Share good ideas and conversation.   Login, Join Us, or Take a Tour!
comment by b_b
b_b  ·  409 days ago  ·  link  ·    ·  parent  ·  post: How homeownership became the engine of American inequality

Certainly not fair, because of the legal rights you cite. But it's another data point that needs to be considered when evaluating the good and bad of homeownership. Like all investments, there's a level of risk with buying a home that is often underweighted, because of all the good that it comes with. Home equity is actually rising in America, but unfortunately I think that isn't reflected too much in down market housing--the rich are still getting richer for the time being.

The radical part of me thinks that home equity loans should maybe not be illegal, but should be so strict in their distribution that you would need a really damn good reason for taking one (redoing the kitchen because it "adds value" not being one of those reasons).

kleinbl00  ·  409 days ago  ·  link  ·  

    But it's another data point that needs to be considered when evaluating the good and bad of homeownership.

I understand the problem you're trying to solve, but the way you're trying to solve it is wrong-headed. In finance, we call it "leverage" and it isn't a bad thing - it demonstrates how much of your stake is on the line vs. how much is other people's risk. We talk of "highly leveraged businesses" but home owners are debtors, despite the fact that their transactions are much more secure and much better backed.

The data agrees with you:

    AT: Sure. A number of groups, President Bush included, have advocated increasing homeownership. That's a great goal, to be sure, and these groups have good intentions. The problem is that they usually advocate waiving downpayments, or subsidizing downpayments for people who can't afford to put up the money up front. Unfortunately, a family that doesn't the financial resources to put together a downpayment on their own, is 15-20 times more likely to lose the home on foreclosure. Let's face it, if you haven't been able to save up some money for a downpayment, it's a sign that your income is too erratic or your expenses are already too high, and you can't afford that house right now.

    The second problem is that mortgage companies will charge these low-income homeowners a much higher rate, because they view them as a higher risk -- the banks know full well they're 20 times more likely to get foreclosed on. So they're paying more for the same product.

The basic issue is that housing is not affordable, people are barely making ends meet, and for the past 80 years our government has based advancement on property ownership. The hardest thing is to bring property values in line with wages. The easiest thing is to waive equity requirements. So we do the easiest thing.

    The radical part of me thinks that home equity loans should maybe not be illegal, but should be so strict in their distribution that you would need a really damn good reason for taking one (redoing the kitchen because it "adds value" not being one of those reasons).

The sane part of you recognizes that this problem could be simply solved by limiting predatory lending practices.

We got a flyer in the mail the other day. It offered a $100k line of credit on our house, no questions asked, pre-approved. This differed radically from the line of credit we actually applied for from our credit union, who were willing to extend us a HELOC only on the equity we actually had in the house, and only for two years, and only at 7%. The bank-by-mail didn't disclose interest or anything else, of course, and had done no due diligence. The credit union required us to pay to have an approved assessor come out.

The truly appalling thing is that the bank-by-mail offer wasn't even to us. It wasn't even to our last tenant. It was to a guy who lived here in 2011 and moved out in 2012.

b_b  ·  409 days ago  ·  link  ·  

I'm both a believer that leverage can be used for good and that consumers should be able to take on risk without government interference. That said, most consumers aren't savvy enough to understand their own risk structure (e.g. "Do I need that operation the doctor recommended?"). So it's left up to experts to inform consumers of risk beyond the consumers' expertise. That's a major conflict of interest, especially in the commission-based finance system. I suppose the real question isn't whether or not HELs should exist, but rather how liable should banks be when mortgagees go belly up en masse? Miami is trying to convince the courts the answer to that question should be "a lot". Their standing in a suit against big backs was recently affirmed by a federal court, so now we'll see what happens. Very much anticipating the results, even though it will be years.

kleinbl00  ·  409 days ago  ·  link  ·  

Kind of amazing how it all comes back to predatory lending, which all comes back to Glass-Steagall, which all comes back to Marquette, which all goes back to usury laws.

It's fuckin' tragic. Ban the Jews from owning property or farming and act surprised when they turn into moneylenders. Forbid them from discourse on default and condemn them when they charge high interest rates. Do the same thing as a gentile?

JP Morgan is a captain of industry and Meyer Rotschild is a zionist lizard person.

b_b  ·  409 days ago  ·  link  ·  

Recently read Louis Brandeis' Other People's Money, and he fuckin hated JP Morgan. Then again, Brandeis was a Zionist, so, maybe I'm not making a good point.

OftenBen  ·  409 days ago  ·  link  ·  

Other than his Zionism, what did you think of Brandeis? My economic history professor was over the moon for him, Other People's Money was a required reading.

kleinbl00  ·  409 days ago  ·  link  ·  

All the robber barons were straight psychopaths. The difference is, the little people don't think they're straight psychopaths. Say "rothschild" in a crowd of hipsters and people get all Jeckyll Island on you.

b_b  ·  409 days ago  ·  link  ·  

I'm not super sure I feel a lot differently about today's tech CEO than I do about the robber barons. If course we think we live in a more morally enlightened​ time, but wtf has Zuckerberg ever done besides make it so you're inundated with ads like all the time instead of just most of the time?

kleinbl00  ·  409 days ago  ·  link  ·  
b_b  ·  409 days ago  ·  link  ·  

Lol. Well Musk and bezos are competing to run our space program, so just wait until they start competing in ICBM prices.

kleinbl00  ·  409 days ago  ·  link  ·  

Northrop, Boeing, Lockheed.

Amusingly enough, they're both working with Orbital ATK.

    If the NGL can overcome these challenges, it will still be an unorthodox design. No other launch vehicle has ever used two solid stages topped with a liquid hydrogen/liquid oxygen upper stage. But, for Orbital ATK, this design makes sense as it draws on their decades of experience and utilizes facilities they already have. This unique architecture could actually be seen as an advantage by the US military, whose doctrine of “assured access to space” depends on having several independent means of launching satellites into space. SpaceX will use only SpaceX hardware on their Falcon rockets. ULA, as a traditional contractor, will integrate Blue Origin’s rocket engines on their new Vulcan rocket. If Orbital ATK uses their own solid-propellant motors and an RL10-powered upper stage, that would be a technologically independent means of launching national security payloads. While the NGL is unorthodox, its unconventional nature may actually prove to be its greatest asset.

Their current principal launch vehicle, the Minotaur, is the WMD formerly known as the MX Missile.

400 missiles, 90 billion dollars. that's about 2500 Falcon 9 launches.