Mr Greenspan's delusions

Thursday, 2:13 pm

By Kate

Mar

22

2007

I just read James Kunstler’s weekly post, which began with the following blurb:

From the Florida Sun-Sentinel:

BOCA RATON – Retired Federal Reserve Chairman Alan Greenspan, speaking at a Futures Industry Association annual conference here on Thursday, said the problems of the subprime mortgage market had more to do with home prices than easy credit.

"If we could wave a wand and housing prices go up 10 percent, the subprime mortgage problem would disappear,” he said.

Kunstler’s reponse to that statement was less than polite. And I’d agree. This is about the stupidest statement I think I’ve ever heard come out of the mouth of a ‘well-respected’ economist. It’s what I’d call not dealing well with reality. Because, Mr. Greenspan, there are no such things as magic wands.

The reality is...housing prices are going down and adjustable rate sub-prime mortgages are now adjusting up. Way up. People are getting screwed left and right. And losing their homes while still retaining their housing debt. I’m not defending the poor choices of those getting screwed, but for a supposedly bright man to make that kind of stunningly stupid statement, it’s breath taking.

As my dad used to say, “If wishes were horses, beggars would ride.”

Yes, Mr. Greenspan, the problem has very much to do with easy credit. If lending institutions were not in massive greed mode, they would have continued the same sensible lending practices that were drummed into my head when I was a banker. Good times, they come and go. Loans stick around. When lending to someone, the banks USED TO take worst case scenarios into account before doling out the dough. Some still do and those are the ones who will still be here when the dust settles.

It’s easy to blame the consumers who bought into the whole sub-prime mortgage scheme. But the lending institutions do have the responsibility for protecting their long term interests as well. A few million very large mortgages going belly up in a crashing housing market are not in anyone’s best interests. Markets go up and they go down. When making a loan, the lender is responsible for making sure that the borrower is not already over-extended while the good times are rolling. No matter how tempting it is to cash in on the good times. That’s lending responsibility. Period.

I was fortunate to be the daughter of two people who came of age during the Great Depression. It marked them for life, but in a good way. It made them cautious and made financial security very, very important to them. My Mom and Dad lived by a few simple rules: Live beneath your means. Save for a rainy day. If you don’t have the money, don’t spend it. When you buy a house, put enough money down on it so that the mortgage will never be higher than the value of the house. Not even in the worst of times. If you can’t do that, you have no business buying a house. When you get a mortgage, make sure the payment will never be more than 25% of your current monthly income. Make sure that you have enough saved to cover the mortgage payment for a few months if times get tough. And always pay extra on it every month.

My parents were married in 1933 and they didn’t own their first house until 1946. They didn’t enjoy renting all those years, but that’s what they could afford, following their very sensible rules. Their first mortgage was for half the selling price of the house. It wasn’t easy. They scrimped and saved. They did without many nice things while scrimping and saving. Worked out well for them and their contemporaries of like mind, though, I must say.

Those are basic rules that make a lot of sense. They are rules that have held me in good stead, as well. They are Rules To Live By. Reputable lending institutions know it, too.

The bottom line is...no matter how desperately you want it, don’t buy it if you can’t afford it. It’s hard when you want a house so badly. But it’s just plain self-preservation to follow those rules. Do not listen to lenders who offer you the moon and the stars on a silver platter. They are lying through their rotten teeth. And so is Mr. Greenspan. 

Tomorrow

Sunday, 2:22 pm

By Kate

Sep

10

2006

Tomorrow is the 5th anniversary of that day. I don’t plan to say anything about it tomorrow. I’m tired of hearing about it. I’m tired of the almost religious fervor behind the words, “We will never forget.” Why do people need to announce to the world that they’ll never forget? Who in their right mind would forget? Why do people want to keep it alive and remember every gory detail? It’s like a sickness. I often wonder if this country will still fetishize the date and event in 20 years. It was a tragic day and I remember being afraid for several weeks, but I look back at the media frenzy and the political posturing and feel anger. There was no effort to calm the American public. Quite the opposite. Our fears were useful. Our fears were played like finely tuned instruments. They still are.

The people who were there and who lost loved ones have a right to observe the day in peace. They won’t get it. I’m sorry for that and for them.

Why aren't we?

Sunday, 3:04 pm

By Kate

Sep

03

2006

James Wolcott posted a particularly fine essay yesterday, Five Minutes to Midnight in the Garden of Good and Evil, in which he examines the ramp-up of war rhetoric this month. In his analysis it’s a last ditch effort to marshal the forces of fear to keep the bombs falling in accordance with neo-con whims. People are losing interest, growing tired of the constant war bluster, growing weary of daily accounts of troop deaths and civilian deaths. People are tired of a war on terror that apparently has no other objective than a foggy goal of talking big and staying the course. What course? There is no definable course nor is there any evidence that our leaders know how to stay whichever one they’re imagining exists. The civil warriors and neo-con supporters are losing their battle of escalation. Bankrupt of other ideas, just pull out the stops and let loose the rhetoric of war and fear to the nth degree. It’s all they’ve got.

In the days approaching the 5th anniversary of 9/11, the rhetoric should be be nearly apocalyptic. As if it hasn’t been already. But here’s the thing…

Terrorists can destroy infrastructure a piece at a time and, yes, kill people, but they can’t destroy the United States. I’ve never felt a particular danger of terrorists conquering us. The United States is as much an ideal as a physical place. Democracy is a way of life, an ideal, an idea. It is so deeply ingrained in our society that it’ll never be eradicated. The only dangers to it, that I can see, are the blockheads in our own government who have succumbed to fear, promote it, and also use it to achieve their political goals. By hacking away at the Constitution, they seem to believe they can protect and preserve us—and themselves. Mostly themselves, in my opinion. Isn’t that the greatest irony? If we’re to be temporarily undone, it won’t be by any terrorist’s hands. We’ve lost our nerve, given in to fear, and stopped thinking critically. That’s a signal of weakness. This country should be better than that. Why aren’t we?

Morning gripe

Tuesday, 9:42 am

By Kate

Apr

04

2006

Over the last couple of weeks, For Sale signs have been popping up in front of houses all over town. Just in the mile stretch between my house and the downtown area, there were 12 houses for sale and this morning 3 more had sprouted For Sale signs. It looks like a mass exodus is taking place. It never used to be common to see four or five houses on the same block selling at the same time. Either people are deciding to cash in on their equity before it evaporates or there are a lot of people with refis plus equity who are afraid of losing their shirts.

Anyway. One day last week I turned a corner on my way home and saw a crew out in someone’s side lot chopping down a stand of beautiful old fir trees. Over the course of the week, they removed every last tree on the lot. And now...looks like a new house is going up on the completely denuded plot of sand.

So, here we have someone who just has to have a brand new house with not a tree to call their own while there are over a dozen really nice houses (with established trees and landscaping) for sale in the very immediate vicinity. There really is something wrong with this whole notion that brand new is necessary or better or even best.

Meanwhile, the people who live behind me up on the hill have just started construction on the third addition to their house. By the time they are finished it will rival Versailles. At least they didn’t tear the old house down and start over. One of these days, I expect they will move back in. They’ve been living elsewhere for the past year while their house is enlarged and enlarged again. I shake my head and think I should probably mind my own business because I have no idea of their circumstances. But cripes. They’re up to at least 5000 square feet now and still building. It all seems kind of excessive, y’know?

Never thin enough

Friday, 9:23 pm

By Kate

Feb

24

2006

I sat down to see what was on television and a commercial flashed across the screen. There was a bubbly young woman named Zora Andrich. The accompanying print said she is a reality TV star. I have no idea who she is. But she appears to be quite tall and emaciated. She said, “This is the first time I can remember feeling this good about my body. I went from a size 10 to a size 4 in just two months.”

The ad showed a before and after picture. The only difference I could see was that the before picture showed a thin woman with just enough meat on her bones to prevent them from sticking out. In the after picture, she is nothing but bones with skin wrapped over them. But pretty smile. And did I mention bubbly? She’s so skinny that she feels great!

The commercial was for Nutrisystem.

What’s wrong with this picture, huh? What does it say about our society when a woman has to be that thin to feel good about herself? She’s too thin. Way too thin. But she feels good about her body for the first time. She got that message someplace and did a fine job of internalizing it. Nutrisystem is apparently now preying on the already thin enough with the message that you can never be too thin. That was a bizarre ad. And unhealthy, too, in my opinion.

That was all the television I could stand for one night.

The Denali

Tuesday, 11:24 am

By Kate

Feb

14

2006

This morning I had to stop at the gas station for a fill-up. As I rolled toward an open pump, a huge black SUV came charging toward the same pump from the opposite direction. I slipped into the bay and the guy shot me a wicked dirty look. He had to back up and maneuver into a different bay. No big deal, I should have thought. Except that he was still shooting me dirty looks as he climbed down out of his tank and started filling it up.

I stood there, while I fed my car, and looked over his vehicle. It was huge—a new GMC Yukon Denali. The license tags said Maine. The guy was dressed expensively, driving alone. There was nothing about the man that would even hint at a weekend off-road warrior. Given the cost of the vehicle, I’m sure that it doesn’t see any off-road action. The thing didn’t have a speck of dust on it. I watched as his gas pump whirled numbers. My car was completely fed at 10 gallons and $22. As I replaced my gas cap, he was still feeding his vehicle. When I drove off, the numbers were still whirling on his gas pump and he was up to 17 gallons and $41. As I later learned, he still had another 9 gallons to go.

It wasn’t until I was driving away that his vehicle’s name kind of struck me. The Yukon Denali. Denali National Park in Alaska. America’s last frontier. Pristine beauty and fragile eco-system, yet rugged in its beauty.

And I’m wondering how the geniuses in Detroit came up with that name. It’s a master stroke of stupid marketing. In my not so humble opinion.

I looked up the specs for the Yukon Denali. It has a 26 gallon gas tank and gets an impressive 13 miles per gallon around town and 17 miles per gallon on the highway. What a travesty to call that vehicle a Denali.

According to the GMC site, there is a new and improved Yukon line of vehicles coming out this summer that offer a strong showing for power and fuel efficiency. No lie. The site says:

Yukon engines balance power with outstanding fuel efficiency.
Making Yukon among the most fuel-efficient full-size SUVs in the industry.
Highlighted by innovative Active Fuel Management technology, for added fuel economy.

Outstanding fuel efficiency? In whose universe? The new Denali gets a whopping 19 miles per gallon highway and the same 13 miles per gallon around town. Whoo! A whole two highway miles more per gallon than last year’s model. Let’s hear it for that innovative Active Fuel Management technology! Well pardon my disgust. How crass to name that gas guzzling, polluting tank after one of the last unspoiled eco-systems on the face of the earth.