The Blog @ Spolitics

NY Times: The More Debt You Have, The Richer and More Ruthless You Are

Says the NY Times:

…the rich have stopped paying the mortgage at a rate that greatly exceeds the rest of the population.

By “rich” they mean people with a wealth of assets or high earnings, right? Wrong. They mean people with million-dollar mortgages, i.e., seven figures worth of debt.

If you’ve been following the mortgage mess you’ve doubtless heard that a big part of the problem was people buying homes they couldn’t really afford with little-to-nothing down and an interest rate poised to reset. The playbook was to capitalize on skyrocketing home prices, refinance before the interest rates rose and pocket the home’s appreciation.

Once home prices crashed, these buyers found themselves with a mortgage they could barely afford for a home that was no longer worth what they owed on it and a likely interest-rate hike in the offing.

So why are high-end homeowners defaulting? Well, they can’t prove it, but the NY Times believes it’s because these people rich with debt are “ruthless” and unconcerned with the “civic good.” The Times demonstrated this by quoting a woman who said she and her husband had just lost their jobs and could no longer afford their mortgage. As if we’re supposed to believe that. This is recovery summer, baby. And if that’s not enough to convince you, there was also this:

At a vacant house with a pool, where the lender was seeking $1.27 million, a raft and a water gun lay abandoned on the entryway floor.

Nothing says ruthlessness like an abandoned water gun.

Of course, there are other explanations for why high-end homes would see higher delinquency rates. First off, super jumbo loans are lot more risky to begin with: high-end homes tend to drop more in price during a downturn and they’re also harder to sell in a down market. Super jumbo loans have higher interest rates than FHA-backed mortgages, but, up until 2007, ARMs helped make homes in this price-range more affordable. The credit squeeze especially affected jumbo mortgages, increasing the required LTV which made it a lot more difficult to get one — or refinance one — of these loans. If you had an ARM, this was a big problem. In other words, all the chaos we’re seeing in the housing market has been exacerbated at this level. Lastly, none of these borrowers are eligible to participate in the government’s loan modification or refinancing programs (not that they should be).

But I can’t blame the New York Times for failing to mention any of this. I didn’t stand face-to-face with that squirt gun. It may have scared me senseless, too. Besides, it’s not like they made total jackasses of themselves.

A Trip to the Memory Hole: Foreign Policy Lightweights

Unfortunately, according to our President-elect and likely Secretary of State neither of them will be qualified for their jobs:

[Hillary] Clinton zeroed in on Obama’s remark that his “strongest” foreign policy experience came from living in Indonesia as a child.

“Now voters will judge whether living in a foreign country at the age of 10 prepares one to face the big, complex international challenges the next president will face,” Clinton said in a speech to an audience in Iowa.

Obama’s response?

I know, I know… they’re “just words.”

Retrospective Irony

Note: This post has been updated.

A recent article in Time linked to a review of the Top 25 blogs. Although undated, the permalink suggests the reviews were written last year, which makes one wonder why Time linked to them as if they were still current, but I digress.

In its review of Andrew Sullivan’s Daily Dish, Time had this to say:

He endorsed George Bush in 2000, John Kerry in 2004, and seems to be leaning toward Barack Obama this year.

For anyone who didn’t follow Sully’s descent into hysterical madness, he ended up “leaning” so far over he fell into Barack Obama’s lap. In addition to repeatedly titling posts and signing them off with the oxymoronic phrase “know hope,” Sully had to this to say the night of Obama’s convention speech:

I’ve said it before – months and months ago. I should say it again tonight. This is a remarkable man at a vital moment. America would be crazy to throw this opportunity away. America must not throw this opportunity away.

Know hope.

He also became so fanatically driven to try to smear Sarah Palin that he perpetuated the unfounded rumor that Trig wasn’t really her baby and repeatedly called on her to release her medical records to prove she was his mother — even after the election!

If Time is going to continue linking to that review they may want to update it. In the meantime, it still gave me a good laugh to see Sully portrayed as a moderate.