Teaser-rate loans allowed folks who otherwise could never have afforded to own a home to buy one, at least until the rate reset.

It’s not hard to predict what happens when rates reset. All of a sudden, buyers who have been paying $1,000 per month face monthly payments of $4,000. Many, perhaps most, go into default.

The possibility that this would become a major problem became apparent as early as 2005.

We've been saying that, too.

At least $500 billion more of teaser-rate mortgages are scheduled to reset over the next several years. In all likelihood, they too will go into default and become toxic waste. Nothing in Mr. Paulson’s original proposal was intended to do anything about this next $500 billion installment – or, indeed, to prevent lenders from making more teaser-rate mortgages in the future.

Is it reasonable to prohibit teaser rates on mortgages by law? Is there anyone out there with graphics of what the future resets look like and how far through the process we are? Apparently last December they slowed the rate of resets.

Understanding Tax: 7 The Financial Crisis: What Went Wrong?

This particular bit of partisanship would be easy to ignore if it was only coming out of the mouths of pundits, but we're actually hearing legislators calling for the repeal of the CRA.

There are too many people who are trying to duck responsibility for the current mess, and seeking to place blame elsewhere. I find this to be terribly important, as we seek to repair the damage amidst an economic crisis. Rather than objectively evaluate the present crisis in an attempt to craft an appropriate response, the partisan hacks are trying to obscure the causes of the current situation. Like burglars trying to destroy the surveillance tape, they are all too aware of their role in the present debacle.

Shame on them for their foolishness or cowardice.

The Big Picture | Misunderstanding Credit and Housing Crises: Blaming the CRA, GSEs

Princeton economists review recent events on Wall Street and assess the implications for the economy and public policy.

If you are short on time, you might consider skipping to Krugman at 50:00...

YouTube - Crisis on Wall Street - Gold Star

ubernoir wrote:
i trust Paul Krugman's opinion on this as someone who knows far more about it than me and I remember reading him talking about a housing bubble and saying it was dangerous rather a long time ago Jan 2006. It makes rather interesting reading now although I didn't take it too seriously at the time.

Out of curiosity I searched the MemeStreams archive. The earliest reference that I can find to something being wrong with housing is from DMV, who posted about it in April, 2004. The first actual reference to the word "bubble" is in a post from Noteworthy from May, 2005. Its an offhand reference - as if the idea that there is a bubble is already established and we're just waiting for it to pop. A week later these comments about certain kinds of mortgages being to blame. There were a number of posts about it during the summer of 2005. Apparently the idea was established widely enough that someone was (still is) selling t-shirts mocking it.

In my view 2006 was pretty late to the game. None of us understood that complex debt derivatives were behind this, but (AFAIK) none of us are bankers. All these policy makers and regulators who have been blindsided by this should have known before we did that something was amiss and they should have been able to figure out why and what the consequences were going to be and they should have been able to take preemptive action. They knew. They had to have known because WE KNEW. Why didn't they act?

RE: Op-Ed Columnist - Where Are the Grown-Ups? - Op-Ed - NYTimes.com

flynn23 wrote:

Whoever produced this deserves a MacArthur genius grant. Watch it all the way through, unless you start to hyperventilate.

Contrary to popular belief, I am not responsible for this, although it is uncannily similar to what I would've produced. I give high props to whoever put this together.

ATL you're next!

You bicycle riding douchebags will never make it south of Corky's BBQ! God willing, they will run you infidels all the way back to that atrocious statue of Nathan Bedford Forrest! Finally, an opportunity to melt that fucking thing down! Allah, Akbar!

RE: Nashville's Gas Crisis: Inside the Metro Bunker? - Nashville Scene

janelane wrote:

The company's main product, Enzyte, which promises sexual enhancement, has ads featuring ''Smiling Bob,'' a happy man with an exaggerated smile.

Holy crap! I just saw this ad yesterday! Wait...you mean "natural male enhancement" is just a pseudonym for fraud? Inconceivable!

-janelane

Apparently "natural" means "herbal" which often means "snake oil," but then you gotta figure a placebo is probably all a lot of these guys need. :)

Regardless, this case has raised important Internet civil liberties issues as the government was reading this guy's email for years and was able to do so without a search warrant. I talked about this issue a bit in my 2006 Phreaknic talk on situations where the 4th amendment doesn't apply.

Thus, in the case of e-mail messages stored and sent in the cloud, the government doesn't need a warrant, doesn't need probable cause, and doesn't need to provide the "owner" of the communications with notice. At least, not right away. Indeed, the government can request that the ISP "preserve" future communications that haven't even been conceived of yet, so that the government may demand them if the situation warrants.

The EFF has obtained a ruling (in THIS case) that this practice is not constitutional but that ruling is controversial.

In some respects this is similar to the border search issue. In general, the police are used to the idea that they can search anything at the border. So people start bringing years worth of email correspondence with them across the border and the police think it makes sense for them to be able to search it. Same thing here. The police are used to being able to search any information you've provided to a third party without a warrant. So people start hosting their entire email archive at gmail and the police figure it makes sense for them to be able to search that without a warrant.

The problem is that we're rapidly approaching a place where the 4th amendment won't matter much as a practical concern because our technology has changed in a way that puts most of our personal information beyond its reach. It will be as good as if it didn't exist, and no one is really considering the impact that change is going to have on the nature of our culture. When America finally wakes up and realizes that the Constitution doesn't work the way they thought it did, I think there is going to be hell to pay for the politicians and lawyers who have blissfully allowed this slide down the slippery slope, but in the mean time there are a lot of people like Mr. Warshak who are going to be surprised to learn that everything they are doing has been watched for years without probable cause. Whether or not he deserved it, its still a scary thought.

RE: Ohio company owner gets 25 years in fraud case - NYTimes.com

What of the “near abroad,” the former East European satellites? They too will understand, with a little applied pressure such as military threats, that they belong to the Russian sphere of influence and that it was a mistake to join NATO, which won’t be of any help to them. What of Western Europe? It would perhaps be too much to say that it does not exist, but it certainly does not amount to much. In the absence of a common European foreign and defense policy and above all a common energy policy (which could make them less dependent on Russian oil and gas supplies), one need not bother about the E.U. Their dependence on Russian energy supplies will grow as the North Sea resources will be exhausted in the not-too-distant future.

Russia and the Middle East Middle East Strategy at Harvard

Nothing says "incorruptible international competition" like a bunch of bullshit rules about what your t-shirt is allowed to say and whether an elevator can display its manufacturer's mark.

Olympic logo cops enforce stupid rules with masking tape - Boing Boing

The war in Georgia, therefore, is Russia’s public return to great power status... Russia has been an empire for centuries. The last 15 years or so were not the new reality, but simply an aberration that would be rectified. And now it is being rectified.

Why did the U.S. bless this conflict? Did they intend to provide Russia this opportunity to make a demonstration in exchange for some covert concession?

It occurs to me that perhaps they figured Russia planned invade outright and they wanted to push their hand early.

The Russo-Georgian War and the Balance of Power | Stratfor

This is a set of dramatic high resolution photos of what is going down in Iowa.

Photos of the Iowa cataclysm