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Sunday, March 31, 2013

OTP: April 2013: Daily Caller: Baseball and the GOP: To rebrand the party, think like a sports fan

This week’s GOP autopsy report, commissioned by RNC Chairman Reince Priebus, is a great start in the much-needed task of rebranding the Republican Party. As the chairman acknowledged, “the way we communicate our principles isn’t resonating widely enough” and “we have to be more inclusive.” The report contains 219 recommendations to “connect people to our principles.” To achieve that goal, the party will need a strategic vision of how voters think about politics, which is something that the report lacks. For that, the GOP can learn a lot from another American passion: baseball.

This year, about 75 million Americans will go to the baseball stadium to watch a ballgame, about the same number as those who will vote in next year’s election. We rarely think about why someone becomes a baseball fan, or why they root for a certain team. Nor do we usually think about why someone chooses to vote for a certain political party. But it’s actually a very useful exercise.

When it comes to baseball, fan loyalty has almost nothing to do with the brain, and almost everything to do with the heart. In all of history, there’s never been a baseball fan who rooted for his team because it had the lowest ticket prices, or because it had the most taxpayer-friendly stadium deal, or because its players did the most community service. For the vast majority of Americans, rooting for a baseball team — not to mention, voting for a political party — isn’t really a rational choice; it’s more of a statement of personal identity — a statement telling the world, “This is who I am.” And for most people, defining “who I am” starts with family and community, before branching out into areas like race, age, gender, and class.

Family is pretty straightforward. If your mom and dad are Yankee fans, you’re almost certainly a Yankee fan. The same is true in politics. If your mom and dad are Republicans, you’re almost certainly a Republican.

Community is also pretty straightforward. If you grew up in, say, Philadelphia, chances are pretty great you’re a Phillies fan. Likewise, someone who grew up in Republican territory like, say, suburban Dallas or rural Indiana is much more likely to become a Republican than a nearly identical person from Seattle or Santa Fe.

Cities with more than one baseball team, like New York or Chicago, show revealing breakdowns by race and gender. The racial split in Chicago between Cubs fans on the North Side and White Sox fans on the South Side is well-documented. In New York, there’s an intriguing gender gap between Mets and Yankee fans, with women gravitating a lot more to the Yanks. While there’s a few theories out there trying to explain that, one obvious answer leaps out: Yankees heartthrob Derek Jeter.

In sports, as in politics, people’s convictions can’t be conveniently reduced to who their parents are or what they look like. But those things are an important foundation, upon which more rational sentiments come into being. Once you’re attached to your team on an emotional level — seeing them as a personal reflection of who you are and what you care about most — a rational exterior comes into being through phrases like “the Red Sox are the best team because they have the most heart” or “the Republicans are the best party because they know how to create jobs.”

Tripon Posted: March 31, 2013 at 10:52 AM | 6544 comment(s) Login to Bookmark
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   2001. Rickey! On a blog from 1998. With the candlestick. Posted: April 11, 2013 at 04:32 PM (#4411075)
Let's burn it all down today. Tomorrow, no society. Just utopia.


Stardust!
   2002. Delorians Posted: April 11, 2013 at 04:50 PM (#4411094)
But I'm glad to see you're suddenly concerned that innocent people might lose their money. Another word for this is "taxes."

Ray, what level of taxation do you think is appropriate? If it is more than zero, it is not innocent people losing their money, it is the cost of living in a society.
   2003. Jolly Old St. Nick Is A Jolly Old St. Crip Posted: April 11, 2013 at 04:59 PM (#4411102)
Andy, your favorite pastor is back, if tangentially, in the news...

Thanks for the update, and BTW how's your favorite financial adviser been doing lately?
   2004. Jolly Old St. Nick Is A Jolly Old St. Crip Posted: April 11, 2013 at 05:02 PM (#4411103)
In the real world, when an entity that holds tens of billions of other people's money goes down, even innocent people suffer. Let Merrill, AIG, and everyone else burn? Oh, sure, trillions of dollars will be lost, millions of people will be thrown into poverty, but dammit, at least the government stayed out of it! Only a libertarian who lives in a glass Internet house can look at a situation like that and say that the loss of home and security for millions is a good thing.


You're assuming the conclusion. It's not clear at all that would have happened.

And if it did, the only principled libertarian response would presumably have been "Sorry about that."
   2005. McCoy Posted: April 11, 2013 at 05:07 PM (#4411109)
And if it did, the only principled libertarian response would presumably have been "Sorry about that."

Don't you mean, "I don't feel sorry for them"?
   2006. Jolly Old St. Nick Is A Jolly Old St. Crip Posted: April 11, 2013 at 05:15 PM (#4411118)
Don't you mean, "I don't feel sorry for them"?

Well, I suppose that would be the more literal and formal version.
   2007. The Id of SugarBear Blanks Posted: April 11, 2013 at 05:23 PM (#4411129)
Well, I suppose that would be the more literal and formal version.

No need to reward incompetence, or feel sorry for it. Save your sympathy and empathy for the deserving -- like me, whose checkbook always gets raided to bail out the incompetent.

   2008. Ray (RDP) Posted: April 11, 2013 at 05:37 PM (#4411141)
And if it did, the only principled libertarian response would presumably have been "Sorry about that."


And the only persons you are sorry for in this entire affair are the irresponsible home "owners" who like parasites leapt into "affordable" homes that they couldn't actually afford.

Kind of like how some people now have health "insurance" that they can't afford either, even if Congress pretended it was "affordable," which is why these people too are parasites leeching off of the taxpayers.
   2009. Jack Carter, calling Beleaguered Castle Posted: April 11, 2013 at 05:43 PM (#4411145)
They also understand the concept of an interest rate that is adjustable,

No, a thousand times no, not only that but I've ruin into freaking JUDGES* who do not understand, by saying this you are proving that you are clueless
It's Ray's old bugbear, empathy. If he understands it, everyone must.

I'm currently dealing with a skilled carpenter, a homeowner, with a kid and everything, and he can't answer simple questions put to him in writing. I have a smart friend, with a degree in Econ from Georgetown, and he can't follow through on basic things. It took him two months to buy a CD for a Trust. I ask him to open a checking account, and he opens an account with E-Trade. That an ARM eludes people doesn't surprise me at all.

I'm not amazed people don't get this stuff. I'm amazed that as a society we get through a single ####### day intact.
   2010. Ray (RDP) Posted: April 11, 2013 at 05:52 PM (#4411148)
It's Ray's old bugbear, empathy. If he understands it, everyone must.


Well, everyone who "understands" that in order to live, you have to breathe, anyway.

This is 5 minus 4 minus 1 = 0 type stuff. If you net $5 and already spend $4 and the mortgage is going to cost $1 and it could easily increase, you shouldn't be signing up for the mortgage. This is basic, basic stuff.

Do people with $50,000 incomes typically go out and spend $75,000 financing a porsche? If they are capable of understanding that it's a bad idea with respect to a car, they should be able to understand it with respect to a house, which costs much more. And if they don't, don't come knocking on my door for the cash. I didn't buy the porsche, and wasn't driving it. So I shouldn't ####### pay for it. And if I am made to pay for it, I deserve the sympathy, not the poor irresponsible jackasses who were too stupid to figure it out.

Happy April 15th.
   2011. zenbitz Posted: April 11, 2013 at 05:53 PM (#4411149)
"ARM."
"What's an ARM?"
"Adjustable-rate mortgage."
"Oh. That means that the interest rate could change?"
"Yep."
"It could go up?"
"Yep. So you need to be careful. Here's how it works...."


Ray:: Not a salesman.
   2012. The Id of SugarBear Blanks Posted: April 11, 2013 at 05:53 PM (#4411150)
So I took the opportunity at the market bottom in March 2009 to pile into the S&P and other brand-name stocks. (Chance of a lifetime, really.) Other people were scared and afraid and so they sold and went into cash.

The stocks have now more than doubled, and a few are something like eight-baggers. Should we feel sorry for the people who sold or didn't buy stocks then, thus missing out on a great opportuntiy to make money?
   2013. Jack Carter, calling Beleaguered Castle Posted: April 11, 2013 at 06:04 PM (#4411154)
I've got as much sympathy for someone who agrees to an ARM without any kind of research as I do for someone who buys a pizza and is shocked that it contains dairy products. I'm not talking even about getting a lawyer - if you can't be bothered spending a few minutes to learn the basics of the largest financial transaction you will make in your 80 years of existence, you get exactly what you deserve.


What you may be missing is that a significant majority of the population simply cannot understand the concept of an ARM as it applies to them. If most people understand what to you and me and most here is fairly simple math, the world would be a rather different place. Innumeracy is rampant.

As others have said, you are overestimating the due diligence people put into their decisions.

It's not just due diligence. It's simply beyond most people. Most of the people I do business with won't understand an ARM, and these are hardly the dumbest people doing business.

Later tonight I will explain to a builder that I need him in fact to answer the five questions I've put to him in two previous emails. There's 12k at stake for him on an easy job I know he wants and needs, and I would bet real money he won't understand what I'm asking (simple questions), or that the job depends on his response.

I don't quite get how you can not understand "Are you including the cost of the concrete in your estimate on the piers, or are you just giving me the price of the labor involved in pouring the piers?". but he seems not to, at least not when it's put to him in writing. And in person he's a pleasant, affable guy who knows light construction, but he's about to lose the job because if I can't communicate with him in writing, and given that I won't be at the job site every day, we won't be able to resolve problems that come up.

The chance he could understand an adjustable rate mortgage in writing is zero.

This reminds me, too, to build simple models of the three most difficult connections in the framing for a builder's use. They won't understand the prints. By far the most popular books are understandable by an eighth grade education. There's a reason for that.
   2014. Jolly Old St. Nick Is A Jolly Old St. Crip Posted: April 11, 2013 at 06:06 PM (#4411155)
No need to reward incompetence, or feel sorry for it. Save your sympathy and empathy for the deserving -- like me, whose checkbook always gets raided to bail out the incompetent.

I'll bear that in mind.

------------------------------------------

And if it did, the only principled libertarian response would presumably have been "Sorry about that."

And the only persons you are sorry for in this entire affair are the irresponsible home "owners" who like parasites leapt into "affordable" homes that they couldn't actually afford.

Kind of like how some people now have health "insurance" that they can't afford either, even if Congress pretended it was "affordable," which is why these people too are parasites leeching off of the taxpayers.


What can anyone say in response to a comment like this? Why do I get the feeling that the longer you live, the more you're going to wind up an increasingly lonely and embittered old man who goes around cursing at clouds?
   2015. Ray (RDP) Posted: April 11, 2013 at 06:08 PM (#4411156)
Ray:: Not a salesman.


Right, but that's why I have continually said that borrowers should be getting advice from people who do have the borrower's best interests in mind. You shouldn't be relying exclusively on the freaking lender to tell you whether you should sign.

I seriously wonder whether people here, when entering into contracts, typically go to the other party and ask the other party whether the contract is in their best interests to sign. That seems to be the take-away message from the comments here. Is the concept of getting _objective_ advice from a disinterested person, or a person having a duty to you, actually foreign to people?
   2016. Mefisto Posted: April 11, 2013 at 06:10 PM (#4411157)
I think you guys are being entirely too hard on Ray. It's clear that modern society deprives him of his natural FREEDOM to demonstrate his innate superiority in so many ways. Some examples:

The mandatory polio vaccine prevented the 3 year old Ray from showing his intelligence by not ingesting water contaminated with the polio virus.

Pasteurizing milk prevented Ray's parents from demonstrating the time and money they were willing to spend on verifying that the milk he drank wouldn't give him milk sickness, unlike those irresponsible parents who failed to do their own due diligence.

Ray's parents were also willing to spend time and money assuring that his hot dogs weren't contaminated with rat feces. Personal responsibility, right there.

Ray himself suffers by being unable to buy his own water supply and guarantee his own safety from dysentery, unlike the rest of us who are impoverished by government water quality standards.

Ray has too much money in his savings account, because he can't purchase the Kevlar vests and related defensive armor he would need if his neighbors were truly free to purchase all the arms FREEDOM demands.

Ray suffers vicariously the emotional distress of all those shop owners unable to refuse service to "colored people".

Ray's expertise in organic chemistry doesn't receive sufficient admiration because he can't put it to use verifying the safety of his household cleaning supplies. That sort of freedom is irreplaceable.

Ray's advanced knowledge of engineering is useless thanks to government safety standards for high rises and bridges. He'd never enter a building or cross a bridge until he carefully inspected it. We've all been made poorer by this terrible interference with FREEDOM.

In short, there are a million ways in which modern society makes all of us less free, and Ray is uniquely suited to adapting his behavior to every single one of them. Shame on all of you.
   2017. Ray (RDP) Posted: April 11, 2013 at 06:13 PM (#4411160)
What you may be missing is that a significant majority of the population simply cannot understand the concept of an ARM as it applies to them.


Adjustable rate mortgage. It's right there in the name.
   2018. The Id of SugarBear Blanks Posted: April 11, 2013 at 06:15 PM (#4411161)
Ray suffers vicariously the emotional distress of all those shop owners unable to refuse service to "colored people".

Their freedom of association was clearly vitiated. That shouldn't even be controversial.
   2019. Rickey! On a blog from 1998. With the candlestick. Posted: April 11, 2013 at 06:16 PM (#4411162)
Right, but that's why I have continually said that borrowers should be getting advice from people who do have the borrower's best interests in mind. You shouldn't be relying exclusively on the freaking lender to tell you whether you should sign.


I'm shocked that a lawyer thinks there should be a middleman involved in all negotiations.
   2020. Los Angeles El Hombre of Anaheim Posted: April 11, 2013 at 06:19 PM (#4411164)
I seriously wonder whether people here, when entering into contracts, typically go to the other party and ask the other party whether the contract is in their best interests to sign.
I've made the point before multiple times, but here it is again: If a person who does not expect to be able save up enough to buy their own home is given the opportunity to get a ARM loan to purchase property that is expected to increase in value quickly and make real money in the short term, then taking that loan is a perfectly rational decision. If the market continued to rise, then they can flip the property and make real money they wouldn't have made before, and they default on the loan, well, they're not much worse off than they were before. It's a perfectly reasonable risk to take.
   2021. Ray (RDP) Posted: April 11, 2013 at 06:22 PM (#4411165)
I've made the point before multiple times, but here it is again: If a person who does not expect to be able save up enough to buy their own home is given the opportunity to get a ARM loan to purchase property that is expected to increase in value quickly and make real money in the short term, then taking that loan is a perfectly rational decision. If the market continued to rise, then they can flip the property and make real money they wouldn't have made before, and they default on the loan, well, they're not much worse off than they were before. It's a perfectly reasonable risk to take.


In that case the person _does_ understand what an ARM is.

I'm not sure what point of mine this refutes.
   2022. The Id of SugarBear Blanks Posted: April 11, 2013 at 06:24 PM (#4411166)
Adjustable rate mortgage. It's right there in the name.

But they can't understand it. The vast majority of people are in way over their heads even with such a simple concept.

That's what happens when you have 40 years of People magazine, Oprah, self-help flimflam, and an education system set up in the image of the identity liberals where no one puts in any effort, and instead sits around ######## about how unfair everything is and telling each other how great they are.

You're imagining a nation of strivers and learners, but that isn't the United States. The country's broken.
   2023. Los Angeles El Hombre of Anaheim Posted: April 11, 2013 at 06:29 PM (#4411167)
I'm not sure what point of mine this refutes.
You've continually expressed astonishment that people would take on ARMs. For some people, it's not a bad risk to take. Indeed, they acted in pretty much the same way many of the larger market agents acted throughout the early/mid 2000s.

And as others have pointed out, it's not the easiest thing in the world to understand. My mom, who dealt in residential real estate, advised people to stay away from them in part because she, a successful real estate professional, couldn't understand the specifics well enough to explain it to others.
   2024. Johnny Sycophant-Laden Fora Posted: April 11, 2013 at 06:29 PM (#4411168)
Is the concept of getting _objective_ advice from a disinterested person, or a person having a duty to you, actually foreign to people?


Yes Ray, it is actually foreign to a great many people, if it wasn't snake oil salesman wouldn't make money, the makers of Enzyte would never even have bothered trying to go to market.

I have far less sympathy for these people than Andy does, I just think that society as a whole (of which I am a member), would be better off if we did a better job of protecting morons from themselves or at least discouraging people fro taking advantage of the morons. If we did that we may not have had to bail out the financial system in 2008/09.

   2025. Ray (RDP) Posted: April 11, 2013 at 06:35 PM (#4411169)
You've continually expressed astonishment that people would take on ARMs.


I have done no such thing. I have a 5.1 ARM of my own.

I have said that the concept is not so difficult to understand, and even if it was it is not an excuse for jumping into a mortage one couldn't reasonably afford to say "I didn't know what the #### I was jumping into." That argument is absurd on its face, because if you didn't understand it, you shouldn't have signed on the ####### dotted line.
   2026. Johnny Sycophant-Laden Fora Posted: April 11, 2013 at 06:36 PM (#4411170)
If a person who does not expect to be able save up enough to buy their own home is given the opportunity to get a ARM loan to purchase property that is expected to increase in value quickly and make real money in the short term, then taking that loan is a perfectly rational decision. If the market continued to rise, then they can flip the property and make real money they wouldn't have made before, and they default on the loan, well, they're not much worse off than they were before. It's a perfectly reasonable risk to take.


It's a perfectly reasonable risk to take.

maybe on an individual level, but on a societal level it was disastrous

1: Markets do not continue to rise indefinitely, has never happened in the history of the world, and never will
2: You have a large # of people making each individually making this "reasonable risk" means you have a huge pool of essentially speculative capital pouring into that market- you are creating and feeding a bubble- someone does this and makes out like a bandit, then 2 do, then 4, then 8
3; when that bubble pops, when that market "corrects" a large number of people are going to be left hanging- owing far more than they can pay with their income, and an asset that has suddenly lost value- and if that number of people is large enough it'll ripple through the entire economy.



   2027. Rickey! On a blog from 1998. With the candlestick. Posted: April 11, 2013 at 06:36 PM (#4411171)
   2028. The Id of SugarBear Blanks Posted: April 11, 2013 at 06:39 PM (#4411173)
That argument is absurd on its face, because if you didn't understand it, you shouldn't have signed up for it.

Except every message the culture sends -- "JUST DO IT"!!!, "YOU CAN ACHIEVE ANYTHING YOU SET YOUR MIND TO!!!", "LIVE YOUR DREAMS!!!" -- is directly contrary to this seemingly straightforward principle.

You're expecting people to not only understand it, but properly evaluate the risks and rewards at the same time something they really want to buy and something society says constitutes the "American Dream" is waiting for them if they just sign the papers.

Isn't going to happen.
   2029. Rickey! On a blog from 1998. With the candlestick. Posted: April 11, 2013 at 06:40 PM (#4411174)
I have said that the concept is not so difficult to understand, and even if it was it is not an excuse for jumping into a mortage one couldn't reasonably afford to say "I didn't know what the #### I was jumping into." That argument is absurd on its face, because if you didn't understand it, you shouldn't have signed on the ####### dotted line.


Ray, let me clear this up for you.

The people who are incapable of grasping the finer details of an ARM _don't know they're incapable of grasping the details of the product._ The don't know what they don't know. As such, they do not know that they are taking on a risk they aren't prepared to deal with in worst case conditions.

The people selling these things (in order to generate debt to sell to CDO tranches, because debt is the underlying currency of debt based collateral) didn't care about the risk (because "housing prices never fall") and were not interested in explaining the risk to someone because that might drive them away from the sell (and thus the creation of debt to back the CDO economy.)

You are asking non-rational thinkers to think rationally about their non-rational thinking. It's impossible.
   2030. Ray (RDP) Posted: April 11, 2013 at 06:41 PM (#4411175)
Patent trolls are demonized by some (thus, the name "troll"), but they have an entirely legitimate existence and play an important role in the system.

IMO, of course. Granted about half of the people who understand the issues would disagree. It's a controversial subject.

What is not in dispute is that there is no law against them. Although Congress may try to change that. There is case law on how being a patent troll affects your ability to be granted an injunction at the start of litigation, but there is no law, codified or otherwise, against being a patent troll and operating as such.
   2031. Rickey! On a blog from 1998. With the candlestick. Posted: April 11, 2013 at 06:44 PM (#4411177)
What is not in dispute is that there is no law against them. Although Congress may try to change that.


You're not really getting the bit about "too much law" are you?
   2032. Johnny Sycophant-Laden Fora Posted: April 11, 2013 at 06:51 PM (#4411183)
You've continually expressed astonishment that people would take on ARMs. For some people, it's not a bad risk to take.


No, if rates are high (historically speaking, right now they are not- they are extremely low historically speaking), an ARM may be attractive, because your rates will come down when rates in general do, you don't have to worry about re-financing. If you borrowed money 10 years ago at 6-7%, you are paying 6-7% now if it was a fixed rate loan (and really should be looking to refinance). If you had an ARM you are probably paying 3-4% on that loan and don't need to refinance.

Banks prefer ARMs to long term fixed rate loans, because the interest rates banks get charged are always varying, in a banker's dream world the only time they'd offer a fixed rate mortgage longer than a year is when rates are really historically high. Sure sometimes they would have been better off with having sold a fixed rate loan, but if everything is an ARM, then all the money they've loaned (at whatever time) is earning the same interest rate.

Mortgage Advice- at some point in the future rates are going up, and there'll come a day when when you are paying 4% on your loan, but banks are making loans at 7-8%. The present value of your loan (to the bank) is going to be less than your outstanding balance, let's say you owe 100K, the bank could make just as much money by letting you payoff that loan for just 70,000 and re-loaning that $70,000 for 6% - suggest that to your bank- some of them will go for it (BTW obviously this wouldn't work if you have to borrow the 70k).
   2033. Los Angeles El Hombre of Anaheim Posted: April 11, 2013 at 06:53 PM (#4411184)
maybe on an individual level, but on a societal level it was disastrous ...
3; when that bubble pops, when that market "corrects" a large number of people are going to be left hanging- owing far more than they can pay with their income, and an asset that has suddenly lost value- and if that number of people is large enough it'll ripple through the entire economy.
I agree, and this is why the Thatcher argument that "there is no such thing as society" is so flat ridiculous. I'm stunned that people actually think nothing so terrible would have happened had trillions of dollars just gone up in flames in 2008.


Patent trolls are demonized by some (thus, the name "troll"), but they have an entirely legitimate existence and play an important role in the system.

What is not in dispute is that there is no law against them.
They do, but this is part of the whole legal-is-not-the-same-as-good argument. There's a whole slew of corporate entities whose entire raison d'être is to wait for someone else to be innovative, then squeeze them for money. They're not protecting any patents, and they're not fostering innovation. They're a bunch of lawyers trying make a living squelching other people's hard work.
   2034. Johnny Sycophant-Laden Fora Posted: April 11, 2013 at 07:02 PM (#4411188)
but there is no law, codified or otherwise, against being a patent troll and operating as such.


There's a troll in NJ I've run into who made his living buying up dishonored checks from check cashers. He would then sue the check makers on the checks.

How did that work some might ask?

If A writes out a check for $20 to B, that check is a negotiable instrument, B can assign it to C, and C can enforce it.

If C is a "holder in due course," meaning he has paid value for the check and has no knowledge that the debt it represents is not valid, then C can enforce the check.

You may ask, but hey, he's buying dishonored checks, doesn't that put him on notice that something is wrong?
Well no, most checks are not dishonored because of a forged signature or stop payment order, they are dishonored NSF, meaning insufficient funds- meaning that A didn't have $ in the bank, it doesn't mean that A didn't owe the $ to B.

So he'd buy $100,000 worth for checks (face value) for a couple thousand, sue everyone in sight, and make enough to make it worth his while, did that for years... last I heard he was caught forging affidavits and was facing disbarment...

but anyway, I suppose a patent troll is something like that
   2035. Johnny Sycophant-Laden Fora Posted: April 11, 2013 at 07:12 PM (#4411192)
They do, but this is part of the whole legal-is-not-the-same-as-good argument. There's a whole slew of corporate entities whose entire raison d'être is to wait for someone else to be innovative, then squeeze them for money. They're not protecting any patents, and they're not fostering innovation. They're a bunch of lawyers trying make a living squelching other people's hard work.


It's called "rent seeking."

Some things are just a cost of doing business
A: you have to pay employees
B: you have to pay for supplies
C: you have to pay off the corrupt OSHA/health inspector
D: you have to pay off the local don to avoid mysterious vandalism incidents
E: you have to pay royalties to some patent holder
F: you have to collect and pay sales taxes
G: you have to pay interest to your father in law's wealthy brother because he loaned you the money to open up shop
H: you have to pay rent (literally) on your shop
I: you have to pay for liability insurance

C and D are examples of rent seeking behaviors, so are E and H, but E and H are legitimate (well sometimes E may not be)
I is related to rent seeking, you are paying premiums, that in part, relates to the possibility that someone may trip and fall entering your store and suing you.
F is seen as rent seeking by a certain type of philosophy- i.e, what's the difference between a government demanding money to leave you alone and the mafia seeking "protection money?"
   2036. Bitter Mouse Posted: April 11, 2013 at 07:12 PM (#4411193)
Taxes are demonized by some, but they have an entirely legitimate existence and play an important role in the system.

What is not in dispute is that there is no law against them.


Fixed that for you.
   2037. Morty Causa Posted: April 11, 2013 at 07:12 PM (#4411195)
The stocks have now more than doubled, and a few are something like eight-baggers. Should we feel sorry for the people who sold or didn't buy stocks then, thus missing out on a great opportuntiy to make money?


If everyone decided to get in on that, what would happen? Can everyone make a killing?
   2038. Joe Kehoskie Posted: April 11, 2013 at 07:16 PM (#4411201)
You and Joe K should actually go back and read the suits. The suits charged that lenders were giving loans to whites but not to minorities who had the same credit ratings. In other words, the banks had no problems giving loans to people with weak credit, just not black people with weak credit. — Los Angeles El Hombre of Anaheim

Still waiting for that list of banks that were issuing loans to classes of white borrowers whom they knew would default at a rate of 50-plus percent, like the 50-plus percent of Obama's 186 plaintiffs who ended up in foreclosure and/or bankruptcy.

I've made the point before multiple times, but here it is again: If a person who does not expect to be able save up enough to buy their own home is given the opportunity to get a ARM loan to purchase property that is expected to increase in value quickly and make real money in the short term, then taking that loan is a perfectly rational decision. If the market continued to rise, then they can flip the property and make real money they wouldn't have made before, and they default on the loan, well, they're not much worse off than they were before. It's a perfectly reasonable risk to take.

If the above is true, then why do you and others here keep referring to such borrowers as "victims"?

One minute, these borrowers were uninformed rubes who were all but forced to take out big loans at gunpoint. The next minute, they were savvy investors wisely availing themselves of a financial tool with little or no downside risk. Let us know when you make up your mind.
   2039. Johnny Sycophant-Laden Fora Posted: April 11, 2013 at 07:21 PM (#4411202)
If everyone decided to get in on that, what would happen? Can everyone make a killing?


yes, everyone, because, well things are different now, the business cycle has been broken and they will go up forever.

   2040. Jay Z Posted: April 11, 2013 at 07:33 PM (#4411217)
The daughter of the Rev. Jeremiah Wright — the controversial former pastor to President Barack Obama — was indicted today in an expanding federal probe of a state grant tied to a former suburban police chief.


Heck, last Sunday the bishop* for our church killed a 52 year old woman on a bike trail by running her over with his car. Of course he was drunk at 3 PM on a Sunday. Of course he's out now after arraignment, no bail, with the promise that he attend a substance abuse program. The disgusting USA love affair with DWI continues apace.

*I'm Lutheran, not Catholic. The bishop is elected for a limited term.
   2041. Ray (RDP) Posted: April 11, 2013 at 07:36 PM (#4411221)
You and Joe K should actually go back and read the suits. The suits charged that lenders were giving loans to whites but not to minorities who had the same credit ratings. In other words, the banks had no problems giving loans to people with weak credit, just not black people with weak credit. — Los Angeles El Hombre of Anaheim

Still waiting for that list of banks that were issuing loans to classes of white borrowers whom they knew would default at a rate of 50-plus percent, like the 50-plus percent of Obama's 186 plaintiffs who ended up in foreclosure and/or bankruptcy.


I'm still waiting to learn why my comment that lenders were being accused of being racists was pushed back on, when redlining lawsuits such as Obama's were being filed.

   2042. Bitter Mouse Posted: April 11, 2013 at 08:04 PM (#4411234)
I'm still waiting to learn why my comment that lenders were being accused of being racists was pushed back on, when redlining lawsuits such as Obama's were being filed.


Well I was pushing back on the idea that the lawsuits led to the problem. Laws should be followed. If you don't like the law then it should be changed (I happen to think the redlining laws are fine, but that is a different discussion).

When lending money have a consistent color (and other) blind process and follow it.
   2043. Los Angeles El Hombre of Anaheim Posted: April 11, 2013 at 08:30 PM (#4411258)
I'm still waiting to learn why my comment that lenders were being accused of being racists was pushed back on
I've linked to stories from the Sun-Times, AP, and the U of Michigan Law School summary of the case. All of them were pretty clear on what the case entailed. If you guys want to continue with the Tea Party spin of things, that's up to you.

If the above is true, then why do you and others here keep referring to such borrowers as "victims"?
This just goes in a circle forever....

We live in the real world where real people lose real money when those institutions fail, to the tune of trillions. The arguments keep getting directed back to poor people with ARMs, but that wasn't the problem, and all attempts to stay focused on the CDO issue gets redirected back to poor people with ARMs. It's not like if all those poor people who defaulted would have done a fraction of the damage that was caused by the large investment houses, but I can't seem to get any lib-cons to say anything about them other than the old "they should have be allowed to fail" while refusing to talk about what would have happened to the trillions of dollars that millions of people would have lost.
   2044. Joe Kehoskie Posted: April 11, 2013 at 08:39 PM (#4411265)
So it wasn't the poor people who were the victims, it was non-poor depositors and taxpayers whose money was at risk and/or used in the bailouts? Is that now your position?

Also, how could debt collateralization have become so profitable without the systemic weakening of underwriting standards that drove the real estate bubble in the first place?
   2045. Los Angeles El Hombre of Anaheim Posted: April 11, 2013 at 08:45 PM (#4411270)
So it wasn't the poor people who were the victims, it was non-poor depositors and taxpayers whose money was at risk and/or used in the bailouts? Is that now your position?
Many poor people were sold a false dream. Many people had their savings wasted on high-risk market games.

You're an expert at claiming victimization, Joe. I'm sure you can think of others.
   2046. Joe Kehoskie Posted: April 11, 2013 at 08:54 PM (#4411276)
I don't recall claiming victimization a single time here. I do, however, point out specious claims of victimization, the litany of which is neverending among lefties.
   2047. Rickey! On a blog from 1998. With the candlestick. Posted: April 11, 2013 at 09:05 PM (#4411283)
Also, how could debt collateralization have become so profitable without the systemic weakening of underwriting standards that drove the real estate bubble in the first place?


Because CDOs were a completely unregulated market that thrived on false premises and essentially printed their own earnings. We will repeat this simple fact until you stop saying factually incorrect things. Sub-prime lending was not a driver of the CDO bubble. It was an EFFECT of the CDO bubble.

In the late 90s and early 2000s financial institutions developed "complex instruments" for derivative trading. One of those complex instruments were CDOs. The institutions found that by slicing and dicing debt based collateral into ever more impossible to define mixtures of risk tranches, combined with a bought and paid for "ratings" industry that gave them all high rating scores, they could essentially print money. The currency at the heart of this paper economy was debt. When the CDO genie was unleashed, sometime around 2000-2001, institutions began gobbling up every ounce of debt they could find to back these new "print your own money" derivative instruments. Sometime around 2005 or so, the market for debt started running low *on debt itself.* The market demanded more debt, because debt was the building blocks of CDOs, and CDOs were free money.

So, to fill this new demand for debt, lenders started lending to riskier, sub-prime borrowers. This is why the sub-prime lending boom didn't start until four or five years AFTER the CDO boom kicked into high gear.

High risk, sub-prime lending didn't cause the CDO bubble. The CDO bubble caused the explosion of high risk, sub-prime lending.
   2048. Joe Kehoskie Posted: April 11, 2013 at 09:14 PM (#4411289)
Like the people claiming that the essence of an ARM was buried in the fine print rather than in the ARM name itself, #2047 conveniently ignores the definition of "collateral" (which, once again, is right there in the CDO name).

Adding to the absurdity, it ignores (1) that people like Barney Frank continued insisting there was no national real estate bubble in the first place, and (2) the "too big to fail" mentality that allowed such practices to continue unabated for years and years after the existence of the r.e. bubble was plainly obvious.
   2049. Slivers of Maranville descends into chaos (SdeB) Posted: April 11, 2013 at 09:27 PM (#4411299)
That argument is absurd on its face, because if you didn't understand it, you shouldn't have signed on the ####### dotted line.


Dunning-Kruger Effect.
   2050. Jack Carter, calling Beleaguered Castle Posted: April 11, 2013 at 09:43 PM (#4411305)
What you may be missing is that a significant majority of the population simply cannot understand the concept of an ARM as it applies to them.

Adjustable rate mortgage. It's right there in the name.

What you may be missing is that a significant majority of the population simply cannot understand the concept of an ARM as it applies to them.
   2051. Jack Carter, calling Beleaguered Castle Posted: April 11, 2013 at 09:49 PM (#4411308)
Do you know why? Because they tightly regulated the home mortgage market. Lenders could not lend more than 80% of a home's value, based upon an independent state licensed appraisal (they couldn't even use in-house appraisers). ARMs were not allowed, "teaser rates and neg-Am" loans were not allowed

as a result no RE bubble and no crash, but they did it by severely limiting the right to contract so beloved by libertarians


Yes -- this is how things used to be and what they should go back to being. People aren't in fact capable of sensibly understanding and choosing between a variety of investment and financial products. We have to go back to dumbing those things down.


There are plenty of people with solid job histories who are good bets at 5% down on the right homes. If we want to keep the world economy from crashing, we simply disallow bets on mortgages by anyone not directly involved in the mortgage. There's no particular reason why we need to build casinos around betting a significant fraction of the world economy on the repayment of mortgages.
   2052. snapper (history's 42nd greatest monster) Posted: April 11, 2013 at 09:54 PM (#4411311)
There are plenty of people with solid job histories who are good bets at 5% down on the right homes. If we want to keep the world economy from crashing, we simply disallow bets on mortgages by anyone not directly involved in the mortgage. There's no particular reason why we need to build casinos around betting a significant fraction of the world economy on the repayment of mortgages.

Basically, no mortgage should ever be issued at less than 20% down. The median home price is <$175,000. If you can't save the $35G for a downpayment, you're probably better off renting, or buying a cheaper house.

If you're too cash poor to save the downpayment, you're too cash poor to afford a house. Crap breaks in houses all the time and you need to spend $5000-10,000 on a new furnace or a new roof.

   2053. Jack Carter, calling Beleaguered Castle Posted: April 11, 2013 at 09:57 PM (#4411312)
Basically, no mortgage should ever be issued at less than 20% down. The median home price is <$175,000. If you can't save the $35G for a downpayment, you're probably better off renting.


Nope. The tablets did not include the magic words, "20% down"; at least, not that I can recall. Given how many people work their asses off and are nonetheless perpetually in the lower middle class, depriving them forever of the chance of owning a home, building equity, and helping their children join the middle class is simply weird. Especially coming from you, given your stated concerns for the working class.

edit: you may be living in a world of $250,000 starter homes. There are a great many houses available for 100k to 150k, where the mortgage is noticeably less than the cost to rent a smaller apartment. Without dropping the entry fee to those houses, you leave them in the hands of landlords and speculators. With a 5% down payment, you put them in the hands of hardworking, deserving families it would take a couple of decades to save $25,000, a length of time during which they'd have gotten past the halfway point towards owning the house outright.
   2054. McCoy Posted: April 11, 2013 at 10:04 PM (#4411316)
I think in a lot of markets 20% can be a little absurd. For instance I'm actually leaning towards buying a condo DC this year and real estate in DC is insane. 300 grand for a 600 sq ft condo right now. If you're sitting on 60 grand in cash you're probably doing something wrong. You can plop 6% down and have your monthly payments be less than your rent.

Or what Jack basically beat me to.

20% down is a nice thought for people who have moved beyond starter home but for the people who haven't that is a significant barrier.
   2055. snapper (history's 42nd greatest monster) Posted: April 11, 2013 at 10:14 PM (#4411321)
Nope. The tablets did not include the magic words, "20% down"; at least, not that I can recall. Given how many people work their asses off and are nonetheless perpetually in the lower middle class, depriving them forever of the chance of owning a home, building equity, and helping their children join the middle class is simply weird. Especially coming from you, given your stated concerns for the working class.

Yeah, there's been tons of equity building going on recently. Living in a house vs. and apartment doesn't magically make you middle class.

There's no magic wand that makes a house a good investment. Long term, HPA is about 3-4% real. If you're not paying much income tax (most working class people pay negative income tax, if they have children, due to the EITC) the economics of home ownership are not that great. Historically, it's not a better investment than 30-year Treasury Bonds or Stocks.

Everybody should have 6-month take home pay saved as a reserve before they even consider saving for a downpayment. There is no problem being a life long renter. Many people have done just fine that way.

Encouraging people who lack saving to invest in maintenance intensive capital goods is not doing them any favors.


   2056. snapper (history's 42nd greatest monster) Posted: April 11, 2013 at 10:16 PM (#4411322)
I think in a lot of markets 20% can be a little absurd. For instance I'm actually leaning towards buying a condo DC this year and real estate in DC is insane. 300 grand for a 600 sq ft condo right now. If you're sitting on 60 grand in cash you're probably doing something wrong. You can plop 6% down and have your monthly payments be less than your rent.

How much do you make? You should have at least 50% of you take home pay in cash at all times. 100% is better. Anyone can be out of work for 6 months at any time.

If you don't have 50% of your take home pay in cash, stop taking vacations and eating/drinking out until you do.

20% down is a nice thought for people who have moved beyond starter home but for the people who haven't that is a significant barrier.

It's meant to be a barrier. Home ownership is expensive, and a huge financial commitment.
   2057. Jack Carter, calling Beleaguered Castle Posted: April 11, 2013 at 10:21 PM (#4411324)
@2054: I agree, to be sure. The purpose of the down payment is to protect the lender against default combined with a drop in property values. The government in the case of veterans (for example) has long been the lender who guarantees the 15% a buyer can't come up with. The government could lose every penny of its guarantee for one million buyers of low cost homes and still drop only a paltry $20 billion.

It's not difficult to put a handful of stipulations in place to prevent flipping, or the buying of vacation homes, or homes that have substantially increased in value over the last x years, thereby avoiding have buyers buy at the top of a bubble (though low-cost homes generally prevent that).

McCoy, are you a fan of ST TOS? I seem to remember that from an earlier thread...

edit: "Encouraging people who lack saving to invest in maintenance intensive capital goods is not doing them any favors."

Spoken like a man who, when his roof leaks, calls a roofer; or who, when his water heater goes, calls a plumber; or who, when he has another kid and needs an extra bedroom, calls a contractor. The guys I know who own the houses I'm talking about won't spend the difference they save between a mortgage payment and apartment rent on maintenance; not when all they're paying for is materials and pizza and beer. It's the same way they very rarely take their cars to a mechanic. You have no idea--or have forgotten--how important home ownership is.

And if one in ten can't handle it, so what? The world goes on.

You've forgotten how the world of the working class operates.
   2058. McCoy Posted: April 11, 2013 at 10:26 PM (#4411328)
How much do you make? You should have at least 50% of you take home pay in cash at all times. 100% is better. Anyone can be out of work for 6 months at any time.

That sounds insanely absurd and wasteful. Especially in this era of PTO and 401k. Right now I've got 2 months of PTO owed to me and my company gives me 4% for 5% contribution. Sitting on tens of thousands of dollars in a CD or worse a savings account to me is akin to shooting yourself in the foot. Perhaps if you're making 150,000 or something but people like me who are making below 100 grand we don't have a ton of marginal dollars to simply store half our money in a closet. That isn't to say one shouldn't have a pile of cash in case of emergencies and such but I don't half being the right amount.

It's meant to be a barrier. Home ownership is expensive, and a huge financial commitment.

Renting an apartment is expensive and a huge financial commitment as well. If you can buy a home and have it been cheaper than renting why should be kept from buying simply because you don't have a giant wad of cash on hand?
   2059. McCoy Posted: April 11, 2013 at 10:27 PM (#4411329)
McCoy, are you a fan of ST TOS? I seem to remember that from an earlier thread...

Hell no.
   2060. snapper (history's 42nd greatest monster) Posted: April 11, 2013 at 10:27 PM (#4411330)
I agree, to be sure. The purpose of the down payment is to protect the lender against default combined with a drop in property values. The government in the case of veterans (for example) has long been the lender who guarantees the 15% a buyer can't come up with.

That's basically an employee benefit. That's fine.

But why should the Gov't do the same for random people? All these subsidies do is drive up the price of housing and screw over first time buyers who don't get the assistance.
   2061. McCoy Posted: April 11, 2013 at 10:31 PM (#4411331)
But why should the Gov't do the same for random people? All these subsidies do is drive up the price of housing and screw over first time buyers who don't get the assistance.

Isn't that what an FHA approved first time buyer loan is for?
   2062. snapper (history's 42nd greatest monster) Posted: April 11, 2013 at 10:32 PM (#4411332)
Renting an apartment is expensive and a huge financial commitment as well. If you can buy a home and have it been cheaper than renting why should be kept from buying simply because you don't have a giant wad of cash on hand?

You can walk out on a rental at pretty much anytime, especially if you have no assets. If you want to be a jerk, you can stop paying rent, and live rent free for 3-6 months before eviction.

Owning a home is rarely cheaper than renting. People look at mortgage payment vs. rent, ignoring, taxes, maintenance, major repairs, etc.

That sounds insanely absurd and wasteful. Especially in this era of PTO and 401k. Right now I've got 2 months of PTO owed to me and my company gives me 4% for 5% contribution. Sitting on tens of thousands of dollars in a CD or worse a savings account to me is akin to shooting yourself in the foot. Perhaps if you're making 150,000 or something but people like me who are making below 100 grand we don't have a ton of marginal dollars to simply store half our money in a closet.

Your 401(k) is for retirement; you should never touch that. Two months is nothing. I know plenty of people who have been out of work for a year or two.

What are you doing with the money you aren't storing "in the closet"? If you don't have anything left to save after living expenses, OK, but again, you shouldn't own a house.
   2063. snapper (history's 42nd greatest monster) Posted: April 11, 2013 at 10:32 PM (#4411334)
Isn't that what an FHA first time buyer loan is for?

Yes. Why should the Gov't subsidize that, vs. subsidizing renting?
   2064. Jack Carter, calling Beleaguered Castle Posted: April 11, 2013 at 10:33 PM (#4411335)
But why should the Gov't do the same for random people? All these subsidies do is drive up the price of housing and screw over first time buyers who don't get the assistance.


Any evidence for this, or at least, that it meaningfully drives up prices?

Oh, and there are no "random people". We're all god's children, after all.
   2065. McCoy Posted: April 11, 2013 at 10:39 PM (#4411336)
You can walk out on a rental at pretty much anytime, especially if you have no assets. If you want to be a jerk, you can stop paying rent, and live rent free for 3-6 months before eviction.

You can do the same thing with a house.


Owning a home is rarely cheaper than renting. People look at mortgage payment vs. rent, ignoring, taxes, maintenance, major repairs, etc.


Okay, but I'm not. There is also the fact that every dollar you use to rent is never ever coming back to you whereas most of your dollars will eventually come back you from your mortgage payments and the government subsidizes your mortgage.
   2066. McCoy Posted: April 11, 2013 at 10:43 PM (#4411339)
Your 401(k) is for retirement; you should never touch that. Two months is nothing. I know plenty of people who have been out of work for a year or two.

What are you doing with the money you aren't storing "in the closet"? If you don't have anything left to save after living expenses, OK, but again, you shouldn't own a house.


If I'm out of work for a year or two I'm screwed no matter what at least if I owned a house I could get something back if I had to sell it. Whereas if I get kicked out of my apartment I'm simply broke and homeless. How is that better?

I invest my money and pay down debt with my extra dollars. Setting half my money aside and do neither of those things would be self defeating. Buying a home and being smart about that purchase can be and generally is a great investment. Not only that but it would make it even easier to build your pile of safety cash.
   2067. snapper (history's 42nd greatest monster) Posted: April 11, 2013 at 10:43 PM (#4411340)
Okay, but I'm not. There is also the fact that every dollar you use to rent is never ever coming back to you whereas most of your dollars will eventually come back you from your mortgage payments and the government subsidizes your mortgage.

If you're working class, you don't pay income tax, so the Gov't isn't subsidizing your mortgage. If you're in a high tax bracket, then yes, buying is often better than renting. But we weren't talking about people in high tax brackets.

The interest payments are gone forever, just as much as rent is.

Oh, and there are no "random people". We're all god's children, after all.

Renters are God's children too. Why should their taxes subsidize home ownership?
   2068. snapper (history's 42nd greatest monster) Posted: April 11, 2013 at 10:47 PM (#4411342)
I invest my money and pay down debt with my extra dollars. Setting half my money aside and do neither of those things would be self defeating. Buying a home and being smart about that purchase can be and generally is a great investment. Not only that but it would make it even easier to build your pile of safety cash.

If you're investing, you have savings. What's the disconnect?

A home is no more likely to be a good investment than anything else. You can do just as well, or better, by buying stocks or bonds, or investing in CDs, if you are "smart about that purchase".

My "pile of safety cash" returns have beaten the crap out of stocks and housing over the last 13 years.

If I had taken every penny I had in 2000 and put it in long-term bank CDs and Tsy Bonds, and rented, I'd be much wealthier today.
   2069. McCoy Posted: April 11, 2013 at 10:47 PM (#4411343)
If you're working class, you don't pay income tax, so the Gov't isn't subsidizing your mortgage. If you're in a high tax bracket, then yes, buying is often better than renting. But we weren't talking about people in high tax brackets.

I think something flew over my head here. How am I not paying income tax?

The interest payments are gone forever, just as much as rent is.

Interest payments are not as much as rent payments so I'm not sure how that is a wash. Depending on the market a house is going to go up in value 0 to 10% a year whereas the cost of renting generally goes up 0 to 5% a year.
   2070. McCoy Posted: April 11, 2013 at 10:50 PM (#4411349)
If you're investing, you have savings. What's the disconnect?

I'm not investing in cash. If investing qualifies as savings then investing in a house should qualify as savings as well.

My pile of safety cash returns have beaten the crap out of stocks and housing over the last 13 years.

I'd rather have a roof over my head and not live in a closet than have half my money sitting in a savings account.
   2071. snapper (history's 42nd greatest monster) Posted: April 11, 2013 at 10:53 PM (#4411350)
I think something flew over my head here. How am I not paying income tax?

We were talking about working class people buying homes.

I never said you shouldn't buy a home. I know nothing of your finances.

Interest payments are not as much as rent payments so I'm not sure how that is a wash. Depending on the market a house is going to go up in value 0 to 10% a year whereas the cost of renting generally goes up 0 to 5% a year.

Depends on the market. Where I live you can rent single family homes for about the same as the mortgage payment plus taxes.

Or a house could go down in value by 30-50%. It's no safer than stocks, and given the demographics of the US, housing appreciation is unlikely to be good going forward.
   2072. snapper (history's 42nd greatest monster) Posted: April 11, 2013 at 10:54 PM (#4411351)
I'd rather have a roof over my head and not live in a closet than have half my money sitting in a savings account.

You can rent larger places too.

I'm not investing in cash. If investing qualifies as savings then investing in a house should qualify as savings as well.

Is none of it liquid? You should never by 100% in long-term investments. A house isn't "rainy day" savings b/c it's not liquid.

IMHO, the only road to financial security is living below your means, and diversification.
   2073. McCoy Posted: April 11, 2013 at 11:00 PM (#4411353)
Depends on the market. Where I live you can rent single family homes for about the same as the mortgage payment plus taxes.

So why rent?

We were talking about working class people buying homes.

I never said you shouldn't buy a home. I know nothing of your finances.


So people making even less money than me should still stick half their money away in savings accounts? I simply can't imagine how someone could actually pull that off at that level of income.

About 5 years ago I quit my job in the midwest and took an introductory job at 39,000 dollars a year just to get my foot in the door in a corporation. I don't recall not paying income tax on that and I can't imagine trying to live on around 1,000 dollars a month which is the amount that would have been needed to set aside half my take home.
   2074. Jolly Old St. Nick Is A Jolly Old St. Crip Posted: April 11, 2013 at 11:00 PM (#4411355)
Owning a home is rarely cheaper than renting. People look at mortgage payment vs. rent, ignoring, taxes, maintenance, major repairs, etc.

That second part is true, but when you consider the long term appreciation of housing in big cities; when you take in the fact that your monthly payment is almost always getting lower in real dollar terms with each succeeding month (not to mention if you can refinance at a lower rate); and when you consider the dramatic increases in rent during that same time period, you're crazy if you think that buying isn't a much better deal. And that doesn't even get into the tax advantages for the homeowner.

At the time we bought our 4BR/2.5BA house in 1991, we were paying $546 a month in rent for a 2BR/1BA Adams-Morgan apartment on one of the best blocks (Mintwood Place) in the neighborhood. That apartment now rents for over $3000. And oh, free street parking, which once was a snap, is now virtually impossible to find anytime other than in the middle of the day.

OTOH in 1991 our mortgage payment was roughly $1200 at 9% interest, or about $2,045 in today's currency. But even after steadily increasing assessments and a rise in the property tax rates, we're now paying $901 a month, with a big chunk of it in tax-deductible interest, thanks to two refinancings and the effect of inflation on the value of the dollar. That represents well over a 50% drop in our monthly outlay in real dollar terms over the past 22 years. We would have had to have shelled out over a quarter of a million dollars in home repairs to have lost all this advantage, and again, that's not even taking the tax advantages into consideration.

Obviously this sort of an extreme contrast has a fair amount to do with both the specifics of the DC market and with the timing of our purchase, but when you take everything into consideration, it takes a whole lot of house maintenance costs to offset the advantages of home ownership.
   2075. McCoy Posted: April 11, 2013 at 11:05 PM (#4411357)
Is none of it liquid? You should never by 100% in long-term investments. A house isn't "rainy day" savings b/c it's not liquid.

Some of it is liquid but nothing like 60 grand.

You can rent larger places too.

Why would I want to do that? If I can afford to rent a bigger place I can afford to buy a house. Throwing money at a bigger apartment seems very wasteful to me.

Or a house could go down in value by 30-50%. It's no safer than stocks, and given the demographics of the US, housing appreciation is unlikely to be good going forward.

I've lived in the suburbs of Illinois, southern Wisconsin, Dutchess County, Philadelphia, Dallas, Virginia, and DC. I've never seen homes in these areas lose 30 to 50% of their value. The worst I think is about 20 to 25% of their value and that was during the real estate crash about 5 years ago. Since then they've recouped their losses which is something that you can never do with an apartment.

A home can lose paper value but paying rent is actual real dollars going out the door and never coming back. Like someone else said above about their financial advisoer, if you're stupid enough to sell at the bottom of the trough you probably shouldn't be trusted with your money in the first place.
   2076. McCoy Posted: April 11, 2013 at 11:10 PM (#4411359)
That apartment now rents for over $3000. And oh, free street parking, which once was a snap, is now virtually impossible to find anytime other than in the middle of the day.

It is even getting tough in the middle of the day. A ton of renovations and construction is going on in the neighborhood so a ton of parking spots are getting cobbled by the dread "emergency no parking" signs. A quarter of my block is gobbled up by those signs right now.

Obviously this sort of an extreme contrast has a fair amount to do with both the specifics of the DC market and with the timing of our purchase, but when you take everything into consideration, it takes a whole lot of house maintenance costs to offset the advantages of home ownership.

I know a ton of people in the same boat as you. Bought a house in DC in the early to mid 90's and have seen their property value soar since then while having their payments in comparison to rent drop to almost nothing. Plus the rental market is so hot in DC that you can always rent your place out or part of it at any time.
   2077. Jolly Old St. Nick Is A Jolly Old St. Crip Posted: April 11, 2013 at 11:12 PM (#4411360)
I've lived in the suburbs of Illinois, southern Wisconsin, Dutchess County, Philadelphia, Dallas, Virginia, and DC. I've never seen homes in these areas lose 30 to 50% of their value. The worst I think is about 20 to 25% of their value and that was during the real estate crash about 5 years ago. Since then they've recouped their losses which is something that you can never do with an apartment.

And in most of the major metropolitan areas, not only have rents been increasing at a rate well over inflation in the more livable neighborhoods**, but every year there are fewer and fewer neighborhoods that survive as low rent alternatives.

**Except for a temporary downturn in the few years of the crash, but even there those rent decreases seldom applied to the more desirable rental units.
   2078. Jack Carter, calling Beleaguered Castle Posted: April 11, 2013 at 11:12 PM (#4411361)
snapper, no idea why you're assuming the government guaranteeing parts of down payments for working class and middle class families is a money-losing proposition. We're not talking about subsidies on houses bought on spec, and the fees paid by borrowers for the privilege of a low down payment are not insignificant, they're simply spread out over time. Further, you're assuming 20% is some sort of magic number. It isn't. Why not at least get behind lending to people and making the down payment a more reasonable percentage based on previous valuations of the property? Why not at least propose dropping the requirements of a down payment on inexpensive property to the break even point for the program as a whole?

This 20% threshold you insist on really does smack of "I've got mine".
   2079. Jolly Old St. Nick Is A Jolly Old St. Crip Posted: April 11, 2013 at 11:17 PM (#4411364)
That apartment now rents for over $3000. And oh, free street parking, which once was a snap, is now virtually impossible to find anytime other than in the middle of the day.

It is even getting tough in the middle of the day. A ton of renovations and construction is going on in the neighborhood so a ton of parking spots are getting cobbled by the dread "emergency no parking" signs. A quarter of my block is gobbled up by those signs right now.


The latest desperation move on the part of the DC government to counter the parking crunch for residents in inner city neighborhoods is to ban all non-residential parking on one side of the street. Previously it simply restricted the number of hours that a non-resident could park there. They've also accelerated the problem by reducing or eliminating the off-street parking requirement for new apartment buildings.
   2080. Jack Carter, calling Beleaguered Castle Posted: April 11, 2013 at 11:22 PM (#4411365)
We would have had to have shelled out over a quarter of a million dollars in home repairs to have lost all this advantage, and again, that's not even taking the tax advantages into consideration.

That whole post is an excellent summary of the advantages of home ownership. My parents did something similar and my dad, a public school teacher, and my mom, who worked part time and raised us, were able to retire at 55 on the basis of the difference between the house they bought on a subsidized down payment in 1960, and a small house in the country very adequate to their needs in 1985.

Snapper's argument only makes sense if lenders lowering the down payment requirement are paying no attention at all to whom they're lending to, are lending to spec buyers, and we have a repeat of 2008.
   2081. Jolly Old St. Nick Is A Jolly Old St. Crip Posted: April 11, 2013 at 11:43 PM (#4411373)
Renters are God's children too. Why should their taxes subsidize home ownership?

There's a good moral case to be made for that point**, but it's irrelevant to the question of whether under current laws it's more financially advantageous in most cases to buy or to rent, which is what this discussion has focused on.

**Though the counter-point is that home ownership tends to give a person a greater stake in his community---an argument I'd think might resonate with you of all people.
   2082. Srul Itza Posted: April 12, 2013 at 12:07 AM (#4411384)
A house isn't "rainy day" savings b/c it's not liquid.


Even if it's an igloo?
   2083. Gonfalon Bubble Posted: April 12, 2013 at 12:09 AM (#4411388)
Celebrating the life of Margaret Thatcher:

In England this week, there's a campaign urging people to buy a copy of the 1939 Munchkin version of "Ding Dong the Witch is Dead" so that it will be the country's #1 song on the day of Thatcher's funeral. Chart position in the UK is entirely based on sales, and the BBC plays the official countdown show every Sunday. With two days remaining, the song has moved into the top position, and its per-day sales totals are rising.
   2084. Tulo's Fishy Mullet (mrams) Posted: April 12, 2013 at 12:12 AM (#4411391)
Further, you're assuming 20% is some sort of magic number. It isn't.


It is in a sense that is the figure at which PMI is off the table (or a piggy 2nd).
   2085. Kurt Posted: April 12, 2013 at 12:28 AM (#4411413)
At the time we bought our 4BR/2.5BA house in 1991, we were paying $546 a month in rent for a 2BR/1BA Adams-Morgan apartment on one of the best blocks (Mintwood Place) in the neighborhood. That apartment now rents for over $3000. And oh, free street parking, which once was a snap, is now virtually impossible to find anytime other than in the middle of the day.


I lived in that exact neighborhood from 98-02 (in the apt building on the corner of Columbia and Mintwood - I still have a lifetime membership at Bedrock), and can tell you that street parking was a distant memory even by then. We would just park illegally, figuring that even 5 tickets a month at $20 a pop was still a better deal than renting a parking space.
   2086. Howie Menckel Posted: April 12, 2013 at 12:30 AM (#4411417)
"Obviously this sort of an extreme contrast has a fair amount to do with both the specifics of the DC market and with the timing of our purchase, but when you take everything into consideration, it takes a whole lot of house maintenance costs to offset the advantages of home ownership."

well, in many cases the first part makes more sense than the second.

I've paid the same rent for the last 5 yrs in a northern NJ market, and month-to-month for the last few years, so 'liquidity' is quite real. If I had bought 5-8 years ago, even with a 20 pct down payment I'd be in a MUCH grouchier mood.

I appreciate your caveat, because the "always better to buy" or "always better to rent" crowds are both pretty tiresome.

as your point suggests, "it depends."

   2087. Jack Carter, calling Beleaguered Castle Posted: April 12, 2013 at 12:58 AM (#4411434)
as your point suggests, "it depends."

As long as "it depends, but it's usually much better for a family to buy if they can afford the mortgage payment and have a respectable employment history and can come up with a 5% down payment, while renting is more expensive." The problem is that snapper (and others, elsewhere) says that's not close to enough.

A house isn't "rainy day" savings b/c it's not liquid.

Of course it is. It's called a sensible home equity loan.

It is in a sense that is the figure at which PMI is off the table (or a piggy 2nd).
Sure, but that number is arrived at as a calculation towards turning a profit. It's not the break even point for lending, which should be the criterion for a government program meant to sensibly encourage home ownership. I'd put the break even point for down payments on non-spec buying, with a good employment history, on houses that pass inspection and are valued at 100k to, say, 175k, and meeting all the other usual requirements, at well under 10%.

I'd also like to see the government get more into subsidizing attractive, inexpensive, low-income, modular housing in rural areas, but that's another issue entirely.

I wonder how many people with mortgages know to tell their lender to stop the PMI payment once they make it to 20% equity? I wonder how many banks quietly pocket the difference.

--off topic (well, maybe not, since one of the topics is banks), but does anyone like con game movies? House of Games is good, and I just saw Confidence on cable with the exquisite Rachel Weisz. Not great, but very solid. The Grifters was just okay, but that's probably because I don't find John Cusack at all compelling in that role. The Sting and Paper Moon top the list, and George C. Scott was awfully good in The Flim-Flam Man
   2088. Tulo's Fishy Mullet (mrams) Posted: April 12, 2013 at 01:07 AM (#4411439)
I wonder how many people paying mortgage know to tell their lender to stop the PMI payment once they make it to 20% equity?


Talking about nobody understanding the concept of an ARM, even fewer can grasp PMI.
   2089. Tulo's Fishy Mullet (mrams) Posted: April 12, 2013 at 01:15 AM (#4411440)
this is off topic: but pretty impressive watching this 14 year old kid shoot a 73 at the 1st round of the Masters. Tianlang Guan of China.
   2090. Jack Carter, calling Beleaguered Castle Posted: April 12, 2013 at 01:31 AM (#4411445)
That's nuts. I've played on a few courses after they were prepped for majors and I think I must have 73-putted a round. Three-tiered greens with the cup embedded in a ten degree slope? It's just a completely different game from my muni course.
   2091. Morty Causa Posted: April 12, 2013 at 01:40 AM (#4411447)
--off topic (well, maybe not, since one of the topics is banks), but does anyone like con game movies? House of Games is good, and I just saw Confidence on cable with the exquisite Rachel Weisz. Not great, but very solid. The Grifters was just okay, but that's probably because I don't find John Cusack at all compelling in that role. The Sting and Paper Moon top the list, and George C. Scott was awfully good in The Flim-Flam Man


Lubitsch's Trouble in Paradise. Capra's Lady for a Day. Meet John Does center's around a con with national connotations. Sturges's The Lady Eve. Leisen's Midnight. Christmas in Connecticut. Billy Wilder's The Major and the Minor and Some Like It Hot. The Fortune Cookie, too. The Music Man. Dirty Rotten Scoundrels is good, as is the movie it remade: Bedtime Story with David Niven and Marlon Brando in a comedy role (he's good). The Producers. Gambit.
   2092. Jack Carter, calling Beleaguered Castle Posted: April 12, 2013 at 02:24 AM (#4411456)
Loved The Producers, but either missed most of the rest or saw them too young to really appreciate. I'll add them to the list. Have to admit I largely missed the unbridled appreciation so many have for Some Like It Hot. It has its splendid moments, but much of it is straightforward farce and nothing special. Jack Lemmon's shrieky voice is a big drawback. It's one of the rare comedies to make some Top 100 All-Time lists, but Tootsie is much better in the class of the cross-dressing comedies, and at least three Marx Brothers, a bunch of Keaton's, some Chaplin, and a W.C. Fields (off the top of my head) are flat out funnier.

I think I'm also in an extreme minority for finding Gary Cooper almost invariably wooden and unappealing. I watched Meet John Doe recently and it felt very, very flat.
   2093. Greg K Posted: April 12, 2013 at 04:23 AM (#4411461)
Even if it's an igloo?

If your igloo is liquid, you may have built it in the wrong place.
   2094. The Id of SugarBear Blanks Posted: April 12, 2013 at 06:48 AM (#4411472)
Celebrating the life of Margaret Thatcher:

In England this week, there's a campaign urging people to buy a copy of the 1939 Munchkin version of "Ding Dong the Witch is Dead" so that it will be the country's #1 song on the day of Thatcher's funeral. Chart position in the UK is entirely based on sales, and the BBC plays the official countdown show every Sunday. With two days remaining, the song has moved into the top position, and its per-day sales totals are rising.


Let us therefore brace ourselves to our duties, and so bear ourselves, that if the British Empire and its Commonwealth last for a thousand years, men will still say, "This was their finest hour."

   2095. Richard Posted: April 12, 2013 at 07:03 AM (#4411476)
The Tory papers in the UK are in an apoplectic rage about this, which proves how fantastic it is.
   2096. The Id of SugarBear Blanks Posted: April 12, 2013 at 07:07 AM (#4411479)
The Tory papers in the UK are in an apoplectic rage about this, which proves how fantastic it is.

It's pathetic, by any measurement (*), and a marker of significant national and cultural decline. Their energy would be far more profitably expended trying to extricate themselves from the dole.

(*) The woman hasn't been in office for 23 years. Her heyday of influence is 30+ years old. While she makes an easy target, the vast majority of Britain's losers would be losers had she never been born.
   2097. A Fatty Cow That Need Two Seats Posted: April 12, 2013 at 07:40 AM (#4411489)
In England this week, there's a campaign urging people to buy a copy of the 1939 Munchkin version of "Ding Dong the Witch is Dead" so that it will be the country's #1 song on the day of Thatcher's funeral. Chart position in the UK is entirely based on sales, and the BBC plays the official countdown show every Sunday. With two days remaining, the song has moved into the top position, and its per-day sales totals are rising.


watch out for fandango
   2098. Jack Carter, calling Beleaguered Castle Posted: April 12, 2013 at 07:45 AM (#4411491)
You could accomplish some of the social welfare gains that come from unionization by passing strong collective bargaining laws. Famously France has a lower union membership rate than the US but an extremely high rate of workers covered by collective bargaining.

Yes, it's not necessarily about unions, nor should it be. It's about labor having some leverage. If there's another way to get that, fine.


There isn't, and don't fall for snapper's smoke. With unions comes political muscle, essential to offsetting corporate muscle. It isn't just about getting more dollars per hour. You'd have to make a titanic push here to pass the laws that in France carry nonunion wages along with union wages, but you'd magically be doing that without any political power, and you'd have no political power to sustain those gains.

The implication that there's nothing between right to work (for nothing) laws and tyrannical! socialist! unions is silly. Strong unions are real social goods.

They started it, and presidents/PMs ever since have continued it -- because Reaganism and Thatcherism assured that there's more money and power in siding with capital than siding with labor.

A treatment that was necessary in the late 1970s has been pursued well past the point of positive returns, deep into the realm of negative returns.


Tariff Monkey: I've heard this from time to time from people who simply don't understand economics. There were many ways to address the economic problems that came to a head in the late 1970s without gutting the working and middle classes. It's absurd to think that Reagan's and Thatcher's policies (one logical consequence of which was the S&L looting--not a case of going to far, but a logical, even an inevitable consequence of massive deregulation) were the only means of addressing ills.

The worse thing said by a politician in the last 30-odd years is Reagan's government is the problem.

Well he was a great spokesmodel.


Heh. Granting that's not really what Reagan said, the Dems were clueless boneheads when it came to messaging. They should have six guys on call in a hotel suite somewhere, guys whose job it is to stay pleasantly plastered and come up within the hour rebuttals like "Yeah. When Reagan governs, government's a problem".

Claims like that should never be left to wander unattended among the children (voters).

As she said herself, there is no such thing as society.

I disagree with her on that. But, the individual economic welfare of each member is not society's problem, except to the extent of providing charity for those who are temporarily or permanently unable to support themselves.


So, can we simply remind you libertarianism doesn't work with humanity, v2013, and get on with the conversation?


edit: Doris, what is "fandango"?
   2099. Bitter Mouse Posted: April 12, 2013 at 07:50 AM (#4411492)
It's pathetic, by any measurement (*), and a marker of significant national and cultural decline. Their energy would be far more profitably expended trying to extricate themselves from the dole.


This is a wonderful post and almost a parody of itself. The assumption that everyone buying the song is on the dole is my favorute though.

A bunch of people organize and engage in an exercise in political expression regarding a seminal figure in their politics and that is "pathetic"? No it is creative, funny, and a legitimate political commentary on a politicians policies. But oh no, someone is saying something bad about someone who recently died ... send me my pearls, I need to clutch them!

And by the way were she alive and in her right mind she would have almost certainly appreciated the gesture. She was much hardier about criticism than many delicate snowflakes on this site seem to be.
   2100. The Id of SugarBear Blanks Posted: April 12, 2013 at 07:58 AM (#4411495)
A bunch of people organize and engage in an exercise in political expression regarding a seminal figure in their politics and that is "pathetic"? No it is creative, funny, and a legitimate political commentary on a politicians policies. But oh no, someone is saying something bad about someone who recently died ... send me my pearls, I need to clutch them!

It's legitimate political commentary, sure -- but it's pathetic political commentary. Just so that's clear, what's pathetic isn't the context, it's the content.

And just so that's clear, the content is the rantings and ravings of losers and supporters of loserhood.
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