Jezebel: subprime mortgage crisis

Sometimes I Wonder How Those Oil Companies Keep From Going Under…

Moe — Wed, 25 Jun 2008 18:30:00 EDT

The Grandmaster Flash memoir is out, and I know a big plot point is how he beat cocaine, but fuck if the guy doesn't sound as endearingly hyperactive as he did rapping about stagflation three decades ago or whatever. Apparently he's a hero in Burma? [Newsweek]
All this time I've been calling Barack Obama a Muslim and it turns out he's actually a Hindu who worships some golden monkey god? [Times of India]
Senator Chris Dodd moved his entire family to Iowa all to win one percent of the vote and I am not happy to report his powerful speech in opposition to retroactively granting big telecom firms the right to spy on people will no doubt prove equally in vain. [Wash Post]
The Supreme Court decided to let Exxon off the hook on some of these pumped up oil spill fines. I mean, we can't very well expect those guys to scrounge up the money to find new sources of oil if we force them to pay putative damages for every little thing they do wrong, can we? You decide. [NYT]

Also in the Supreme Court child rapists won a victory of sorts, and Barack Obama apparently does not approve. [Wash Post]
Countrywide Financial was sort of the poster bank for the whole "Rent to own, No credit no problem" mortgage concept that is now costing taxpayers $300 billion or so, so it makes total sense that billionaire CEO Angelo Mozilo's tears would garner a standing ovation at the latest shareholders meeting. Wait no, actually it doesn't. [LA Times]
I gotta say, I totally agree with this so far and it's kind of a disappointment. [Wash Post]
Scoff all you want about how a grown man should be capable of distinguishing between a teacher dressed up like a Ninja for a costume party and the genuine Ninja article, but in this post-Virginia Tech era can schools ever really be too cautious? [Phillyburbs]

Why Do Women Insist On Buying Houses?

Moe — Wed, 11 Jun 2008 17:00:00 EDT

"The scariest money mistake women can make (Hint: It's not shoes!)" sure sooounds like your average "Hey, it's O.K.…" Glamour enablement missive. (This month: Hey, it's O.K… to think about your eBay bid during sex!) But actually, "Welcome To My Mortgage Hell", penned by Meghan Daum, who knows a little bit about money mistakes, is interesting/depressing/important. Women, particularly single women, are addicted to acquiring real estate. "You use your home as a way to express who you are," says one lawyer and expert. Like shoes! But this is a newer development: until the 1970s single women were rarely allowed to buy homes without somehow proving the veracity of their intention to never have kids; today the rate of homeownership (or, you know, "ownership") among single women — single women who've been taking on half-million dollar double adjustable-rate crackpot mortgages with no down payment and that sort of thing — is twice that of single dudes. But why?

According to the expert lady, "Women view a house as the ultimate self-improvement, lifestyle-transformation design project." So yeah, really like shoes. But I think there's a lot more commitment vs. fear-of-commitment crap that goes into this decision. Dudes like liquidity in their investments and the rush of playing the market etc. etc. Women like to invest in crap that seems solid and reliable. (In lieu of anything else that is solid and reliable.) As a homeowning friend of mine put it, "I broke up with my BF and was just like, 'Fuck it, I don't need a man to do this.'" But oyyyyy, when you're paying $4000 a month to "own" a place you could rent for $1250, why do you need to do it? It's like "settling" for a bartender high school dropout with pubic lice and pledging to have anal sex with him every night for the next twenty years, and giving him the option to renegotiate for additional blowjobs if women still find him attractive in three years. Like, you know? I know it's a long shot, but you actually might have better luck in a few years if you just spend the money on drinking and index funds.

"Welcome To My Mortgage Hell" [Glamour]

Why Must All Dudes "Always Be Closing"?

Moe — Thu, 13 Mar 2008 12:00:00 EDT

A few years ago I was writing a story on something called mark-to-market accounting. (No I promise! I'm going somewhere here!) The way mark-to-market worked with this one Enron division is roughly: they'd send salesfolks across the country promising big companies it would save them lots of money if they agreed to let Enron pay their energy bills for a set period of time. As an incentive to sign up, Enron wrote big checks to the companies for the privilege. Now, this division lost shitloads of money, but it didn't matter because when they needed to raise more cash from shareholders they would just prove they were profitable by using "mark-to-market" accounting, whereby they would book the year's portion of the profits they imagined they'd be making over the horizon of the contract. Of course, they had no fucking clue what these profits (or losses) would be. So they made them up! Pulled them out of asses and projections so rosy you couldn't even call them delusional. Anyway, I'm telling you this story not because mark-to-market accounting is currently being blamed for our present financial crisis — I mean, you know, as if — but because it gets back to this conversation I had at a bar the other night where a somewhat miscellaneous Lower East Side sleaze was trying to pick me up. A friend of mine was at right, fielding a flurry of amorous text messages.

The sender: a college friend of hers in Florida who had suddenly decided, after ten years of mostly long-distance friendship, that he wanted to marry her.

She was somewhat skeptical.

"What compels dudes," I asked the guy to my left, who had been hitting on me sort of pointlessly. "To constantly, like, pathologically, write checks they know they can't keep?"

I was thinking of my friend. I was thinking of Eliot Spitzer's bounced checks to the Emperor's Club. I was thinking of Jerome Kerviel and the internet bubble and Glengarry Glen Ross and the subprime mortgage crisis, specifically, this reformed mortgage broker whose self-published atonement memoir I had read about in Newsweek:

"The rate of property appreciation experienced on a national basis over the last seven years was not only a function of market demand, but was due, in part, to the subprime industry's acceptance of overvalued appraisals, coupled with a high percentage of credit-challenged borrowers who financed with no money down," Bitner writes.

Well, duh. The crisis, like every financial crisis that came before it, was in large part a function of an institutionalized neglect of the glaringly obvious and systemic groundless optimism.

"We intend to keep them," the guy said. "It's just that you always disbelieve them. We can see it in your eyes, you have no faith. Your lack of faith ruins everything."

"Are you fucking kidding me?"

"Really. If anyone I'd ever asked to marry me had believed I really wanted to marry them, then I wouldn't be single."

He proceeded to tell me the uplifting story of his live-in girlfriend's recent second-trimester abortion and order a scotch.

"That's on the house, right?" he asked the bartender.

"Uh, I guess," she said.

Confessions Of A Subprime Broker [Newsweek]
Hedge Funds Reel From Margin Calls [Bloomberg]
Glengarry, Glen Ross [Wikipedia]
Mark-To-Market Academic Paper We Did Not Read But You Could [Princeton]
Did Mark-To-Market Accounting Create The Credit Bubble? [Naked Capitalism]