Wednesday, October 31, 2012

A close friend oft opines like this..

"competing stories are the only things that distinguish the two contenders."

" In the fact-based world, they’re quite difficult to tell apart.
 So really, who can blame..."
(some poor low info soul )

"... for preferring a more congenial story?"

 ya there is a big slug of folks in the middle income range
that fits this portrait
                                                more or less

whats in it for ME ! what's not in it for YOU!

caught between the charybdis of  tax evading knavish  free riders
and the scylla of   hand out grabing  lazy free loaders

but there are differences on the ground
 as they say

and they are real and material even if largely unconsidered
by the paleface enrage

one straight forward example

the potus appointed  board of the NLRB

to scoff at these real material differences
to agree with the proposition
neither party has done a damn thing for the middle elements of the job class

to suggest  with scorn
the bastards  are enthralled by their misdirected fury
                  as in
                          "spite makes em go  right "

to walk away mentally
to abandon the white wage class
by their  low info/ low ed  tens of millions
to getting "  what they want"
             and getting  it  " good and hard"

this fellow spirits
     is the dead wrong track to follow

 for progressive change artists caught here and choosing to stay here
                                                                 the global titan's jelly belly

  let us hope
  the world of making  small differences
         reigns supreme
                              in the hearts  attached to most  thoughtful heads

me at a blog

Let's give up the ghost here and go to a progressive consumption tax
Wealth needs to be taxed directly which is unconstitutional
Unless we devise some sort of life time income mechanism
That includes gifts and inheritance
Playing tax man is fun
But realistically let's focus on triggering a wage boom thru tightening the job markets
and revamping social security
In exactly the opposite direct of tubbyTaylor's
Paine said in reply to Paine...
The key to both
Destroy the twin taboos of federal deficits and product price inflation
The big media could do this if it treated the task like it treats global warming even
Now the sacred fear of accumulating federal debt is universally worshiped
And us scoffers are treated like lunatics rather then enlightened heretics

Tuesday, October 30, 2012

report on willful walk aways and other victims of socialized usury

"Historically, the U.S. mortgage default rate has varied in the range of 0–2% over the economic cycle. However, default rates broke dramatically from this historical pattern in 2006. At the peak of the housing downturn, the aggregate default rate climbed to about 10% of mortgages. In certain geographical markets and for certain types of mortgages, such as loans to subprime borrowers, the rate exceeded 25%.
What happened to borrowers who defaulted? On the plus side, defaulting borrowers potentially got some financial breathing room. Housing expenditures are typically about 30–35% of total household income. For many overstretched borrowers, defaulting on a mortgage and becoming a renter reduced housing expenditures considerably, although the quality of their living quarters was lower. Furthermore, the extended period between mortgage default and foreclosure allowed many borrowers to remain in their homes for a while rent-free.
Of course, foreclosure is far from a positive for most borrowers. One need only look at the estimated home equity of U.S. households to realize that borrowers perceive default to be very costly. The share of homeowners with mortgage balances exceeding the value of their houses is estimated to be about 20%. Many of these underwater borrowers appear to have a financial incentive to default. The fact that most do not default suggests borrowers see other costs to walking away from their mortgages.
One of the main costs is that access to credit is restricted for borrowers who have defaulted. Relatively little research has examined how default affects borrowers. Cohen-Cole, Duygan-Bump, and Montriol (2009) find that certain provisions in the bankruptcy code allow borrowers who have defaulted on a mortgage to get credit cards again fairly rapidly. For mortgage borrowers, Brevoort and Cooper (2011) find that those who went through a foreclosure in the recent housing crisis experienced sharp drops in their credit scores, which appear to be long lasting. Moreover, these borrowers are more likely to default on other types of debt.
Borrower access to credit markets following a mortgage default
In this Economic Letter, we examine how long it takes individuals or a household to borrow again to buy a home after defaulting on a mortgage. To get a sense of how default affects access to mortgage markets, we look at consumer loan data from the first quarter of 1999 to the fourth quarter of 2011 collected by Equifax, a major credit reporting agency. Our analysis is based on Equifax data in the New York Federal Reserve Bank’s consumer loan file, a 5% nationally representative random sample designed to reproduce the movement of young and old consumers into and out of the credit pool (for a description, see Lee and Van der Klaauw 2010). We define default as a mortgage that terminates when, in the final quarter it is observed, it is either 120 days past due or severely derogatory, meaning it is past due and reported to have a charge-off or foreclosure.
We treat access to credit as a decision more or less made by lenders. In other words, at what point are they willing to lend again to a borrower with a tarnished history? In reality, borrowers may not want credit. The data only show the quantity of credit outstanding. They do not directly indicate credit demand or supply, although some inferences regarding credit supply can be made.
In addition, important institutional restrictions affect credit following mortgage default or foreclosure, especially mortgage borrowing. People with a major derogatory event on their credit history, such as foreclosure or bankruptcy, typically can’t qualify for a conventional loan securitized through government-sponsored enterprises (GSEs) such as Fannie Mae and Freddie Mac until four to seven years have elapsed, depending on circumstances surrounding the event. This restriction does not completely preclude lending to borrowers who have recently defaulted. A lender has the option of making the loan and keeping it on its own balance sheet instead of selling it to one of the GSEs. However, the GSEs own or guarantee the vast majority of new mortgages, which makes the restriction a powerful barrier keeping defaulters from returning to the market.
Figure 1
Cumulative rate of return to mortgage market
Cumulative rate of return to mortgage market
Source: FRBNY Consumer Credit Panel/Equifax and author's calculations.
The Equifax data confirm that a prior mortgage default has a large effect on future access to mortgage credit. Figure 1 shows the rate at which borrowers with different credit histories return to the mortgage market following a termination or exit. Termination is defined as having a zero mortgage balance after having a positive mortgage balance.
The blue line in Figure 1 plots the rate for returning to the mortgage market for borrowers with no prior defaults or foreclosures. We do not know why these borrowers terminated their mortgages. They could have moved, or adjusted their housing expenditures by trading up or downsizing. Or they could have paid down their mortgages and now own their houses outright. We might expect that most borrowers who have paid off their mortgages will never return to the market. Indeed, 12 years after a termination, just above 35% of borrowers with no prior defaults have taken out new mortgages. This number may seem low. But, as the red line in Figure 1 shows, it is much higher than the average rate at which borrowers with prior defaults return to the mortgage market over the same time horizon.
Figure 2
Return to mortgage market following defaults
Return to mortgage market following defaults
Note: Cumulative rate, variation by default vintage.
Source: FRBNY Consumer Credit Panel/Equifax and author's calculations.
Figure 2 shows the rates at which borrowers who defaulted on mortgages in 2001, 2003, or 2008 returned to the market. The figure plots the cumulative percentage of defaulters who have a new mortgage within a given number of quarters after their last default. Even though a short amount of time has passed since the 2008 cohort defaulted, their return to the housing market appears to be significantly slower than for cohorts that defaulted in the two earlier years. The low rate of return for the 2008 cohort could be related to demand. In the 2001 and 2003 cohorts, there was very strong overall demand for housing, as evidenced by the strong run-up in the rate of homeownership during the 2000s. But the Great Recession that began in 2007 was much deeper than the 2001 recession, and uncertainty about jobs or future income prospects may have made people unwilling or unable to demand housing at the rate seen after previous recessions.
However, the 2008 cohort’s slow return to the mortgage market could also reflect tight credit supply. The mortgage finance system was severely disrupted during the financial crisis of 2007–08. The 2009 and 2010 mortgage default cohorts look very similar to the 2008 group, although they are not shown in Figure 2. By contrast, the credit environment for the 2001 and 2003 cohorts was very different in the years after their defaults. Loan terms were generally easy and subprime mortgage lending boomed.
Figure 3
Return to mortgage market by initial credit score
Return to mortgage market by initial credit score
Source: FRBNY Consumer Credit Panel/Equifax and author's calculations.
Economic growth was solid and interest rates low in the decade following the 2001 recession. But Figure 2 shows that, even in these good times, it took a long time for defaulted borrowers to return to the housing market. About two-thirds of the borrowers in the 2001 cohort had still not come back within 10 years.
Figure 3 shows the rates of return to the mortgage market according to the borrower’s initial credit score. Borrowers who defaulted in any year within the sample are included and are divided into two groups: those with credit scores above 650, labeled prime, and those with scores of 650 and below, labeled subprime. The credit scores used are borrowers’ first scores after taking out mortgages on which they eventually defaulted.
Figure 4
Return to mortgage market by type of foreclosure
Return to mortgage market by type of foreclosure
Source: FRBNY Consumer Credit Panel/Equifax and author's calculations.
Interestingly, the experiences of the subprime and prime groups in the two years following foreclosure are similar. This is probably because the borrowers we label as prime are no longer in that category after foreclosure. Indeed, Brevoort and Cooper (2010) show that, regardless of pre-foreclosure credit score, the typical borrower who goes through foreclosure ends up with a credit score below 600. Figure 3 also shows that, after about two years, borrowers who were in the prime group before foreclosure begin to return to the mortgage market at significantly faster rates than those in the subprime cohort. All the same, the majority of prime borrowers do not return to the mortgage market within our sample period.
Are there important differences in the rate of return to the mortgage market across different types of markets? Figure 4 shows that one distinction that does not appear to matter much is the type of foreclosure law, that is, whether the borrower lives in a judicial or nonjudicial foreclosure state. This is surprising. Judicial foreclosures, in which the foreclosure must be pursued through the courts, are much more time-consuming and costly than nonjudicial foreclosures, in which the lender can serve the borrower with a notice of foreclosure and proceed to reclaim the house. All else equal, borrowers in judicial foreclosure states would be expected to be denied credit for longer periods.
What explains the timing of the return to the mortgage market?
The rate at which borrowers get new mortgages after defaulting on a mortgage is low. Only 30% of borrowers who defaulted in 2001 had taken out another mortgage within 10 years. What explains the pace of return to the mortgage market? Overall economic conditions appear to play an important role in allowing borrowers who have defaulted to return to the market. When we control for factors such as local unemployment rates and past house price appreciation, we find that these variables influence the rate at which defaulters come back to the mortgage market. Overwhelmingly though, the best predictor of when a defaulting borrower returns to the market is the change in the borrower’s credit score. Our research finds that, after five years, borrowers who return to the mortgage market after a default have experienced a more-than-100 point increase in their score.
Evidence suggests that the process of regaining creditworthiness is lengthy. Borrowers who terminated their mortgages for reasons other than default returned to the market about two-and-a-half times faster than those who defaulted. This has important implications for the housing recovery. The improvement in the housing market is often assumed to reflect significant pent-up demand. But an estimated 4 million foreclosures have taken place since 2007. The consumers who went through those foreclosures will return to homeownership only gradually, suggesting that mortgage supply will also be a factor in the housing recovery."

Monday, October 22, 2012

securitization advanced during the great moderation ...and so did" derivatization"

"..from 1990-2005 the estimated sum of equity-market capitalization,
 outstanding total bond issues (sovereign and corporate) and global bank assets
 rose from 81% to 137% ...."of Global  GP  (gross product),

" ..over-the-counter derivatives markets tripled in the latter five years to $285 trillion,
 six times .." Global GP

Sunday, October 21, 2012

a voice to conjure with

read this:

"We are rapidly evolving a fast-moving, increasingly cybernetically interlinked capital marketplace that, as Lord May observes in the Santa Fe Institute Journal, has become intertwined in ever-more complex interdependent patterns. He goes on to ask how much are we, societally, paying the financial sector to allocate capital? More importantly, is the sector allocating capital to further societal goals, or merely enriching itself and a narrow segment of the world’s population? Human nature is powerful. John Stuart Mills said, in Social Freedom: “Men do not merely desire to be rich, but richer than other men”.
Benjamin Friedman holds, in The Moral Consequences of Economic Growth, that “greater opportunity, tolerance of diversity, social mobility, commitment to fairness and dedication to democracy” derive directly from economic growth. He shows that even during stagnation–let alone recession and depression–those values can vanish easily. Brad Delong observes, in reviewing Friedman, that if the majority of the people do not see an improving future, these values are at risk even in countries where absolute material prosperity remains high. Given rising political intransigence and loss of common social purpose in the U.S., and the rise of nationalistic political sentiments in Europe, the effects of increasing stagnation and inequality are becoming more evident, despite the financial sector’s phenomenal growth.
In a 2006 speech on the growing integration of the financial sector and the broader economy, Rodrigo deRato, Managing Director of the IMF, noted its supposed general stability and growth, and that from 1990-2005 the estimated sum of equity-market capitalization, outstanding total bond issues (sovereign and corporate) and global bank assets rose from 81% to 137% of GDP, while over-the-counter derivatives markets tripled in the latter five years to $285 trillion, six times global GDP, 50 times the U.S. public debt. So if the financial sector has worked, we should see proportional acceleration of growth plus improved consequences for all society.
This is not happening, as Cornia and Court report in Inequality, Growth and Poverty in the Era of Liberalization and Globalization.Global poverty reduction has stalled for 30-40 years, despite an approach to growth based on “…a neo-liberal policy package, [including] stringent focus on macroeconomic stability, liberalization of domestic markets, privatization, market solutions to the provision of public goods, and rapid external trade and financial liberalization.” They reveal that inequality has grown faster during the same period in the majority of countries for which data is available. The paper also shows that increased inequality greatly encumbers the climb from poverty and that excessively low or high levels of inequality impede growth, provoking various ills, including crime, social conflict and uncertain property rights. In the US, bank employees were found to be signing thousands of foreclosure documents without checking the information in them in so-called robo-signings that rendered the documents illegal.
All the data seem to affirm Friedman’s assertion that all societal strata should participate to maximize the moral benefits of economic growth. Further support can be found in Court’s conjecture about an optimum range of equality. This is confirmed by modeling work at Dominican University, discussed in a previous OECD Insights post, which shows that there is indeed an optimum level of equality for a given economic structure useable for policy planning, to insure capital allocation to economic growth for public purposes. Returning us to Lord May’s point that we must know how much economies are ‘paying’ the financial sector to allocate capital, including payments to banks, sovereign funds, hedge funds, private equity, and the managers, often in major international banks, of the estimated $21-32 trillion of largely secret “offshore” financial assets.
The financial crisis and subsequent Euro problems show that we are paying vast sums for a system that, as Joseph Stiglitz, former chief economist of the IMF, points out, doesn’t allocate capital where needed, causing capital flows that are pro-cyclic, exacerbating peaks and lows of business cycles. What efficient capital distributive function is served by the approximately $1.5 trillion of daily flows sloshing about in the casino of OTC foreign exchange activities, and the nearly 70% of all U.S. market trades conducted algorithmically, without human intervention?
Keynes may have lost the 1944 Bretton Woods battle for a solution that transcended national financial self-interest but his plans for an international clearing agency are prophetic, especially considering how the combined financial sector dominates national and international policy for its own ends “ As Keynes said, “… no country can . . . safely allow the flight of funds for political reasons or to evade domestic taxation or in anticipation of the owner turning refugee. Equally, there is no country that can safely receive fugitive funds, which constitute an unwanted import of capital, yet cannot safely be used for fixed investment.” Right again, Lord Maynard."

when thinkng of

hydra headed  rent scooping
credit securitizing
 lbo ing  parasiting
private parts equitizing
flying sharkoid mega blob

      globe trotting
 speed of light 
                   hi fi  laputo

future means and  methods
of  a RED hot global governance

a fantasy launch

an uncle ize national  hi fi laputa  !

Wednesday, October 3, 2012


A new word is being floated by the media: predistribution. It has landed on our shores from the other side of the Atlantic, where Ed Miliband, the U.K. Labour Party leader is apparently building a “new agenda” around it, as reported in The Nation, October 8, 2012 in its "Noted." column. 

Predistribution encapsulates the idea we have been espousing for months, which is that the overall distribution of income is not only unfair but economically unsound. In particular, noting how increasingly skewed the distribution of income has become in the U.S. (and around the world, for that matter), we have questioned the economic rationale underlying the pricing of labor in particular. We refuse to explain the stagnation of real wages since the mid-1970s -- while productivity (output per worker) has continued its upward trend -- by blaming it on objective economic laws. Rather, we see right-wing politics and power at work in all manner of well-documented ways, resulting in a concerted attack on labor and a corresponding increase in the power of the economic elites like the Bain Capital beneficiaries such as Mitt Romney. Finally, the dots are being connected. We can now see clearly that, as Warren Buffett puts it, there has been a class war and his side has won. (Actually, Buffet himself is one of the most constructive members of his class – he invests for the long term, unlike Bain Capital.)
For the country to get back on track as a functioning, full-employment social democracy, what we have to see after the election, more than redistribution by progressive taxation and government transfer payments – although there is room for those -- is recognition that the price system is not working and needs to be changed. This can best be seen as the need for a high wage policy, the other side of the coin being a reduced share of corporate profits in GDP and changes in the way top incomes are determined. The net result would be a society with a more sound distribution of income and more jobs, as we have argued at length on this blog. To the extent wages are more adequate – supported by higher minimum wage levels and a revitalized labor movement -- there will be less need for redistribution policies, which can be focused on specific subsidies where there is clear need, like health care, education and social security. 
Footnote: The moral and political appeal of this approach could be enormous:  a “populist” economics that puts well-earned higher wages into the hands of workers, rather than a “liberal” redistributive tax-and-spend, hand-out economics. 

Tuesday, October 2, 2012

if the GOP sweeps the board this november ...a recent exchange

 "Rights cannot be protected except by the exercise of power. How do
> you purpose that the people exercise power. A democracy means the
> people in arms, so the above groups will be able to protect
> themselves. In any case a democracy necessarily needs a democratic
> media. All current states have oligarchic media, who engage in hate
> campaigns. Thus the need for the left to agitate for democratic
> media,which necessarily cannot be capitalist."
> It would be unkind to parse that into shreds, because I think he means
> well, but I do know something about group protection and exercises of
> power. That's what it comes down, always. There comes a point in the
> process where everyone but the groups in direct conflict just wants
> the conflict to stop and they no longer care all that much about the
> rights and wrongs of the affair."

op responds :

in other words

"justice and fairness no longer motivate people to live with the disruptions.."

i think of any protracted struggle between union labor and corporate management

that spreads wildly  and widely in waves
 from industry to industry region to region

if there is stalemate
at some point
the moment  of  "popular turn off  "comes

and then ...yikes

examples ?

 and 1946 america

or late 70's britain

'the...poor ass hole ' phase
  turns into the ' everyone buts'  revulsion

   mass opinion
  " no longer care all that much about the
rights and wrongs of the affair."

they just want it over

and given the bourgeois hegemony
---hell its "their" state and their media--

when the bulk of the uninvolved "people "
hit the reset button
the deeply embedded class tilt of the system
  works against the unions

a deep  spontaneous popular reaction gets effectively translated into a  surface reaction...
against the side that can be stomped
within the confines of the existing institutional arrangement

ie dah unions

the media abets the reactionary route to stablizing the class system
by shifting the weight of the mittel stand against the unions

plutocrat-theocrat split ?


mike lofgren :

"Some liberal writers have opined that the different socio-economic perspectives separating the "business" wing of the GOP and the religious right make it an unstable coalition that could crack. I am not so sure. There is no fundamental disagreement on which direction the two factions want to take the country, merely how far in that direction they want to take it. The plutocrats would drag us back to the Gilded Age, the theocrats to the Salem witch trials"

why do the palefaced native yahoos vote for more inequality ?

down scaling white values voters "...poll more like Iranians or Nigerians than Europeans or Canadians on questions of evolution versus creationism, scriptural inerrancy, the existence of angels and demons, and so forth, that result is due to the rise of the religious right, its insertion into the public sphere by the Republican Party and the consequent normalizing of formerly reactionary or quaint beliefs. Also around us is a prevailing anti-intellectualism and hostility to science; it is this group that defines "low-information voter" - or, perhaps, "misinformation voter."

that is one of the great "products" of thirty five years of relentless " mass program-ing "

easily countered by FDR style politics
but the Dems since 76 have  prefered their own brand of values politics
it works better with  the public objectives of their donor base