with a bunch of fees for trying, though! In specific, they set up an account in her name, on her behalf, without notifying her or gaining her consent, and then billed her for the associated fees, even though they ended up not approving the modification, so the account was neither necessary nor used. It was awesome.

And did you know that if you take a trial modification, and they decide not to grant it after the trial period, they can bill you for the balance you should have paid, plus interest? With friends like these...

Oh, and the "down-payment" loan? The one they put on a line of equity for the house, but we only figured that out after she'd already signed on the dotted line because nobody told us that was what they were doing? That doesn't qualify for any kind of assistance at all, because it's the "wrong kind" of loan.

So, it's not just the people who got ARMs who are screwed, they're just the ones getting the most attention right now, because their case is a) common and b) egregious.

I'm just saying. Until the feds establish a functional, effective, meaningful system for people to get help, that doesn't leave them in a potentially MUCH worse situation later, I'm not impressed by their cute little PR program. You want to talk about government that doesn't work, the federal home loan modification program is a poster child.

#140 ::: Fade Manley ::: (view all by) ::: November 02, 2011, 11:35 AM:

Nancy Lebovitz @138:

My experience with self-assertiveness training aimed at kids is that it's not about asserting the self, as such, nearly so much as it is about deferring all decisions to an authority adults approve of--themselves--instead of to the peer group. Which suggests to me that it'd be the very opposite of helpful for things like avoiding fraud that's presented by people who seem to be in positions of authority.

But it's entirely possible that there are better training programs out there than the ones I've witnessed or heard about from peers. I sincerely hope there are.

#141 ::: albatross ::: (view all by) ::: November 02, 2011, 12:11 PM:

FaultyMemory:

Just as a nitpick, there was a lot of bailout money given, but almost none of it was given to people who were underwater on their mortgages or otherwise couldn't pay. The bailouts were done to keep the biggest financial companies afloat at a time when it wasn't clear which ones were solvent. A lot of the bailout activity was apparently hidden (for example, Goldman got big effective bailouts because of the way our bailout of AIG was structured), and my understanding is that there is still a lot of detail that is being actively hidden, despite FOIA requests and congreessional requests for information.

My understanding is that a very small amount of money, certainly less than 1% of the bailouts given to banks[1], was made available for a couple of programs to help people get out of foreclosure. Mostly, those programs haven't been effective.

I understand your desire not to get stuck with the bill of other peoples' imprudent decisions. But I think it might make sense to have more of your anger pointed at the people who stuck you with a bigger bill (including a bunch of stuff they won't even let you know about).

If we do something about underwater mortgages and houses in forclosure, it will reward imprudent behavior at the expense of people like you and me who were more careful. This sucks. It may, however, be the best way to avoid a bunch of spillover effects that will land on us and other prudent people, too. For example, there is an empty foreclosed house sitting two doors down from me. The bank evicted the previous owner several months ago, and is now leaving it vacant. That has an impact on me and the other people in the neighborhood who didn't buy a McMansion on a stated-income interest-only loan with a baloon payment at year 10. And, to be fair, it was damned easy to get screwed in the mortgage and housing market in the years between 2001 and 2008. My experiene was that the mortgage market was made up of people with the morals of crack dealers--if they could make money selling yiu something that would wreck you next month, they were game.

My wife and I are both, not to pretend to modesty I don't have, over on the far right end of the bell curve, with good educations and parents and friends who are sophisticated about real estate and finance. And we were careful. And yet, we could have gotten screwed by some subtlety--all our care was worthwhile, but if the housing market here had fallen another 40% instead of 15% after we bought, we'd be far underwater, If I lost my job, we'd soon be in trouble with the mortgage, despite our care. (From experience, savings get burned through with horrifying speed when your income drops to zero for a few months!). Prudence makes you less likely to have gotten screwed, but not immune.

[1] It's hard to get precise numbers here, because much of what was done involved overt or implied guarantees of the debt of financial companies. It's common to say that doesn't really cost us anything, but if you go try to take out al life insurance policy, you will find that the insurance company thinks it really does cost them something to provide that policy to you.

#142 ::: albatross ::: (view all by) ::: November 02, 2011, 12:17 PM:

Carrie S:

When we started looking, I went to our credit union to see what we would qualify for. They pre-approved us for a mortgage that would have bankrupted us within a year. My wife and I looked over the terms they were offering and were terrified--it was like someone just offered to sell you a rope, a map of nearby tree branches, and instructions on tying the hangman's knot.

We ended up doing business with someone else--a woman who, as far as I could tell, was always honest with us, but who would absolutely sell you the rope and instructions if that was what you asked for.

#143 ::: albatross ::: (view all by) ::: November 02, 2011, 12:24 PM:

Nancy:

Yeah, the basic point is right. Many people are not all that bright, many arent terribly well educated, few have even the most basic understanding of financial concepts like present value, many are very busy and stressed. A lot of people make big decisions mainly on whether they trust they person they're doing business with, and the mortgage and real estate markets favor people who are good, convincing salesmen, perhaps with a side order of con artist.

And then you get additional problems. Lots of bad mortgages were apparently taken out by recent immigrants, doing business in a second language and a foreign legal system, with no friends or family who understood the situation better than they did--it's easy to see how they got screwed over. Local Spanish radio has a lot of call-in shows devoted to dealing with mortgage refinancing and a lot of commercials about various people who claim to be able to help keep you out of foreclosure.

#144 ::: David Harmon ::: (view all by) ::: November 02, 2011, 01:18 PM:

albatross #143: It's not even a matter of "Many people are not all that bright" and so forth... trust me, anyone can be conned if they get hit at the right time.

Often enough, "the right time" is when they're stressed and feeling their basic security is in danger... say buying a house, or looking for extra money in the wake of unemployment. And then a whole industry of con artists took out an open season on the American public, on a commission basis!

As you note, (1) those folks who did manage to navigate the minefield shouldn't feel too cocky about it, because it could have been them. A couple of other things to remember: (2) the point of society is to be more forgiving than the "state of nature", and (3) A handout doesn't become "unfair" just because you're not getting any of it. (The bailout of the banks was broken on other grounds entirely.)

#145 ::: abi ::: (view all by) ::: November 02, 2011, 02:09 PM:

Note, folks, that KayTei @139 has just been released from durance vile. (Actually, it was a little nauseated from all the tea and biscuits the gnomes fed it. They thought it was sweet and wanted to keep it.)

#146 ::: Tom Whitmore ::: (view all by) ::: November 02, 2011, 02:35 PM:

KayTei @139 -- just last year, Chase Bank approached my partner Karen offering her a lower rate on her current (with them) mortgage. When she asked, they said that a lot of people were leaving, and that they didn't want to lose a good customer. She reminded them that she was self-employed (she got the last loan that a self-employed person got from WaMu, and did it intelligently). They said it would be no problem.

After charging her various fees, they said "Oops, no, you can't get a mortgage with us at a lower rate, with lower payments, for the same principal because you're self-employed. And now that you've been turned down for credit, good luck getting a loan elsewhere." She complained to the state attorney general, and they actually refunded all her fees. She found another mortgage holder.

So the predators are still out there, but they may be a little more scared than they have been. And Karen is a lot savvier than most on financial matters (a whole lot savvier than me, which isn't difficult!).

#147 ::: Melissa Singer ::: (view all by) ::: November 02, 2011, 02:52 PM:

Nancy @138 : Does anyone know whether the self-assertiveness training that kids sometimes get in regards to refusing pressure towards sex and drugs is apt to get transferred to other parts of life?

At the risk of thread hijack and fwiw, those programs don't even seem to work wrt to drugs and sex, at least not in the teens I see.

Most of what makes teenagers resistant to drug/alcohol/smoking/sex/bullying is not self-assertiveness or self-esteem, as far as I can see. It's what they've learned about the item/act in question, plus the family's attitude about the item/act, plus the overall composition of the peer group. If most of your friends do not drink, it's easier for you to not drink, for example. It also helps if the peer group supports members who publicly decline the item/act; if more than one person in the group confronts/stands up to the bully/bullies; and if an outside authority is supportive of the individual and peer group decisions/positions (parents, guidance counselors, teachers, etc.).

#148 ::: heresiarch ::: (view all by) ::: November 02, 2011, 03:37 PM:

I think the correct analogy for people who ended up with an ARM that they couldn't afford is that of a patient who underwent a procedure at the advice of their doctor that turned out to be as dangerous as it was ineffective. To put it another way: there is no reasonable universe in which everyone who needs a mortgage is able to make a good decision without relying on the advice of an expert. To pretend otherwise is to engage in unforgivable Heinleining.

#149 ::: FungiFromYuggoth ::: (view all by) ::: November 02, 2011, 03:59 PM:

I think the fraud in the mortgage industry is still understated - probably because no one's going to jail over systematic fraud. From MERS to illegal NY trusts, the mortgage industry is built on fraud.

Charging illegal late fees is one big example - some mortgages don't allow for late fees, or put some sort of limit on them. Banks have been ignoring that, and who checks their mortgage paperwork when the bank assesses them a late fee? The HuffPo was the best source I could find for that story when I looked today, which I found disappointing.

There does seem to be some pushback against banks engaging in widespread fraud against veterans, but that's because there is a government agency that cares. I don't think anyone's looking out for the interest of Joe Homeowner.

There are other cases where mortgage brokers have falsely told customers that they didn't qualify for fixed-rate loans, in order for the broker to make more commission on ARMs. This was more common with minority borrowers. I think most people presumed that the mortgage broker had some sort of responsibility to the borrower - I know I was surprised to find out this was not the case.

Locally, we've had three houses on our block go into foreclosure, two of which have resold. The third has never been put on the market, and word in the neighborhood is that it wasn't even winterized, so the pipes burst last winter. Presto, a hundred-year old house that was mentioned on the local library's historical walking tour is now a mold factory.

Gossip is that the family that bought that house was having problems making payments because the father was having problems finding work as a carpenter. Giving him a break on his principal or letting him rent the house from the bank might have been giving him a handout, but it would have kept Bank of America from wrecking the house. We're all in this together, and sometimes we have to decide between mere fairness and the common good.

#150 ::: Nancy Lebovitz ::: (view all by) ::: November 02, 2011, 05:31 PM:

#141 ::: albatross:

Even the public face of the government help being offered seemed insanely restrictive-- iirc, help was offered to people who's never missed a payment. It might even have been for people who'd never been late with a payment.

#147 ::: Melissa Singer:

I prefer to think of it as thread drift.

I've seen a suggestion that parents should think of themselves as raising adults, not raising children. While I'm sure this idea could be misused, it's not a bad principle.

If schools were actually intended to teach their students to be capable adults, how would they be different?

*****

More generally, I can't encompass the damage done by the mortgage crisis. I haven't heard of anyone trying to add it up.

It's not just the loss of value in real estate. Throw in the people who can't afford to move to take jobs, distraction from money fears, damaged health, probably some deaths.....

The only other example I can think of where a country was massively damaged by fraud was an eastern European country after the fall of the USSR which was hit by a Ponzi scheme, and I don't think it was as bad as this.

And it's not just a bubble like the tulip mania, houses are basic life support.

#151 ::: FaultyMemory ::: (view all by) ::: November 02, 2011, 05:56 PM:

At the risk of further fanning flames:

Where are you now, Freeloader? Now that Uncle Mobster has reported
    Loan Shark missing
And Internet Tough Guy's fallen asleep in the merry-go-round seats?
Where are you now that Dealer Marvel's WHADDAYANEED! echoes
    round the street corner,
The junkies don't hear it,
Must all be deaf . . . or dead . . .
The Bill Collector who came down from the Payment Planet
    disguised as a man
Is wandering aimlessly about the foreclosures
With no way of getting back.
Sir Prodigal's been strangled by the Incredible Living Trust,
Check-kiter killed by his own pen.
Pawnbroker has bankrupted the last of his businesses
And has now gone off to commit suicide in the disused
    Hangars of Collections.
The Pickpocket and the Cop still fight it out on a subway
Where the walls are continually closing;
Getaway Car's fuel tanks gave out on I-5.
Even Three-Card Monty's lost, podgy and helpless
He wanders along the streets
Weeping over the marks he found
    Half a decade ago.
        My illustrious companions, it's only a few
            years
Since first I knew you. Yet something in you has already faded
Has the Terrible Fiend, That Ghastly Adversary,
Mr. Conscience, Caught you in his deadly trap,
And come finally to polish you off,
His machinegun dripping with debt . . . ?

with apologies to Oevna Cnggra, Jurer Ner Lbh Nbj, Ongzna?

#152 ::: Jacque ::: (view all by) ::: November 02, 2011, 06:01 PM:

For most of my adult life, I've regarded consumer credit as being slightly less dangerous than heroin.

After going through my own little economic crisis (which, Praise Be, ended just before the collective crisis), I've revised my opinion.

More than once in the last several years have I been grateful to my bookkeeper parents: "If you can't make the numbers make sense, back away slowly." Apparently I'm fairly rare in having received that early indoctrination.

#153 ::: nerdycellist ::: (view all by) ::: November 02, 2011, 06:21 PM:

Just an anecdote. When I moved to L.A. in 2002, I found temp work at a local bank's mortgage arm. Toting barges, lifting bales, light filing, etc. When that bank was eaten by one of the Big Bads, they made most of us Temps loan processors (except those smarties who didn't need insurance). Now being a fairly intelligent critical thinker but never a mathy sort, I had many questions during our crash course in how mortgages work. After the first of my "No, srsly?!" questions, pretty much everything that was asked regarding the dirty practices well-known today was answered with something like "Well it's perfectly legal!" Luckily they fired my tragically underpaid ass in less than a year. Every moment of my time there reaffirmed the wisdom of renting, the mortgage process being so very unethical. Although in L.A. there's precious little chance I'd ever own any property anyway.

Interestingly enough, I learned during that job and in my current one that I'm actually pretty good at budget-type arithmetic as an adult. And also, that if my instincts say "this is wrong", even in an area where I have no expertise, where every authority touts how Legal it is, I should run far away.

#154 ::: FaultyMemory ::: (view all by) ::: November 02, 2011, 06:33 PM:

If it were illegal to lend money to someone whom you doubted would repay you, pawnbroking would not exist. Car title loans would be unheard of, as would rent-to-own arrangements at furniture stores and layaway arrangements at department stores. Mortgages are collateralized specifically so that if the borrower defaults on payments, there is something the lender can repossess to be made whole on the debt. And because there is a collateral, lenders compete with one another to offer mortgage loans at rates and terms more favorable than those offered for unsecured debt.

What is illegal is fraud. Promising that the rate on an ARM won't rise, or will fall, is fraud. Promising that an interest-only loan can be paid off at the coupon payment level is fraud. Were such promises made? Probably. Can it be proved? Damned if I know.

#155 ::: Not as brave today ::: (view all by) ::: November 02, 2011, 07:00 PM:

I'll try to keep the stuff that belongs on the Dysfunctional Families thread out of this, but the mortgage subthread here has been tough to read. 

I don't personally know anyone who has lost a home to foreclosure, but I support efforts to help those in trouble. Even if my taxes would go up. 

I wanted to write more about help vs bailout, etc. but others have written better than I.

I bought my first house as a single person with a solid upper half of five figures income in 2002. As far as I can tell, I "did everything right" and followed the best financial advice I could find, from a CPA with a lifetime of experience and plenty of solid business and financial success. That this person is my parent only increased my perception that the advice was sound. 30 year fixed, 20+% down in cash. That said cash was a gift/unwritten personal loan from said parent probably warped things a bit - as it stands that particular loan won't pay back for quite a while, but it is the difference between "about even" current LTV and "way under water".

In the ensuing years I got married and started a family. We bought one new 23 mpg minivan (now has 55 k miles) in 2007 as both our cars were old- I still drive my 12yo 35mpg compact car. A/C is busted, needs $4500 worth of work and is worth $900, I hope I can keep it going another year until the minivan is paid off. 

One of my extended family members who is on disability and cannot work and has not enough SSI benefits to live on alone moved in to help with the kids. Declining buying power of those bennies plus rising health insurance costs means I claim this person as a dependant legally. Their vehicle needs $1000 or so of work soon, and they don't have enough, nor have a credit card to help. Family x-mess gift will probably be repairing it so this family member has some autonomy.

Another extended family member got their life ruined by a toxic criminal ex and needed much travel on our part ($$) to support and help, and ended up moving in until they could get their life back in line and get back on their feet. They now have a decent job (no bennies tho) and have moved in with a much nicer partner. Also in the meantime various non-covered medical bills needed paying.

Despite raises, the past few years have seen our cushion evaporate and employer HSA contrib keeps going down while premiums keep going up. Not in danger of forclosure yet, but running out of available credit in a house that is now too small for us and too expensive - and thanks to the economy our house is worth less than I paid for it and we will very likely be renters when we finally get this place on the market and sold. It needs work due to being lived in and being 20's construction and theres an ongoing spoon shortage around here - been wanting to move for 4+ years (since kids came- it is a 3br/ 1 bath house for 3 adults and 2 kids...) but it takes spoons and/or money to get work done. 

We do not live extravagantly, though we do eat out more than I would prefer - see spoon shortage and young family. Also see "shadow work" and recent article here: http://m.motherjones.com/tom-philpott/2011/10/cooking-really-cheaper-junk-food-mark-bittman

All this is to say that even those of us who are well-educated, well-employed and got actual honest financial advice are getting hit by the crap economy and popped housing bubble. The conventional, conservative wisdom for home loan size vs earnings 9 years ago has turned out not to have enough slack for both a growing family and a down market. 

I am damn lucky, in that if things got real bad I have a 401k to raid, but that is expensive money. 

I realize that my problems likely read as "rich people's problems" compared to many. I sure don't feel "rich". Rich people don't have their debit card declined at the daycare due to insufficient funds.

I hope I manage to work up the courage to go to an Occupy protest before long, but by the time the weekend rolls around all I want is some rest and to try and regenerate spoons.

I am the 99%.

#156 ::: KayTei ::: (view all by) ::: November 02, 2011, 07:13 PM:

nerdycellist @ 153

"And also, that if my instincts say "this is wrong", even in an area where I have no expertise, where every authority touts how Legal it is, I should run far away."

This, this is where I get into trouble. Because when experts tell me that a thing that doesn't feel good is okay, I too often let myself be reassured because it's "probably something I just don't understand." And yet every time I've let my instincts be overruled, I've regretted it later...

#157 ::: Syd ::: (view all by) ::: November 02, 2011, 08:44 PM:

KayTei @ 156--there are days I'm not sure I even have those instincts. If I do, I'm afraid they may be atrophied from lack of exercise. Dammit. Anybody have any ideas on how to wake them up?

#158 ::: Lee ::: (view all by) ::: November 02, 2011, 09:13 PM:

FaultyMemory: I was responsible, and didn't buy a McMansion I can't afford. Where is my bailout? Why are my taxes subsidizing their indiscretions? is indeed a right-wing talking point; you can hear it up and down the spectrum from Limbaugh to Congress. It may be your opinion, but that doesn't make it any less of a right-wing talking point.

KayTei, #139: Ah, that would be why they're advertising those things all over Facebook. I remembered seeing those ads after my earlier post, but I'd always considered them the equivalent of the spam I get in my e-mail.* Apparently I wasn't far wrong.

heresiarch, #148: That's pretty much what I was going to say, better-worded and more concise. Thank you.


* Or all the other Facebook ads for "Miracle Wrinkle Remover", "Lose Weight With This Trick Discovered By A Mom", "Make Money Working At Home", and the rest of the obvious frauds. Facebook's ad-vetting policies are at best nonexistent; they'll take money from anyone for advertising any scam out there.

#159 ::: Serge Broom ::: (view all by) ::: November 02, 2011, 09:58 PM:

Lee @ 158... Wha? You mean those ads saying that young women are looking for mature men aren't to be believed?

#160 ::: Linkmeister ::: (view all by) ::: November 02, 2011, 09:59 PM:

Lee @ #158, install AdBlock. I use Firefox with that wonderful program, and I have never ever even seen an ad on Facebook.

You may know they're there empirically, but outta sight outta mind.

#161 ::: P J Evans ::: (view all by) ::: November 02, 2011, 11:08 PM:

If you're buying a house, don't assume that anyone is on your side. Everyone you're dealing with will get paid from the money you're handing over, so they all have an incentive to get you to buy a more expensive piece of real estate.

#162 ::: abi ::: (view all by) ::: November 03, 2011, 01:51 AM:

Comments 154 and 155 have both been freed from the gnomes.

#163 ::: KayTei ::: (view all by) ::: November 03, 2011, 02:05 AM:

FaultyMemory @ 154

Except that usury, for example, is illegal. So I see no reason why there shouldn't be similar restrictions on lenders, preventing them from other predatory lending practices.

And before we start down a slippery slope, allow me to note that politicians are also entitled to invoke the standard exception that they are not required to take things to their logical extension if it would be stupid to do so. There is room for nuance in defining what lending is "predatory." Personally, I think that either the law, or recent implementation of the law, places insufficiently stringent restrictions on lenders in this regard.

#164 ::: Bruce Cohen (Speaker to Managers) ::: (view all by) ::: November 03, 2011, 02:06 AM:

In general the educational system in the US has refused to teach critical thinking, precisely, I believe, because it provides tools for people to detect the kind of scams that mortgage lenders and banksters have been trying to pull. Blaming the people who don't even know that critical thinking as a technique exists because they've been carefully shielded from the knowledge of its existence is definitely blaming the victim.

#165 ::: Linkmeister ::: (view all by) ::: November 03, 2011, 02:14 AM:

Bruce C @ #164, even when I went to high school in the '60s the only economics course offered was home economics, and that was in one of the richest school districts in the country (Fairfax County, Virginia). This country has never included common sense economics in formal public education, as far as I know. In these days of shrinking public education budgets I think it's too much to hope that public schools start now. I agree they should, but I'm a realist.

#166 ::: KayTei ::: (view all by) ::: November 03, 2011, 02:41 AM:

Linkmeister @ 165

I feel like home economics is really underrated, in general. I'm a little amazed by the number of adults of my acquaintance who were never taught even basic cooking, cleaning and mending.

I know that my aunt had to take finance as part of her Home Ec degree. So, whether financial literacy is included seems to depend in part on where (and maybe when) you are. But I think that, in general, our schools are so focused on educating kids about Sex and Drugs that they neglect all the other, less exotic Urban Survival Skills (including financial literacy, yes). I think that's a shame.

#167 ::: Linkmeister ::: (view all by) ::: November 03, 2011, 03:27 AM:

Kay Tei @ #166, I never took home economics; I think it was an elective of sorts and there were other courses conflicting (or maybe I thought "that's for girls" -- I'm sure I had those feelings back then). I could definitely have used the mending skills down the road. Cooking I've learned by doing.

I think now the schools are terrified of tests that show they're not doing their jobs well, so they teach nothing but material that will be on the standardized things. It's stupid policy on all sides, as far as I'm concerned.

#168 ::: David Harmon ::: (view all by) ::: November 03, 2011, 07:07 AM:

Linkmeister #167: I think now the schools are terrified of tests that show they're not doing their jobs well,

Not quite right -- they're terrified of rules that say their standardized test scores need to rise every year, forever or the school loses funding. NCLB was designed and implemented as a Procrustean bed to cut away at the public school system... until the only kids who can get a decent education are the heirs of the 1%.

(And I still haven't seen better than Teresa's quip: "Everyone slow down so little Timmy can keep up!".)

#169 ::: Gray Woodland ::: (view all by) ::: November 03, 2011, 07:36 AM:

Linkmeister @ 167: I did take several months of 'Home Economics' at high school - all practical subjects went through a compulsory rota in the early years - and dropped it at the first opportunity. Girl-cootie-phobia may have had something to do with it, but the fact that it consisted exclusively of cooking had more, and the fact that the cooking was so unappetizing and annoyingly organized was the dodgy radioactive-looking cherry on the top.

It was much more of a disincentive to me than a help, and I say that as somebody who liked cooking as a kid and got back into it later. 'Needlework' was vastly worse, and wholly uninterested in teaching any skills not already possessed. Imagine the boyish enthusiasm that resulted all round in that quarter!

Basic Self-Maintenance Skills if actually taught would be more useful than half the cruft on the curriculum, IMO. But it's so hard to keep even the sciences free of pious cant, lifestyle spam, and openly mindless box-ticking from the supervising authorities, I don't hold out much hope for stuff of more immediate relevance to life and livelihood. I'm not saying it can't be schooled, or that the schooling can't be improved under the present system - in several ways it clearly has been, since my student days - but only that the overall tendency doesn't seem to me a promising one.

I ended up learning most of my cooking, mending, and budgeting skills from my immediate and slightly extended family. This explains also why I'm extra nothing with a needle, and makes me painfully aware of folks' situation who drew a bad hand in any or all of the other basics. Especially the money basics!

There have to be better ways of diffusing them than the ones we've got, and I'm pretty sure they're going to have to be bottom-up in nature to avoid the known pitfalls; I'd surely like to hear of any effective examples that come to the Collectively Fluorescent Mind.

#170 ::: Dave Bell ::: (view all by) ::: November 03, 2011, 08:19 AM:

It occurs to me that the school I went to, which was a grammar school by the terminology of the time, here in the UK, was tainted by the belief the families of the students could afford to pay a servant. This in spite of the fact that the world had changed and the pupils were of the sort who were likely to be managers rather than owners.

So practical skills were hardly mentioned or taught, and at least one teacher, while showing the class his motor car as an example of the internal combustion engine, was emphatic in his confusion of the brake-fluid reservoir and the windscreen-washer bottle.

Maybe a full dozen of us knew better, sons and daughters of garage owners and farmers, and some of us had taken a hand in dismantling and reassembling these things, dropping a sump and replacing piston rings and the like. But we couldn't be right.

#171 ::: fidelio ::: (view all by) ::: November 03, 2011, 08:31 AM:

You all know who is willing to teach people about domestic economics, AKA personal finances? Habitat for Humanity. In case you want some information, or you want information to share with other people. Of course, accessing it, unless you are involved with Habitat locally, requires a computer, but you'll share, right?

#172 ::: Carrie S. ::: (view all by) ::: November 03, 2011, 08:59 AM:

If it were illegal to lend money to someone whom you doubted would repay you, pawnbroking would not exist.

I'm sorry, I don't understand what legality has to do with it.

Why would anyone, business or otherwise, lend money if they don't expect to get it back? If you give money with no expectation of repayment, that's not a loan; it's a gift. Businesses, like the kind that make mortgages, aren't there to provide gifts.

As for pawnbrokers, what they get out of the deal is something they expect to be able to sell for more than they paid the person who brought the thing in.

#173 ::: SamChevre ::: (view all by) ::: November 03, 2011, 09:01 AM:

In my (very limited) experience, personal finance is most effectively taught by an "each one teach one" approach.

I taught my sister's then-boyfriend to make a list of his known monthly bills, and wait until he had that much on hand before figuring he had extra money and paying down debt. I'm still pleased that I could do it (and was asked), but amazed that it was needed.

Nancy @ 150

More generally, I can't encompass the damage done by the mortgage crisis....It's not just the loss of value in real estate...

I'm firmly convinced that that's backward. We have a mortgage crisis because of the fall in value of real estate, not vice versa.

David Harmon @ 168

they're terrified of rules that say their standardized test scores need to rise every year, forever

I'm fairly certain that NCLB does not say that, unless your students are below the (very minimal) basic competence level.

#174 ::: David Harmon ::: (view all by) ::: November 03, 2011, 09:17 AM:

SamChevre #173: Consult prior threads for details -- ML has discussed this several times before. The evil of NCLB is exactly that it's not satisfied with bringing the students to a common standard.

AIUI, The school's collective score has to improve each year, regardless of (1) how many special-ed or impoverished students they're dealing with, (2) any limits on local resources, or (3) whether they met standards previously. All the obvious abuses have already been seen in the field, notably including forging test scores, trying to get rid of the lower performing students, and especially teaching to the tests "first, last and only".

#175 ::: SamChevre ::: (view all by) ::: November 03, 2011, 10:25 AM:

David Harmon

Here's the guidance (from a random school site found via google) on what NCLB requires. Basically, 95% of students (100% of the 95% that must be tested) need to be proficient OR more students must be proficient than the year before.

Here's the Virginia 8th grade reading SOL. Getting 60% right counts as proficient; in my (not-very-informed) judgment, that looks like "can read a newspaper".

#176 ::: David Harmon ::: (view all by) ::: November 03, 2011, 10:45 AM:

SamChevre #175: You missed this part:

These annual objectives are based on the goal to have 100 percent of students proficient by 2013-14. All students, as well as eight identified subgroups, must meet the proficiency target in order for a school to make AYP.

Objectives with an unrealistic goal are, well, unrealistic.

Also this one:

In addition, all schools must demonstrate a one percent improvement in the percentage of students proficient in Writing and high schools must also demonstrate a one percent improvement in its graduation rate.

Looks like a ratchet to me....

And...

Schools or districts with subgroups that do not meet the annual objectives for reading or math can meet AYP by reducing the proportion of non-proficient students in that subgroup by at least 10 percent from the prior year.

"Reducing the proportion of non-proficient students." Hmm, now how can they do that... given they already took their shot with actual education?

And notice what happens if you're serving any population where the kids who can't meet the standards nohow, outnumber that 1 in 20 "discard rate"... Believe me, 1 in 20 is not a realistic upper limit -- probably not even in middle-class territory, let alone the inner cities.

#177 ::: C. Wingate ::: (view all by) ::: November 03, 2011, 10:46 AM:

re 173: The mortgage crisis and the fall in real estate prices are to a large extent one and the same thing: the rise in prices was supported by inflationary pressure from the mortgage money pool, and the continuing increase in that pool was made possible by the expectation that mortgages were protected by the continual and inevitable increase in prices. On the one hand one could say that the price bubble was there first, but on the other hand it was a decided move into clearly scammish territory on the part of the lenders that really lit the thing up everywhere. I think it was probably the bad mortgages that really knocked the props out first, but the feedback loop worked both ways and the collapse of the expectation of price rises very quickly realized the problems that were latent in a lot of marginal (as opposed to outright fraudulent) mortgages.

#178 ::: Constance ::: (view all by) ::: November 03, 2011, 11:00 AM:

WBAI is having a (troubled) live stream of the presently ongoing NYC Occupy Wall Street trial of Goldman Sachs.

It's really interesting. The speakers tie the practices and objectives of Goldman Sachs and their ilks to the deeply corrupted community and local systems that they too either directly or indirectly exploit for their gain, from mortgages to public education to public housing, to the culture of rape and demeaning of women and other groups.

Alas that the streaming options are as iffy as they are, but it's impoverished WBAI, not the vastly wealthy NPR, that blatantly shills many times a day to get their listeners to not merely donate -- but to leave their money to NPR in their wills -- and which couldn't be bothered to report at all on yesterday's Oakland's Occupy strike, or the march of the vets here, to Zuccotti Park, in support of Oakland's Occupy strike.

Love, C.

#179 ::: fidelio ::: (view all by) ::: November 03, 2011, 11:04 AM:

WRT 173 & 177--Another factor in the collapse was the increase in payment costs on ARMs as interest rates increased, or as the fixed-rate period many of these were equipped with ended, and the rates were raised to anything from "the current going rate" to "whatever the traffic will bear". Many people who had manageable payments suddenly didn't, with predictable effects.

When ARMs first became a big item, in the early 1980s, interest rates were very high, and an ARM that offered some hope you'd have the chance at a lower payment at some point, at a time when interest rates were over 12%, was good thing for a lot of people. However, when rates are historically low, the ARM becomes a good deal for the mortgage holder, but not for anyone else. This was something that mortage personnel were not likely to point out to anyone obtaining a mortgage in the late 1990s and 2000s.

#180 ::: Mary Aileen ::: (view all by) ::: November 03, 2011, 11:35 AM:

While I was in high school in the late 1970's, there was a newly instituted requirement (state? county?) of one "quarter" (really trimester) of personal finance or business math, and one quarter of economics (and one quarter of career planning). These covered budgeting and compound interest, among other things.

Most people wound up taking this sequence in place of the semi-required World Geography, an unfortunate loss. My grasp of geography is lamentably shaky, but almost everything I know about it, I learned in that class.

#181 ::: Jacque ::: (view all by) ::: November 03, 2011, 12:34 PM:

Syd @157: I'm not sure I even have those instincts. If I do, I'm afraid they may be atrophied from lack of exercise. Dammit. Anybody have any ideas on how to wake them up?

Fortunately, where numbers are concerned, Empiricism Is Your Friend. It's tedious and a pain in the ass, but if you can't make the numbers work out, that's a heavy clue that something's wrong. If your Expert Consultant pressures you to ignore the discrepency, that's a big heavy red flashing clue that something's wrong.

The hardest part, in these kinds of things, is to credit one's own intelligence. Repeat after me: "I'm pretty smart. I'm capable of understanding complicated stuff. If I'm feeling confused, what are the odds that the Expert is being confusing?"

Heh. I remember the first time I encountered a Ponzi scheme (though I didn't have the word for it back then). A coworker wanted me to buy into this deal, explained the concept to me...and I did a quick mental extrapolation. "Um, but what happes to the people on the bottom, who can't find buyers?"

"Oh, that's not a concern. It'll work out. Really!" Um.

Coupla weeks later, she quietly and rather sheepishly admitted to me that I had been right. Evidently she wound up being "last man standing."

#182 ::: joann ::: (view all by) ::: November 03, 2011, 12:38 PM:

Linkmeister #167:

If you went to school at the same time as I (or as I suspect, even earlier) you weren't given a choice about home ec class. That was for girls. (Shop was for boys.)

Our junior high home ec classes consisted of nine weeks of cooking and nine weeks of sewing. We learned how to measure ingredients, stove safety, how to cook a can of tomato soup, how to make cookies, and (special Christmas project) how to make milk-carton candles. We also each made a skirt from patterns, and had a week on health and beauty tips.

I should note that I had already learned every single thing taught in that class (except for the candles) years earlier. I had baked my own ninth-birthday cake, made at least two skirts the previous year, and was making a tailored suit jacket at home to match the skirt I made in class.

The closest anyone ever came to teaching me about finance, budgets, or any of that stuff was in, of all places, ninth-grade civics class, where we spent nine weeks on "careers", meaning we got to tour a bunch of local businesses, and write up a project on what we wanted to do when we grew up, including some sort of budget--which was allowed to be as unrealistic in its assumptions as you might expect, given that there was no data from the real world.

#183 ::: Jacque ::: (view all by) ::: November 03, 2011, 12:51 PM:

Linkmeister @165: This country has never included common sense economics in formal public education, as far as I know. In these days of shrinking public education budgets I think it's too much to hope that public schools start now. I agree they should, but I'm a realist.

I've told this story here before, but it bears repeating, if only to give props to Mr. Knox's 7th grade Government class and the Boulder Valley School District, which empowered him to teach it.

We had a segment on "advertising strategies," and covered some of the basics, such as "bandwagon technique," and "endorsements," and so on. It wasn't all that comprehensive, and I remember thinking "Yeah, yeah, blah blah blah" at the time.

But it served to inoculate me, and I find that as a result of that class I have a fairly sensitive bs detector. Whenever somebody wants me to believe something, my first question is always, "In whose interest is it that I believe this?" See also, the immortal, "Follow the money."

#184 ::: Nancy Lebovitz ::: (view all by) ::: November 03, 2011, 12:56 PM:

#173 ::: SamChevre:

Real estate prices had to fall and it would have made a mess, but it wouldn't have been such a huge disaster if people hadn't been pushed into mortgages they couldn't cover.

I used to hate school in a flamboyant "tear it down" sort of way. I've calmed down since, but I'm not sure how much is that I have better sense and how much it is that I've forgotten how bad it was.

It wasn't an extremely bad school-- it was physically safe. However, it wasted a huge amount of my time, taught me to tolerate boredom and kill time, and trapped me with kids who harassed me.

While I was at least decent at academic subjects, I was bad at sports. I was just downgraded and not taught, which left me somewhat bad-tempered. It took decades for me to stop thinking of sports injuries as funny.

If the whole point of sports is to push your tolerance for pain, and I'm despised for having too much sense to do that to myself, I'm not sympathetic to people getting hurt.

Since then, I've learned something about my own coordination issues (which made running just plain feel bad-- I think I could have done myself some damage if I'd simply "tried harder") and the pleasures of easy movement, not to mention sympathy for the social pressures which encourage people to get themselves hurt. I still don't get the desire to test oneself, but I'm more patient about people having drives I don't understand.

In any case, my stuff about athletics is at least about a fairly small part of life. I get the impression that a lot of people have that sort of despair and anger about reading.

I suspect that part of why so many people are opposed to public schools is that they had a bad time there, and hate them for good reasons.

This doesn't mean NCLB is a good idea, just that viewing mistrust of schools as simple malevolence
may be missing a good bit of what's going on.

#185 ::: FaultyMemory ::: (view all by) ::: November 03, 2011, 01:36 PM:

KayTei@163:

Minor nitpick. Usury laws vary by state. In some places, any interest rate is legal provided the interest rate is disclosed in advance. I've seen photographs of car title loan places with big signs in the windows advertising that the effective annual interest rate exceeds 500%.

Carrie S. @172:

Why would anyone, business or otherwise, lend money if they don't expect to get it back?

Maybe the lender wants your collateral more than they want your money?

The point being that a lender to whom you provide collateral knows that if you can't repay the loan, they get the collateral. With pawnbroking, the broker takes physical possession of the collateral as a condition of giving you the loan. With car title loans, which I consider a form of loan-sharking, you keep physical possession of the vehicle but the lender holds the title, which is the legal possession of the vehicle. If you don't pay up on time, the car title place repossesses the car.

With real estate mortgages, you keep physical possession of the house, but the lender gets a legal interest in the property. They lend you money. If they don't get the money back from you, they get to take the house, which they can then try to sell to recoup their money.

#186 ::: Cheryl ::: (view all by) ::: November 03, 2011, 01:45 PM:

Looks like the police are clearing the Oakland protesters again.

#187 ::: SamChevre ::: (view all by) ::: November 03, 2011, 01:51 PM:

Nancy Lebovitz @ 184

Real estate prices had to fall and it would have made a mess, but it wouldn't have been such a huge disaster if people hadn't been pushed into mortgages they couldn't cover.

True.

What I'm saying, though, is that I was in a non-bubbly area, with a super-conservative mortgage--and I lost 6 years of savings. And except for the great good luck of getting a very good job just when I was almost completely out of savings, I'd have been really in trouble. Someone in a bubbly area would have lost far more. Someone with a standard 20% down mortgage would be far underwater. That dynamic, I think, is 90% of the disaster.

If the only problem, or even the main problem, were the foolish/fraudulent mortgages (3% down is foolish, non-disclosed neg-am's are fraudulent), we'd have 10% of the problem we do now.

1) Percents are representative and based entirely on guesswork.

#188 ::: FaultyMemory ::: (view all by) ::: November 03, 2011, 02:00 PM:

Cheryl@186:

Oh, the irony.

Police in riot gear clashed with protesters in Oakland on Thursday, firing tear gas to disperse demonstrators lingering in the streets after a day of mostly peaceful rallies against economic inequality and police brutality.

Sounds like the beatings will continue until the morale improves.

#189 ::: Cheryl ::: (view all by) ::: November 03, 2011, 02:13 PM:

I don't even know what to make of this article:
http://dailycaller.com/2011/11/02/nyc-arrest-records-many-occupy-wall-street-protesters-live-in-luxury/

I'm not at all familiar with "The Daily Caller", so I'm not sure what type of paper it is, and I'm not sure how to interpret the numbers they're using, the cost of housing and average salary being so different here.

Also, "...the youngsters’ privileged backgrounds are revealed by glimpses of expensive gadgetry..." - what does that mean? If I have an iPad, I must be in the 1%?

I'm a little wigged by
"For each of the 984 Occupy Wall Street protesters arrested in New York City between September 18 and October 15, police collected and filed an information sheet recording the arrestee’s name, age, sex, criminal charge, home address and — in most cases — race. The Daily Caller has obtained all of this information from a source in the New York City government."

That info's publicly available?

#190 ::: FaultyMemory ::: (view all by) ::: November 03, 2011, 02:19 PM:

Portland police have been posting protestor mugshots on Facebook. This is for people arrested, not convicted, of things like criminal trespass, resisting arrest, disturbing the peace, and similar misdemeanors. I'm not sure what to think of that, either.

Also, here's video of the Oakland march on the port. It looks to me like a lot more people than the five thousand claimed in the Yahoo! news writeup. The San Francisco paper put it at 100,000 people.

#191 ::: Nancy Lebovitz ::: (view all by) ::: November 03, 2011, 02:23 PM:

#187 ::: SamChevre:

Fair point. I don't have a feeling for to what extent high real estate prices were a result of the banks pouring non-existent money (high loans which couldn't be repaid) into the real estate market.

I'm not sure I have a solid understanding of these issues, but I have doubts about whether some of the hypothesized value of real estate was ever there at all. I'm also not sure my ideas on the subject are clear or sound.

I know that "real price" which isn't the price in a market is an illusion, but what's to be made of prices which are estimates of what something will sell for if not too much changes?

#192 ::: Nancy Lebovitz ::: (view all by) ::: November 03, 2011, 02:54 PM:

Sam, I took another look at your post, and I'm thinking about the non-bubbly area-- I don't know whether the whole real estate market was pushed up.

#193 ::: Gray Woodland ::: (view all by) ::: November 03, 2011, 03:00 PM:

Nancy Lebovitz @ #191: I know that "real price" which isn't the price in a market is an illusion, but what's to be made of prices which are estimates of what something will sell for if not too much changes?

Feedback noise. A nescience cascade temporarily driving the information content of the price towards zero, until a collision with some wall or other re-introduces substance into the conversation - the hard way.

Human reactions to this mean that the harder the way, the less like a 'market correction' the results are going to look. The analogy I think of is that, if I walk slowly into a wall, it really will correct my course. If on the other hand I crash-bang-wallop into it like a frantic person, my subsequent movements are not guaranteed to be very well directed.

#194 ::: Stefan Jones ::: (view all by) ::: November 03, 2011, 03:06 PM:

I stopped by the local food bank office on Monday to pick up a couple of donation barrels. I noted that they offer cooking classes.

It wouldn't be much harder to offer smart shopping classes.

#195 ::: Bruce Cohen (Speaker to Managers) ::: (view all by) ::: November 03, 2011, 03:11 PM:

Even when schools have offered financial training they haven't been serious about the students learning anything from it. When my older son was in high school (this would have been about 1990) I talked to his "personal economics" teacher at a Parent-Teachers meeting. I asked him why my son wasn't getting any homework in the class, and the teacher replied, "I don't assign homework because they won't do it if I do."

Umm ... yeah, and they sure won't do it you don't assign it.

#196 ::: Bruce Cohen (Speaker to Managers) ::: (view all by) ::: November 03, 2011, 03:19 PM:

FaultyMemory @ 190:

While I don't really believe things have gone quite this far in the US yet, the posting of photos of the arrested demonstrators reminds me uncomfortably of a tactic used by the Egyptian Mubarak loyalists during the opening moves of the Arab Spring there. The police made sure that information about leaders of the demonstrators was available to the "public", which is to say paramilitary groups of loyalists who were probably organized and equipped by the security forces. I think the revolution moved too fast for individual assassinations and disappearances to become common; the paramilitaries quickly escalated to random "reconnaissance by fire" in neighborhoods known to house demonstrators.

#197 ::: albatross ::: (view all by) ::: November 03, 2011, 03:35 PM:

One useful thing for parents from this discussion would be the sort of things you wish school had taught you. For example, I have spent a lot of time working on teaching my kids critical thinking wrt advertising (asking what the person speaking or making the ad or commercial or poster wants you to believe, for example). And I've been trying to get my kids to understand how to minimally cook for themselves, though I get little joy from cooking, so I doubt I will be a great teacher. But I wonder what other things I should be teaching them....

#198 ::: Mary Aileen ::: (view all by) ::: November 03, 2011, 03:44 PM:

Not school, but my parents made sure that all of us kids, boys and girls, learned: basic cooking, basic sewing (enough to replace a button), basic ironing (less important now, probably), how to do laundry, how to hammer a nail, screw a screw, saw a board, check the oil in a car, change a tire, write a check, and balance a checkbook.

#199 ::: Lori Coulson ::: (view all by) ::: November 03, 2011, 03:55 PM:

What I wish my parents (or school) had taught me:

How to balance a checkbook and when not to borrow money (and how credit cards REALLY work).

What I wish schools or parents WOULD teach:

How to do research -- like finding out whether you need a city, state, or federal agency to look into a particular problem.*

*If I get one more call today asking if we're the health department or if we inspect housing, I'm going to go mad...

#200 ::: albatross ::: (view all by) ::: November 03, 2011, 03:58 PM:

FaultyMemory:

If you are a mortgage broker, you care only about what you can sell the mortgage for. You aren't lending your own money to anyone, so there isn't an obvious reason for you to care.

The buyers of those mortgages were, as I understand it, computing a value on the mortgages based on statistical models of default and refinancing (during the up years, refinancing was a bigger source of loss than default). Those models were based on the last several years of data, during which house prices were going up consistently, and during which lending standards were falling as mortgage brokers got better at gaming the system. The mortgages were then bundled into CDOs, and the repayments were broken into tranches of shares. (So if you have 100 mortgages, the top tranche gets paid as long as at least, say, 20 mortgages keep making payments; the second tranche gets resold for less money (higher rate of return on investment) but only gets paid if the next 40 mortgages keep making their paments, etc.)

The market value of those tranches was determined, as I understand it, by credit ratings (provided by ratings agencies paid by the company creating the CDO), and those ratings were based, again, on staristical models of probability that X% of those mortgages will be refinanced or will default in the duration of the mortgage.

The way I understand it, there was positive feedback between the models (whose results were based on years of prices always going up so default was quite rare) and the amount of money available to buy up mortgages (as the models indicated that the investments were relatively safe, more money flowed into the mortgage market, so there were more companies wanting to buy mortgages from the brokers, so there was more money available to buy houses with, so house prices kept going up.). (This is my understanding, but I'm not an expert--probably someone here knows a lot more, and hopefully they'll correct my errors.)

But the upshot here is that the folks selling the mortgages to people buying houses didn't care whether the mortgages would be paid back--that simply wasn't their problem. They got paid as long as they could sell the mortgages to someone bundling them into these larger securities, and those buyers were looking only at the data on the application forms, I think.

More generally, if I'm in the business of lending my money out, I just want to make sure I'm making enough from the interest I charge to make up for any losses from people not paying their bills. Credit card companies are totally okay with lending money to people who are relatively likely to default, as long as they expect to make enough on interest and fees and such to cover the probability of default. (If you're charging 20% interest when the riskless rate of return is about 1%, you can afford to have a lot of people eventually default, as long as they mostly make their payments for awhile before they go bust.).

#201 ::: albatross ::: (view all by) ::: November 03, 2011, 03:59 PM:

Sorry, that was to SamChevre, not Faulty Memory.

#202 ::: SamChevre ::: (view all by) ::: November 03, 2011, 04:08 PM:

albatross,

So far as I know, what you are saying is correct.

Note though that house prices have gone up steadily since at least the early 1980's. In that environment, you have a cycle of legitimate equity interests (represented by groups like ACORN) pushing strongly for looser mortgage lending rules, those rules being adapted on a trial basis, the resulting mortgages performing well and the new homeowners being better off, and around and around we go.

There was bad behaviour. It was entirely unnecessary for a huge bubble in house prices, driven by 20 years of steadily rising prices.

#203 ::: FaultyMemory ::: (view all by) ::: November 03, 2011, 04:23 PM:

albatross@200:

Pretty much, yup. With the added wrinkle that the mortgage broker's fee is generally a percentage of the loan amount; it's often called the origination fee, and is one percent or so of the initial loan balance (YMMV). So, for a given purchase and all other things being equal, the mortgage broker has financial incentive for your down payment to be as small as possible, because that makes the initial loan balance, and their resulting fee, as large as possible.

As a minor nit, if someone refinances, that doesn't result in a net loss for the original lender; they get their principal back during the refi. It just means they don't make their anticipated interest on the loan. But they do get the principal back and can attempt to sell that money again, at the then-prevailing rates of course. So in a falling interest rate environment, there is a risk to lenders that money lent today won't net out today's rates over the life of the loan because some borrowers will refi later at lower rates rather than pay today's rates for the next 30 years. That's not considered default risk though because all the principal comes back.

One failing of the CDO/tranching model is that, while the models worked fine for historically available default data, no one in a position to do the calculations seriously considered what would happen to the CDOs if the default rate increased to, say, double historical norms. Or at least, if such calculations were performed, the results weren't publicized to the ratings agencies that kept rating all the CDOs as AAA debt. Of if the calculations were performed and reported, S&P and Moody's didn't care. And no one seemed to notice or care, as the subprime mortgage market was being aggressively pursued, that adding a lot more subprime borrowers to the mortgage pool was likely to have an effect on overall default rates down the line. Oops. Cue bubble implosion.

One other minor nit is that pursuant to changes in bankruptcy law in the mid-2000s, recent credit card debt can no longer be discharged via bankruptcy. Credit card companies are even more OK with lending you five figures of unsecured debt at double-digit annual interest rates now that they know you can't just walk away from the debt in three months.

FWIW, I am not now and never have been a mortgage broker, nor do I play one on T.V.

#204 ::: SamChevre ::: (view all by) ::: November 03, 2011, 04:31 PM:

One failing of the CDO/tranching model is that, while the models worked fine for historically available default data, no one in a position to do the calculations seriously considered what would happen to the CDOs if the default rate increased to, say, double historical norms.

I don't think this is true. I'm pretty certain that the stress tests went up to 5x historical norms--the problem was that as long as prices rise steadily, there aren't any large defaults.

What wasn't done was to examine whether historical norms should be applied to defaults (which was done), to house prices (which was sort-of done), or to price/rent ratios (which was not done except by much-hated people like those who put the Abacus deal together.)

#205 ::: FaultyMemory ::: (view all by) ::: November 03, 2011, 04:53 PM:

...the problem was that as long as prices rise steadily, there aren't any large defaults.

That makes a certain amount of sense. In a rising price environment, if you get do behind on payments, you can market the property at its original purchase price, which undercuts the market and gets you a quick sale at the price you need to make good on the mortgage. Which can be painful emotionally, but isn't bankrupting financially, and doesn't blow up the CDO; it's more like a refi than a default.

#206 ::: Melissa Singer ::: (view all by) ::: November 03, 2011, 04:55 PM:

4 families I know have lost/are in the process of losing/barely held onto their homes in recent years.

In two cases it could be argued that the families had overbought. However, one family wound up with a Really Big House when all they wanted was a Reasonably Big House because only McMansions were for sale at the time that they needed to move/buy and another overbought because to have truly stayed "within their means" would have meant living at least 3 hours from their work, since prices were over-inflated in the urban area in which they live.

In 3 of the 4 cases, the families included at least one wage-earner who became unemployed during the recession; in some cases, both adults lacked full-time employment. 2 of the families have divorced or are divorcing--which could not have been predicted at the time the homes were bought.

There are real difficulties with finding affordable housing in some urban areas--especially if you also think that your children should have their own bedrooms. In my neighborhood, we also had the problem of smaller, older homes being purchased as tear-downs and replaced with gigantic dwellings that fill their entire plots.

If you wanted a new house in my area, you would inevitably wind up with more house than you really needed (some of these are now being used by several generations of a single family; some were apparently purpose-built for that, but not all). If you wanted a smaller house, it would likely be old enough that you'd wind up having to redo the kitchen, plumbing, wiring, and roof (or some combination thereof). People wound up underwater that way as well.

Apartment pricing was not quite as insane, at least outside of Manhattan, but I'm glad I bought in the 1980s, after the last bubble burst. And I have an ARM because it was all I could get, and I've been (knock wood) lucky with the adjustments. My apartment was worth a lot more than I paid for it at one point, but it's probably worth somewhat less than I paid for it right now. I don't really care.

#207 ::: SamChevre ::: (view all by) ::: November 03, 2011, 04:55 PM:

On the whole mortgage/MBS issue, it is very very hard to do better than Tanta on Calculated Risk in the old UberNerd posts.

The list of all her posts, here is also greatly helpful.

She made the world smarter and is greatly missed.

#208 ::: Nancy Lebovitz ::: (view all by) ::: November 03, 2011, 06:02 PM:

How to fall safely

How to do research and then apply it to a decision

#209 ::: Avram ::: (view all by) ::: November 03, 2011, 06:27 PM:

Cheryl @189, I know what to make of it! The author is cherry-picking figures to fit a "the protesters are spoiled rich kids" narrative. (And the article says "The Daily Caller has obtained all of this information from a source in the New York City government", which probably means it was a leak, not public info.)

According to this real-estate website heat map, the average listing price for a home in Manhattan is in the range of $1.20 million to $1.47 million. The low end is $800k and below. The outer boroughs are cheaper (here's the heat map for Brooklyn), but $305k isn't going to get you a lot of luxury.

And most of the low-end housing in the NYC area is apartments. A single-family house in the NYC area for only $305k is probably tiny, and in a high-crime neighborhood.

An NYC apartment with a rent of $1,850/month is probably a studio apartment if it's in Manhattan. When I lived in Jersey City, my two roommates and I paid (I think, approximately) $1,750/month (total, not each) for a three-bedroom apartment in a private house, with inadequate insulation, and no heat in one of the bedrooms. (My bedroom. The landlord provided an electric space heater when we pointed this out, but we had to pay for the electricity. This actually wound up making my room the warmest one in the apartment when we had troubles with the heating system, which we did, several times. On the upside, the landlord shared his broadband internet with us, and gave us tomatoes from his garden every summer.)

#210 ::: David Harmon ::: (view all by) ::: November 03, 2011, 06:28 PM:

Nancy Lebovitz #208:
How to study properly!

How to break past procrastination and the like.

#211 ::: FaultyMemory ::: (view all by) ::: November 03, 2011, 06:42 PM:

albatross@197:

At the risk of devolving into the Dysfunctional Families thread:

How to negotiate.
How to persuade.
How to empathize.

#212 ::: Stefan Jones ::: (view all by) ::: November 03, 2011, 06:53 PM:

How to raise stoats.

Dumpster diving with dignity.

How to broil and carve a chicken.

(I know one of the above.)

#213 ::: heresiarch ::: (view all by) ::: November 03, 2011, 08:58 PM:

Nancy Lebovitz @ 191: "I know that "real price" which isn't the price in a market is an illusion, but what's to be made of prices which are estimates of what something will sell for if not too much changes?"

There is actually a robust debate over what constitutes "real" prices,* and the position that there's no price but market price is only the extreme neo-classicist position: i.e., it is what is taught in American economics departments. In other words, don't ignore that niggling feeling that market prices are less than the whole story. (Speaking of "instincts telling you that this is wrong"...)

* Well, value.

Avram @ 209: The tip-off is when the writer compares home values of NY-area residents to nation-wide averages.

#214 ::: KayTei ::: (view all by) ::: November 03, 2011, 09:56 PM:

Albatross @ 197

I second Mary Aileen's list. I have three basic categories of additions:

Basic self-defense, including reasonable safety precautions; basic first aid; and basic (civilian) emergency preparedness and response skills.

Tactics for specific common situations, and how to develop tactics for responding to situations you never planned for. "How do you keep yourself safe at a party where people are drinking?" and "What do you do when faced with a threat of suicide?"* are two areas where I frequently notice college students having problems.

On a slightly fluffier note, my children will also be given ettiquette lessons. I think, it's one less thing you have to worry about in social situations, and that energy can be better focused on enjoying yourself and making the most of your conversations. I like to think I'm not hopelessly ill-mannered, but it's definitely an area where I've noticed that I lack confidence as an adult, and which I never would have predicted.


*Actually, in my experience, this is a spin-off of two larger, surprisingly common questions, which are "How do I respond to a person who appears to be (potentially) dangerously mentally ill?" and "What if they aren't an immediate threat, but I think they might become a threat?"

#215 ::: Magenta Griffith ::: (view all by) ::: November 03, 2011, 10:05 PM:

Avram @ 209 and others:

There is a lot of difference in rents geographically. In the Minneapolis area, you can get a 4 bedroom house, 2000 square feet plus, in a nice suburb, for $1800 a month; heating costs will be higher than in Manhattan.

There are huge differences in cost of living in different parts of the U.S.

#216 ::: Lee ::: (view all by) ::: November 03, 2011, 11:51 PM:

Bruce C., #164: The active suppression of teaching critical thinking appears to date from the Vietnam War era. My partner recalls that his high school had, when he started there, a civics unit on "identifying and countering propaganda". It was summarily dropped when the students, assigned to find real-life examples, started bringing in official U.S. government statements about the war.

SamChevre, #173: You're on the right track, but not quite there. We have a fall in the value of real estate because real-estate values were artificially and fraudulently inflated far beyond their real-world limits by a completely unregulated (and as a result totally corrupt) finance system. It was basically a Ponzi scheme, and like any such scam, it could only go for so long before collapsing under its own weight. When it did, the people who were left holding the bag were the ones lowest on the totem pole -- the actual homeowners, and most particularly the ones who had gotten suckered into it most recently.

Mary Aileen, #198: That's a good list. I can cook well enough to keep myself fed, but I don't enjoy doing so; it's fortunate that my partner likes to cook and does it well. :-) I can replace a button or repair a torn seam or sagging hem. Laundry and ironing are both made much easier (in the latter case, nonexistent) by slanting my wardrobe heavily toward fabrics that don't need extraordinary care. I can hang a picture and replace the screw in my glasses hinge when it comes out. I know how to check my car's oil if I have to, but if I need a tire changed I call AAA. My parents did teach me about checks and balancing checkbooks; unfortunately, the way to balance it that made sense to me wasn't the "official" way, so they were convinced that I was Doin It Rong. And in practice, now that I have online access to my bank accounts, I find that the balancing process is pretty much unnecessary -- I can track my expenses in real-time, and don't have to worry about making math errors when subtracting a check.

#217 ::: janetl ::: (view all by) ::: November 04, 2011, 12:31 AM:

Lee @ 216: You're so right about real estate prices being artificially inflated. People were buying houses they couldn't afford, confident that they could "flip" them (and they often could... until they couldn't). That's not people buying housing. It's a speculative bubble in a commodity market.

#218 ::: eric ::: (view all by) ::: November 04, 2011, 12:32 AM:

It was my impression from watching prices in Seattle during the inflationary period (99-06) of the housing boom that the prices were strongly correlated with what a constant payment would buy with increasingly creative terms on the loan.

In the beginning there were fixed and ARMs, and then there were interest only loans, then there were option ARMs, then there were stated income loand, and then there were option ARMs with 'no interest' for 1 year and stated income as well.

People who would normally know better got suckered into loans. For example: someone who's father is an accountant, careful with money, and part owner of a bank, gets to closing on a loan and finds out that it's 5yr + balloon, instead of 30yr. Not that big of a problem, until at year 4.25ish, it turns out that the town house building needs new siding because of construction issues. Now lenders don't want to touch it, and no one wants to buy it when there's scaffolding all over the place.

ARMs were attractive (even without the toxic option ARMs) because their rates were a good point or more lower than a comparable 30 yr fixed. And with lower rates, you wind up with more in your pocket and more going to principle at the same time. Win all around for a few years at least. I had one for a couple of years in what could be considered a low interest environment. I'm not sure I ever intended on keeping the loan more than the 5 year lock period, and looking back, even if I had, it would have been a decent deal.

#219 ::: janetl ::: (view all by) ::: November 04, 2011, 12:42 AM:

I had enough sense to see that there was something wrong in the way house prices were rising faster than the incomes of people who bought them, but couldn't guess what was driving that, until I heard This American Life's piece The Giant Pool of Money. A fortune in investment money sloshing around looking for a place to land, and banks bluffing each other on who could inch further out on a limb to get more of the mortgage sales. It's a great piece of analysis, very clearly explained.

#220 ::: Bruce Cohen (Speaker to Managers) ::: (view all by) ::: November 04, 2011, 01:27 AM:

janetl @ 219:

Speculative float ("money sloshing around looking for a place to land") happens when large amounts of money are created (see "over-leveraged") to invest in high-risk, high-return instruments like future prices of volatile commodities or debt considered as a commodity (see "mortgage-backed securities" and "collateralized debt obligations"). When the speculators have fooled themselves or been fooled by others (see "debt rating agencies" and "greed") into believing the risks are far lower than they really are, then the bursting of the speculative bubble is going to hurt everyone who doesn't have a fairy godbanker handy very badly.

Basically, when the bubble bursts, all that money represented by the leveraging of the speculators goes "poof-gone". We don't even know for sure how much that was in 2008, because the banks have been trying to hide a lot of the bad debt as still reasonably good debt. At least USD 6 trillion disappeared from real estate values in the US, and perhaps as much as $14 trillion total vanished from the economy, including real estate, retirement savings, pensions, investments, and other savings. My wild-ass guess is that there's still at least $1 trillion in assets being claimed by the big banks that's really garbage debt instruments.

#221 ::: SamChevre ::: (view all by) ::: November 04, 2011, 08:29 AM:

Lee @ 216

We have a fall in the value of real estate because real-estate values were artificially and fraudulently inflated far beyond their real-world limits by a completely unregulated (and as a result totally corrupt) finance system. It was basically a Ponzi scheme.

I agree with what's not in bold, but rather strongly disagree with what is in bold.

Since the 1950's, mortgages have gotten easier and easier to get--lower down payments, longer loan terms, higher proportions of income used for qualification, lower spreads to Treasuries.

And most people who bought a house ended up better off financially, over time, than the people who rented--for close to 50 years. So both public opinion AND public policy thought homeownership should be promoted. There was plenty of regulation; it was just geared to promoting mortgage lending.

At no point, in the move of down payments from 20% to 0%, was there any need for fraud. At no point, in the move of payment terms from 15 to 30 years, was there any need for fraud. And while robustness was steadily taken out of the system, it was done primarily because it seemed un-needed.

Now don't misunderstand me; there was most assuredly fraud in the market. I just maintain that collective mis-understanding of why homeownership was a good idea was both necessary and sufficient for the problems we've seen, and fraud was neither necessary nor sufficient.

And the "giant pool of money" explanation manages to miss that that's how fractional reserve banking works; if an asset looks safe, it can be leveraged. It's the classic bubble/bank run dynamic, seen in many countries at many times under many regulatory regimes.

#222 ::: fidelio ::: (view all by) ::: November 04, 2011, 08:57 AM:

Cheryl @189, Avram @209--It is indeed a ploy to make these people look like whiny rich brats.

One comment I saw on the article (at Ballon Juice?) noted that some of these people might be living with their parents because they didn't have other alternatives they could afford. This made me think of one of my aunt's neighbors. Her son, who had just completed pharmacy school and started work but was still living at home as he could deal with the student loans or cover rent.

Then there is, as Avram noted, the problem with high housing costs in some parts of the country.

The consumer electronics bit is another red herring--possession of a smart phone is still, especially if you don't have one yourself, a suggestion of Unnecessary Spending to some minds--even though AT&T is willing to give you an Apple #G, now that Apple has coem out with the 4G. The same with iPads and similar devices--the notion that these aren't just shiny toys but useful tools for work escapes some people.

#223 ::: janetl ::: (view all by) ::: November 04, 2011, 10:03 AM:

Sam Chevre @ 221: I don't want to listen to the "giant pool of money" piece this morning before work, but didn't it go into the misleading bit? Maybe that was in the follow-up story they did. I recall Ira Glass' voice interviewing people and going through:

- mortgages had traditionally only been made using rules to make them low risk (monthly payment less that 28% of your income, high down-payment which validated that you knew how to save and manage your money, careful appraisal of house's value). All of these crumbled.

- banks making the high-risk mortgages re-packaged them to hide the lousy ones.

- the banks, mutual funds, etc buying the bad mortgages assumed that what they were buying would have the same typical low risk that mortgages did in the past.

#224 ::: Mike McHugh ::: (view all by) ::: November 04, 2011, 10:03 AM:

There's an interesting take on the OWS movement, and how it's viewed politically, here.

#225 ::: SamChevre ::: (view all by) ::: November 04, 2011, 10:20 AM:

janetl @ 223

I didn't listen to the "giant pool of money piece"; I've read descriptions of it.

But I'll reiterate (and please, if I'm going on and on annoyingly, tell me and I'll stop) that the loss in safety that you detail didn't happen all at once; it happened one step at a time, starting in the 1950's, and was perceived as an egalitarian progression. And buyers perceived the new products as safe, because every previous step had been safe.

I've seen very little evidence that the bad mortgages were, in general, hidden; the problem was that loans that met published guidelines were remarkably unsafe. (There was definitely fraud, but like some of what goes on in politics, forget the crookedness--it's the legal stuff that's the real problem).

The Tanta archive is all good, but this piece on FHA guidelines is particularly on point to this discussion.

#226 ::: Lori Coulson ::: (view all by) ::: November 04, 2011, 11:22 AM:

So SamChevre @225, you think mortgage sellers practically seducing buyers who qualified for 30 fixed mortgages into interest only or adjustable rate mortgages isn't fraud?

The only reason my partner and I got a 30 year fixed when we refi'd our house is because we refused accept any of the flavor of the month financing the bank was pushing. Trust me, the bank officer had one smooth line of bullshit.

I've met folks who either didn't know better, or were so financially macho that they thought they could get handle one of these timebombs. Then the credit industry as a whole raised credit card rates by 20%, one or both earners lost their job, and their fancy mortgage payment tripled...

Yes the damn banks were, are, and are continuing to, practice financial fraud -- up to and including filing false papers to support foreclosures. If you don't believe me, Google "robo-signing" or MERS.

#227 ::: SamChevre ::: (view all by) ::: November 04, 2011, 12:16 PM:

you think mortgage sellers practically seducing buyers who qualified for 30 fixed mortgages into interest only or adjustable rate mortgages isn't fraud?

No; I just think it's effectively irrelevant to the question of why house prices rose and fell like they did.

Yes the damn banks were, are, and are continuing to, practice financial fraud -- up to and including filing false papers to support foreclosures. If you don't believe me, Google "robo-signing" or MERS.

The whole robo-signing/MERS "scandal" is SFAICT an entire non-issue; I'll change my mind when see even one account of someone losing their house in foreclosure when they were up-to-date on their mortgage payments. I really don't care that the paperwork the lender has are copies rather than wet-inks; that may be illegal (although it shouldn't be--almost every kind of record is now kept electronically), but it's not fraud on the borrower; if it is fraud, it may be fraud on other lien-holders, but it's not material fraud on the borrower.

More generally, it's worth reading the accounts closely. I see disputes like these in my job. In 1995, corporations A and B entered into agreement X, assuming Y. Y didn't happen to be true. Now A is accusing B of some paperwork error, on some random detail, in the hope that B, rather then A, will bear the cost of Y not being true. But the claimed error has nothing to do with Y.


#228 ::: FaultyMemory ::: (view all by) ::: November 04, 2011, 12:43 PM:

SamChevre@227:

Mortgage Holder Moves to Foreclose Despite On-Time Payments From Borrower

Assuming the reporting is accurate, there are many problems with this situation. There is a language barrier, for one. Also, borrower claims that the mortgage broker unilaterally falsified borrower's income. Borrower has been making on-time payments, but understandably, borrower cannot substantiate mortgage broker's false claims; unfortunately for borrower, those false claims formed a material part of the basis on which the mortgage was approved, and borrower signed the application containing the false claims.

At the time of the article (October 2008), the house was five months into foreclosure proceedings. Access to Lexis-Nexis might be able to determine the eventual outcome of the property.

#229 ::: SamChevre ::: (view all by) ::: November 04, 2011, 01:05 PM:

FaultyMemory @ 228

That's certainly a clear case of fraud on the broker's part (if what is claimed to have happened is what happened); it doesn't seem to have any connection to MERS, or to robo-signing.

#230 ::: Nancy Lebovitz ::: (view all by) ::: November 04, 2011, 01:14 PM:

In re the giant pool of money- Austrian economics (not especially about Austria, it's the von Mises/Rothbard theories that libertarians tend to believe) has it that when there's more money floating around than good investments, it will go into investments that don't make sense. This is the boom. The recession/depression/collapse happens when people find out that the investments don't make sense.

The piece of the theory that I can neither remember nor reconstruct is the part about how you tell there's too much money floating around.

It seems reasonable to me that too much money floating around in the investment community (as opposed to the general public, who may just inflate the prices of consumer goods [1]) would lead to bad investments, though I also think that bad investments on the grand scale can be the result of people trying to piggyback on other people's thinking.

[1] The mortgage crisis would be a mixed case. If the too much money theory is correct, it was a case of the investment community pouring money into the general public, so that houses (which are sort of a consumer investment good) got inflated prices.

#231 ::: Lori Coulson ::: (view all by) ::: November 04, 2011, 01:53 PM:

Not only have the banks filed foreclosures on people who are on-time with their payments, there have been cases where they've filed foreclosures on properties they do not own and on houses that had no active mortgage (i.e., paid off years ago).

You are aware that the use of MERS has diddled every county government in the USA of fees they would have collected had the title been correctly registered with those county clerks, aren't you?

#232 ::: FaultyMemory ::: (view all by) ::: November 04, 2011, 02:34 PM:

More Generally Fraudulent Action. I can't tell whether the Negreas' problems stem from robo-signing, but it's difficult to comprehend what other flavor of incompetence would lead to their troubles. They've been current on their payments for fifteen years, and have been foreclosed upon three times.

#233 ::: SamChevre ::: (view all by) ::: November 04, 2011, 02:35 PM:

But filing a foreclosure in error isn't the kind of thing that using paper records will help. It's like searching the wrong house, or arresting someone who looks-like-but-isn't the criminal--it should be minimized, but it will happen, and that's why there's a court hearing the case. I'm getting frustrated enough with this conversation that I think this needs to be my last reply for awhile.

On "things to teach", one I plan to teach all my children is some basic "managing your body" skills--either martial arts, or dance, or something like that depending on taste. The ability to not fall over your own feet is very handy (and I don't have it.)

#234 ::: albatross ::: (view all by) ::: November 04, 2011, 02:42 PM:

Lee #216:

I think a market bubble is basically just a distributed Ponzi scheme, without any one person driving it or planning it, though often with many people understanding what's going on and trying to get rich from it. (Some of those invest on the greater fool theory, others get into the business of selling blue jeans to the folks out panning for gold in hopes of getting rich.)

In the US, there were substantial financial and political interests who benefitted from the property bubble, and who did their best to sustain it. But a bubble is a market phenomenon--it's not just one or two actors driving it, but rather a widespread belief among many people that X is the path to wealth, running long enough that people who believe it often have made a lot of money, which can both be plowed back into the bubble, and can serve as an example convincing other people to jump in.

At the height of the property bubble around here, the nearly-universal received wisdom from people nowhere near the mortgage or real-estate business was that buying a home, preferably the most expensive one you could afford, was the path to middle-class prosperity. It was how you could end up retiring with enough money to live well--just buy that house and sell it at a much higher price when you're ready to retire. Real estate agents and mortgage brokers were certainly willing to encourage this belief, for obvious self-interest reasons. But they were far from the only ones. I think that received wisdom, in some form or other, is a prerequisite for a bubble.

#235 ::: albatross ::: (view all by) ::: November 04, 2011, 02:57 PM:

Lori #226:

In most other areas of life, we don't call it fraud when someone offers you a worse deal than you could have gotten if you'd known more or bargained harder. Rather, we call it fraud when someone deceives you into buying something other than what you thought you were buying. I think that happened sometimes, but that it was far more common that mortgage brokers/banks/etc simply offered people lousy deals, and were accepted because so many of their customers didn't know much about what they should worry about or how to comparison shop. And there was also apparently quite a lot of fraud on the other side of the transaction, where the person selling the mortgage encouraged or helped the person taking out the mortgage to lie on the forms in order to qualify for a mortgage, or just filled out the forms according to what the mortgage buyer would be looking for and told the person taking the mortgage out to sign at the X. (Again, remember that a lot of the people taking those mortgages out were doing it in a second language, and that for those of us without legal training, even English legalese is pretty damned impenetrable.)

And yeah, the MERS scandal is amazing in how clearly it demonstrates the impunity of the powerful and important--if you or I did that stuff on a single foreclosure case, we'd be headed for jail. But banks that manufacture false documents and get caught at it suffer no real consequences, because everyone understands that the whole industry was doing it and that a serious legal challenge to those practices would wreck a big chunk of the mortgage market. This fits the phrase Glenn Greenwald is using to promote his book on unequal justice: "too big to jail."

#236 ::: Stefan Jones ::: (view all by) ::: November 04, 2011, 02:57 PM:

"The Giant Pool of Money" is more properly a production of the Planet Money team. They contribute segments to NPR news programs as well as This American Life.

I got a set of Planet Money program CDs as a pledge drive premium. The programs are available on-line, but the CDs can be lent to less-tech-inclined friends and relatives.
* * *
One things about booms that is forgotten afterwards: The HYPE. The relentless, overconfident, swaggering HYPE.

Bend, Oregon is on the other side of the Cascades from Portland. It is on the edge of the High Desert that sprawls across the middle of the state. I used to stay in a motel in Bend when attending high-power rocket launches. Not a small or sleepy town, but not booming.

During the housing hype, it was growing like crazy. Over the course of the 2-3 years I attended launches I saw the sagebrush flats at the eastern edge of town fill in with subdivisions.

There were loftily speculative stories in the paper at the time suggesting that Bend was the City of Future of Oregon. Poor, backwards Portland, with its urban growth boundaries!

Typing "MWAH-HAH-Hah-hah!" here would be inappropriate, because a lot of people got hurt. Bend kind of collapsed, and cut back services.

#237 ::: Lori Coulson ::: (view all by) ::: November 04, 2011, 03:03 PM:

SamChevre, you are trying to defend a group of people whose actions I find indefensible.

I am watching people I care about drown in misery caused by the financial chicanery of the few who control the levers.

Right now my mind and heart are screaming, "A bas le financiers!" and a guillotine would be just dandy -- if we can't get the money back one way, we'll find another.

#238 ::: Nancy Lebovitz ::: (view all by) ::: November 04, 2011, 03:31 PM:

#235 ::: albatross :

I don't think there's a bright line between fraud and sharp bargaining.

The clearest fraud in the mortgage debacle is probably that dubious (at best) mortgages were resold as reliable mortgages.

#239 ::: Constance ::: (view all by) ::: November 04, 2011, 03:37 PM:

See this from Matt Taibi's Rolling Stone blog, on the mendacious blames on behalf of the 1% thrown out there for the Mess Of All Of It. Mike Bloomberg's Marie Antoinette Moment:

[ "On the other hand, nobody who actually understands anything about banking, or has spent more than ten minutes inside a Wall Street office, believes any of that crap. In the financial world, the fairy tales about the CRA causing the crash inspire a sort of chuckling bemusement, as though they were tribal bugaboos explaining bad rainfall or an outbreak of hoof-and-mouth, ghost stories and legends good for scaring the masses.

But nobody actually believes them. Did government efforts to ease lending standards put a lot of iffy borrowers into homes? Absolutely. Were there a lot of people who wouldn’t have gotten homes twenty or thirty years ago who are now in foreclosure thanks to government efforts to make mortgages more available? Sure – no question.

But did any of that have anything at all to do with the explosion of subprime home lending that caused the gigantic speculative bubble of the mid-2000s, or the crash that followed?

Not even slightly. The whole premise is preposterous. And Mike Bloomberg knows it.

In order for this vision of history to be true, one would have to imagine that all of these banks were dragged, kicking and screaming, to the altar of home lending, forced against their will to create huge volumes of home loans for unqualified borrowers.

In fact, just the opposite was true. This was an orgiastic stampede of lending, undertaken with something very like bloodlust. Far from being dragged into poor neighborhoods and forced to give out home loans to jobless black folk, companies like Countrywide and New Century charged into suburbs and exurbs from coast to coast with the enthusiasm of Rwandan machete mobs, looking to create as many loans as they could." ]

Read the entire entry here.

Krugman linked to this piece in today's NY Times Opinion pages, with full endorsement.

Love, C.

#240 ::: Bruce Cohen (Speaker to Managers) ::: (view all by) ::: November 04, 2011, 04:39 PM:

SamChevre @ 221:

if an asset looks safe, it can be leveraged

1. Mortgage debt was sliced up and repackaged in instruments that contained both low- and high-risk elements, but the instruments themselves were rated low-risk, either as a matter of ignorance, or as outright lying by the rating agencies.

2. This led the purchasing entities to be agressive in leveraging the instruments on the assumption that risk was low, resulting in way too much exposure. So when the bubble collapsed all the risk analyses turned out to be wrong, and only a major bailout by taxpayers saved the big investment banks.

3. There are still a lot of those instruments, still backed by the same underwater mortgages, in the banks assets; the banks have been trying very hard to make believe that those assets are actually worth something. As soon as someone actually goes to assess their value the banks are going to start screaming for more bailout.

#241 ::: heresiarch ::: (view all by) ::: November 04, 2011, 08:31 PM:

janetl @ 219: "A fortune in investment money sloshing around looking for a place to land,"

Bruce Cohen @ 220: "Speculative float ("money sloshing around looking for a place to land") happens when large amounts of money are created"

You are talking about different things, or at least two different sides of the same thing. The giant pile of actual money necessitated the invention of the giant pile of imaginary money. Essentially, there was a big capital flow into the US looking for safe debt, far in excess of the actual safe debt available for purchase. So, desperate to get their hands on that (real, actual) cash, Wall Street invented new forms of debt they said were equally safe, but really weren't. Then they exchanged that toxic debt for the real money, and skimmed off real, actual billions in commissions. It's not quite right to say the money was imaginary: it was the returns which were fictional. (cf. Nancy Lebovitz @ 230)

SamChevre @ 221: "I just maintain that collective mis-understanding of why homeownership was a good idea was both necessary and sufficient for the problems we've seen, and fraud was neither necessary nor sufficient."

If this were the case, then why the sudden and enormous spike in housing prices in the mid oughts? Was there some huge shift in the public perception of the desirability of home ownership at that time? No, there was not. There was, however, a huge shift in the perceived desirability of selling mortgages to people regardless of whether they could pay them back, because suddenly people had discovered how to make money off of it.

There's no need to argue that it's structural, not fraud: it was both. The fraud was induced structurally, and the structure relied on fraud.

albatross @ 235: "In most other areas of life, we don't call it fraud when someone offers you a worse deal than you could have gotten if you'd known more or bargained harder."

There's a rather clear distinction between "a worse deal" and "a ticking time bomb that will ruin your life." Yes, we don't censure supermarkets for overcharging people for fancy cheeses. We do prevent them from selling ebola-contaminated spinach, and if they did so knowingly, they would be roundly condemned in public and prosecuted in the courts. Housing is at least as basic a need as education, medical care, or food safety--why is bargaining hard enough to deprive someone of their home okay when mistreating their illness for personal enrichment is not?

#242 ::: Lee ::: (view all by) ::: November 04, 2011, 10:39 PM:

janetl, #217: Yes. That's why I specified that bailouts to homeowners should be limited to those who bought a primary residence, a home they were intending to stay in. House-flippers... I have little sympathy for them, as they were actively contributing to the problem.

SamChevre, #221: It doesn't matter whether or not you think the fraud was either necessary or sufficient. It happened, and you can't just hand-wave it away like that. And the reason it happened was that the regulations which were supposed to keep it from happening -- which had been installed in the wake of the Great Depression -- were slowly and carefully chipped away or made toothless, over the course of decades, by people who could see very well how much money they stood to make if they could just play that shell-game again. My statement stands.

and @227: If you haven't yet seen the reports of people being foreclosed on, and losing their homes, when they were up-to-date on payments (and in some cases when they DIDN'T EVEN HAVE A MORTGAGE AT ALL), you haven't been paying attention. The problem is endemic in Florida, where judges have long had the habit of rubber-stamping anything the bank presents in court; I'm not sure how bad it is elsewhere, but it does happen.

Also, what Lori said @237. The opposite of "wrong" is neither "not really illegal" nor "everyone is doing it", and you do yourself no credit at all by arguing these things. If it had been only mistakes and unwisdom, the reaction of the financial community when things started to look unstable would have been very different. This was DELIBERATE, and they knew very well that sooner or later the bubble would burst. All they cared about was (1) being at the top of the heap when it did and (2) not being called to account in any way for their actions -- and that's still all they care about.

#244 ::: janetl ::: (view all by) ::: November 05, 2011, 02:34 AM:

FaultyMemory @ 243: Reading that just made me ill. I wonder if this is how my parents felt watching the news in the 1960s?

Kayvan Sabeghi is very lucky that he had friends and/or family to bail him out and get him medical attention. The Oakland police are lucky, too -- watching a man die in his cell might have given them a bad reputation.

#245 ::: Dave Bell ::: (view all by) ::: November 05, 2011, 04:07 AM:

"Fraud" and "dishonesty" overlap, but they're not the same thing.

It seems impossible to deny an excess of dishonesty in the mortgage business, and all the theoretical talk of free markets, all the models, assume the absence of dishonesty. They assume properly-informed agents. They don't take into account the misdirections of advertising.

(Yesterday I saw frozen turkeys placarded at "Half prize!" in the store. They've never been on sale at the full price. [UK Turkey sales are aimed at Christmas, not Thanksgiving])

As long as it is legal...

What sort of society is that?

#246 ::: Nancy Lebovitz ::: (view all by) ::: November 05, 2011, 09:08 AM:

#245 ::: Dave Bell :

all the theoretical talk of free markets, all the models, assume the absence of dishonesty.

That's a rather strong claim. I can't think of any counterexamples, but on the other hand, I'm not an expert on free market theory. It's possible that dishonesty, if there isn't too much of it, could be included as ignorance, which free market theory does include.

Is there any economic theory (maybe Marxism?) which includes dishonesty as an explicit object of study?

#247 ::: Dave Bell ::: (view all by) ::: November 05, 2011, 09:23 AM:

Nancy, I see what you're getting at, and I can see how dishonesty and ignorance can have similar effects on a market, at least at low levels. It's not unlike noise in analogue electronics. The source often doesn't matter two or three different noise sources in the system can be lumped together.

But dishonesty is almost certainly an attempt to mislead the market, to consciously provide false information. There's a bias to it, which a noise signal doesn't have in the same way

#248 ::: Nancy Lebovitz ::: (view all by) ::: November 05, 2011, 10:46 AM:

Dave, I think including dishonesty as part of economic theory either is or would be a very good idea.

I'm not shocked at fake sale signs, which may mean I've spent too much time in a corrupt environment. I assume that local customers (and most supermarket customers are local) would just internalize the price and not care that the merchant is claiming that it's a sale.

It would be interesting if sociologists or someone took a crack at whether that sort of very low-intensity dishonesty correlates with anything else.

#249 ::: Chris Quinones ::: (view all by) ::: November 05, 2011, 12:27 PM:

Nancy, 248: Re: dishonesty as a part of market theory, I think the literature on information asymmetry at least implicitly takes dishonesty into consideration. Cf. George Akerlof's famous paper "The Market for Lemons". And here is an essay by Akerlof on writing "The Market for Lemons."

#250 ::: P J Evans ::: (view all by) ::: November 05, 2011, 12:38 PM:

248
Like the carpet stores that go out of business every three or four months, and seem to re-open under a new name shortly afterward?

#251 ::: praisegod barebones ::: (view all by) ::: November 05, 2011, 01:46 PM:

And indeed, about half way through the second of the essays Chris Quinones @ 249 mentions, Akerlof explicitly says that the kind of issue he is interested in does indeed have an impact on the market for loans (and also, relatedly, insurance).

#252 ::: Dave Bell ::: (view all by) ::: November 05, 2011, 01:50 PM:

Chris, 249, I can see how information asymmetry would fit as a label for dishonesty.

I wonder if people are trying to study dishonest markets without admitting that a market can be dishonest. Imagine the wails of anguish if the economists were say markets are dishonest. It would mean regulation.

#253 ::: Constance ::: (view all by) ::: November 05, 2011, 02:16 PM:

Oakland's Mayor & the Cops, Plus Gub Walker Gets Mike Checked!

Go here because it is a powerful action to watch unfolding. The Wisconsin participants did some strong work in planning the infiltration. Only fair, yes, since the cops and Others are forever planting criminals and provocateurs into the Occupy Wall Street actions to cause violence.

As with the Oakland cops who hate the mayor and have overtly said they will use this to take her out. She defeated Their Guy, who was in cops pockets, and has gotten the cops to pay more out of their pockets into their pensions. This, according to a friend of ours reporting in from Oakland where he's lived for many years.

We have so many different security and police forces now, they are wagging the national dog for sure. Can we mike check Praetorian Guard?

Love, C.

#254 ::: Constance ::: (view all by) ::: November 05, 2011, 02:27 PM:

Some years back while doing research on the history of municipally owned water supply and the privatization of the same going on -- which, by the way, is only accelerating in this decade, I ran across an really interesting study of public works and infrastructure financing. We've had infrequent national eras of public works and infrastructure building -- the first great one during the era after the close of the Civil War, and the second one during the Depression.

In this study that concentrated on public highway system financing, there was a long section devoted to the expectation of skimming of the public funds provided for the projects. You had to expect at least 12 - 15% of the monies to disappear into someones' privated pockets. It was just going to happen, it couldn't be stopped.

BUT -- and this was the HUGE but -- if the funds diverted from the project exceeded that amount, the project would be a disaster, and probably in the short term. So many corners would be cut that the materials would be inferior, the maths would be wrong, too many non-professionals would be hired as cheaper alternatives.

This study was conducted in the 1980's and it pointed out that this was a foundation why so much infrastructure in the developing world didn't work and wasn't ever completed. With the system of bribes and diversion that ran the political and economic institutions of these places, there was never enough money left for effective and safe construction.

I don't know if this is pertinent to the discussion of dishonesty in economic systems, but it leaped into mind immediately the question was posited.

Love, C.

#255 ::: albatross ::: (view all by) ::: November 05, 2011, 03:00 PM:

Dave:

You're strawmanning an entire academic discipline in ignorance. Does it really seem likely to you that nobody in the whole profession of economics has ever heard of fraud? Or believes it ever happens? Ever heard of fhe principal-agent problem? Or adverse selection in insurance? Or economic analysis of the law, which deals with issues like rational deterrence of crime?

#256 ::: Bruce Cohen (Speaker to Managers) ::: (view all by) ::: November 05, 2011, 07:45 PM:

janetl @ 244:

I wonder if this is how my parents felt watching the news in the 1960s?

I don't know about your parents, but it's sure as hell the way I felt. The last few years for me have been like a bad case of deja vu back to the early 1960s, culminating in the last few weeks in a serious-downer acid flashback to the civil rights and anti-war demonstrations of 1963 and on.

So far we haven't seen the really bad reactions of the power structure, such as Chicago in '68, the Kent State shooting, or, from an early incarnation of this same battle, the shooting of two veterans and the assault by combat troops with tanks, bayonets, and gas on the Bonus March in 1932.

#257 ::: Stefan Jones ::: (view all by) ::: November 12, 2011, 03:04 PM:

Frank Miller declares self complete jackass:

http://frankmillerink.com/2011/11/anarchy

#258 ::: heresiarch ::: (view all by) ::: November 12, 2011, 03:40 PM:

Goodness. Did Alan Moore knowingly model Rorschach after Miller, or is this a case of life imitating art?

#259 ::: Bruce Cohen (Speaker to Managers) ::: (view all by) ::: November 14, 2011, 07:34 PM:

Frank Miller strikes me as a case of cluelessness imitating life.

#260 ::: Dave Bell ::: (view all by) ::: November 15, 2011, 02:57 AM:

The BBC is reporting that the NYPD has started to clear Zucotti Park.

#261 ::: Larry Brennan ::: (view all by) ::: November 15, 2011, 03:21 AM:

Dave @260 - Not only clearing the park, but arresting journalists, forcing press helicopters down, closing subway lines and pepper-spraying bystanders. Follow hashtag #ows on twitter. https://twitter.com/#!/search/%23ows

It's a sad day to be an American.

#262 ::: Dave Bell ::: (view all by) ::: November 15, 2011, 07:43 AM:

The initial BBC reports included the claim that this was being done for public health grounds, and the protesters would be able to return later, after unspecified clean up.

Without the context from sites such as this one, that can sound plausible: the image in most of the UK media is about as well-informed as their image of an SF con.

The page with BBC reports mentioned that "journalists were prevented from entering the area". There is information at the bottom of that page on how to get pictures and reports to the BBC—you could bypass the filtering of the US media.

BBC Photo Gallery

I get the impression that, while the political angle may be that the OWS camp was given a chance to clear the park, the truth is that the logistics didn't add up: there wasn't time to pack up and leave peacefully. It was 1am local time, and the same human behaviour patterns which can be used to justify action at that time, on the grounds that targets are half asleep and slow to react, also makes the deadline for getting out unreasonable.

#263 ::: John A Arkansawyer ::: (view all by) ::: November 15, 2011, 08:24 AM:

The police have really done a number on the Occupation in Liberty Plaza. I'd suggest the best reaction was already planned:

Thursday
November 17th
International Day of Action

#264 ::: Bruce Cohen (Speaker to Managers) ::: (view all by) ::: November 15, 2011, 01:35 PM:

Dave Bell @ 262:

At 1 AM it's also easier to control the press reaction: fewer press are on the spot, it takes longer for anyone to get word of the police action and get to the scene, and the high light contrast between areas illuminated by street lights and signs and area that are largely dark allows the police to cover some of their more questionable actions (though that may be prevented by the easy availability of low-light cameras).

It may be that local police forces will be emboldened by the actions of the NYPD and the Oakland Police. That may or may not be affected by the outcome of the court ruling on a restraining order against the police in NY (they've already arrested one person who tried to get back into Zucotti Park with a copy of the judge's temporary restraining order).

#265 ::: Xopher HalfTongue ::: (view all by) ::: November 15, 2011, 02:27 PM:

I accuse Mike Bloomberg of choosing 1 AM as the time for the raid in order to produce maximum chaos, maximum distress, and maximum arrests.

I accuse Mike Bloomberg and the NYPD of keeping the press out as an attempt to suppress the truth of what they were doing there. This technique has such a resemblance to the tactics used in Syria that I will be calling him Mayor Al-Assad from now on.

I accuse Mayor Al-Assad of lying his ass off about the reasons for the raid and the way it was conducted. Civilian commenters have said that there was actually no problem moving freely through the park.

#266 ::: Michael ::: (view all by) ::: November 16, 2011, 07:59 PM:

What is meaningful in a library? The books and media? The access to information, or to story, or to history? The gathering and cultivating and cataloging of those elements so necessary to civilization? The refuge from ignorance? The refuge from isolation? The people who make it all happen and help us understand the resources available to us? The open door?

A library to me is a public place, defined by who is allowed in rather than by public ownership. And on that measure, as well as every measure which I mentioned above, the library tent at Occupy Wall Street was a public library. They had over 5000 published books, original writing and poetry and art, people who volunteered there, and people who used the library. They had all that until New York City made the conscious decision to destroy the library.

That act of destruction was, to me, not qualitatively different from the book burning in Opernplatz in 1933. Both were political acts of destruction intended as statements of power, demeaning and diminishing those disfavored by the state, targeting the tangible instantiations of knowledge and discourse.

I want this week’s act of destruction to feel qualitatively different, because it makes me heartsick to have my birthplace behave in any way similarly to the birthplace of my grandparents, a birthplace they were forced to flee. I want to believe that the authorities’ behavior in New York City was callous rather than calculated. But I cannot find the significant distinctions. Is it because in New York only 5000 books were destroyed rather than the 20,000 in Berlin? Because the books in New York were seized and mangled rather than seized and burned? Because the authorities in New York used police and sanitation workers rather than students to do it? Because the destruction in New York was less fully coordinated with other cities, or because it targeted personal possessions as well as books, or because it was accompanied by police beating and teargassing their own citizens? None of those feel sufficiently distinguishing to allow me an easy rest.

Writing is my only means to scream my outrage and link arms with those who stand against this cyclic violence. I weep that my country would do this.

#267 ::: Michael ::: (view all by) ::: November 17, 2011, 09:31 AM:

I moved my comment #266 to the new post specifically about the library destruction. Please go ahead and delete this comment and #266.

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