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Love those deadbeats

By Michael J. Smith on Saturday April 17, 2010 12:48 PM

Thanks to the miracle of Facebook, I'm now in touch -- of a sort -- with some former college classmates. One of these recently posted an item on his blog that tickled me:


Read carefully. The title of this piece is NOT "Reaganomics," but "Renegonomics."

I came across this interesting snippet from Bill Fleckenstein today, who refers to "the hidden benefits of debt repudiation and forbearance by the banking system, all of which have been created by the government's easy money and bank bailouts.... People who aren't making home payments; or those who are participating in short sales on homes they can actually afford -- in other words, the folks who in essence reneged on mortgages that were under water and did so because they could -- have extra money to spend that they wouldn't have if they'd been making payments."

All of which sounds quite wonderful to me, if true. But my old classmate is worried:
The 'do-over' that the world was given during the financial crisis, courtesy of the printing press (read: government bailouts), will be 'paid for' with higher inflation....
His solution:
Exchange your currencies for gold as a store of value in inflationary times.
Now there's a hard-money guy for you! My classmate links to another blogosphere finger-wagger:
Oh, So The "Recovery" Is About Delinquency?

I've said for a long time that one of the reasons our consumer spending numbers have been "reasonably good" the last six months or so - and have been improving - is that people haven't been paying their mortgages.

Now comes Bank of America about to tell Congress the same thing:

Bank of America's top mortgage executive, testifying today before Congress, will release sobering details of home-loan delinquencies, including that "hundreds of thousands of customers" haven't made a payment in more than a year.... Almost 500,000 struggling loan customers have not supplied information or taken other basic steps to qualify for mortgage help. About half of them have not made a payment for more than a year, or owe more than 50 percent of the value of their homes.

That's because those 500,000 lied about their income, assets or both when they applied for the loan originally, and that deception would be discovered.

But this also means that some 250,000 of those customers have not made a payment in a year.

If we presume that these people have average mortgage payments of $1,000 a month (and this number is probably low), this amounts to $250 million monthly that is being spent in the economy but would otherwise go to mortgage payments.

Anecdotes bear these sorts of numbers out - so-called "struggling" homeowners who, despite being delinquent on their mortgage and in fact not having paid in over a year, are spending upwards of $1,500 monthly in places like Best Buy, hairdressers and tony clothing stores.

The essential conundrum is this: Eventually, one way or another, these families will have to start making payments toward housing again. They may make those payments via their mortgage or they may be evicted and become renters but the money currently being blown on frivolities that is "propping up the economy" and leading to "strong consumer sales" is showing up there only because people are literally getting a free ride on their shelter costs.

The perversions at play here are outrageous - not only are these "homeowners" living effectively for free (and since most mortgages have escrow accounts for property taxes, those aren't being paid either!)

Quite apart from the moral indignation -- which I don't at all share; up with deadbeats! -- this sounds like quite a shoe getting ready to drop. Even local governments may find themselves strapped! They might have to lay off some cops! Oh heavens!

Anything to all this, O econ-meisters? I don't mean the "inflation", which I couldn't care less about, but the idea that the "recovery" -- such as it is -- is fuelled to some important degree by people stiffing their mortgage lenders. Is that really happening? If so, it's the second most wonderful thing to happen in my lifetime.

The first most wonderful thing is shown below. Landlubbers beware: the newsreader, droll though he is, doesn't know how to pronounce the word "leeward".

Comments (19)

Al Schumann:

$250 million wouldn't make a bit of difference. Personal consumption expenditures are measured in the hundreds of billions.



Al Schumann:

It's a nice thought, however: the revolution will be deadbeat. That has a ring to it. I also very much enjoyed the blubber explosion. As an economic metaphor, it's hard to beat.

There's a recovery?

Beauchamp Tailleferro:

--doesn't know how to pronounce the word "leeward".--

Or the dictionary doesn't know how to spell it.


a real problem
we at this site face:

the site self selects for
anti mass consumer society types
and though we are numerous in certain patches of this ramblin broad land
we are a feeble minority community
somewhere north of the volvo set

we all despise the life style asperations
of the masses

to us its one big vulgar hoggish potlatch

our nations job market dependent
mad ave saturated
bumpkins and bozos
earn to spend and spend rapidly
as some equally "material"
earned to save

but we earn less
not just as the saver to have the joy of abstaining
but to spend less for its own sake
save the planet not save my money

so off with the silly heads after
luxury gadgets
self indulgent conveniences
un necessary personal services
and jejune commercially provided

we are simply the wrong type of spirits
to evaluate the life choices of the millions

madame bovary
we refuse to be

we presume like parsons
to have discovered
THE higher compensations of this brief stay on earth

how myopic niggardly chillingsworthian
of us

and to bounce from this
long down the nose distain
to hapless buffoonish
soul blasted
lumpen worship ???

well consider that an unexamined
shadow of our path not taken
our secret desire for vegas gluttony
fallstaffian profligacy

given our curbed and strangled souls
our falstaffs
must be punished
reduced shamelessly to shameful tatters
our falstaff must unlike lear
take it with a jolly equally shameless spirit

a man of means by no means

we are not fit to judge homer and ralph


Trivial though the $250 million may be in the larger scheme of things, that number may be high. It seems to me that many are not paying their mortgages because they've lost their jobs.


Owen pindarized:

we are simply the wrong type of spirits
to evaluate the life choices of the millions

madame bovary
we refuse to be

we presume like parsons
to have discovered
THE higher compensations of this brief stay on earth

how myopic niggardly chillingsworthian
of us

What you mean 'us', paleface?

I for one don't begrudge anybody his pleasures, lowbrow or high-.

But when there's a question of steering people's choices by policy -- with all kinds of direct and indirect levers, from propaganda all the way to downright subsidy -- then one has a right to weigh in, doesn't one?


mjs yours of April 18, 2010 2:41 PM
requires a thoughtful reply

"I for one don't begrudge anybody his pleasures, lowbrow or high"

of course you don't
begrudge the fools their joy in their folly
particularly the rube fools
in their particularly harrowingly ironic folly

i'd be the first to shout out
you are not
a pointy hat guy

in fact
u wouldn't trade places with them
for an instant
you aren't at them
because they don't wear
a hairshirt
in fact walk away is precisely
an anti hair shirt move

nor do u pity the poor fools
at least
no more then u might pity
the rest of us naked b4 our gods
pack of mortal idiots
not that either
not your stance at all
thank heavens

then again

family dwelling ownership => pleb re action
private car => fascism

seems close to a prophetic hyperbole

it might give fuel to some bad

"...from propaganda all the way to downright subsidy "

sprawl ville owner occ livin'
and private car transport
--your brace of bete noirs---
can both
indeed by seen as largely
the results of elite social engineering
the archie to homer sprawl morph
could have been price rationed
out of feasibility
by this same complex of over lapping
social engineering functions

they might have kept
these treasured dream objects
just out of reach
i can imagine homer and chester a riley
remaining in depression era limbo
like ralph cramden

and this would not be better

remove the subsidy and the agit prop
homer like a sea turtle would still make for green lawn territory
and nice comfy dirty motored vehicles

if only in his head

the consequences of that dream
whatever its satanic corporate acceleration
i take to be there like an alp
pulsing and oozing away
inside many many a pleb head

to not emma-fy one's self
to not mind meld with these petty aspirers
to blow out their folly like its a fart ...
i suspect leads to well...

peak oil parsoning
fantasy gooberdammerungs

oh hell
unlike free quebec
i hold no fixed star view on country livin'
i just can't extinguish
a strong coiling back
when down with the burbs
starts trumpeting itself about

i haven't you in mind
more some congealed
unintended over soul
just one among several
over souls of the site

It's one of those scales on which we must each draw our own X, isn't it?

No doubt what passes for the left has been damned near useless and snobbish on issues it sees as "consumption." And no doubt that there have been and are parsons among us (though I personally prefer them to the closet technophiles).

But it isn't untrue that cars-and-burbs has been pushed and pushed hard by the system, with a fair dollop of overclass intentionality all the while.

And there is also the matter of how a more empowered gooberleuten might have perceived and reacted to the always undiscussed costs of it all. When MJS talks about housing, seems to me he's pointing out that the sheer pluses and minuses of the thing aren't quite what people assume, even on their own small terms.

As to peak oil, I'm not sure parsons aren't quite urgently needed. Does the mighty op-san see a comfortable way past that looming trouble?


"comfortable way past that looming trouble"
no not at all comfortable

if total energy costs are now
n% of gdp
i anticipate 3n % right now
would be a cautious response
if some one said 5n% i wouldn't laff

but it's not the resource extraction cost its the total planet impact effect that makes it so high

i would btw
use some estimate of total national consumption from say 1946 or 1866 or what ever
based on the point back in time when the rate of production of climate movers exceeeded
the planets "natural capacity to abosrb and ignore " so to speak

these calculations then are set against some globally determined
"total national ration "
a per capita share
--future birth rates adjusted of course
and quotas going with the individual
if they migrate
(notice the nice tilt here
migrant from the "south" brings with them
net quota
vs a northerner going south bringing net legacy --

what infuriates me is peak talk
it has no physical meaning
unless its a function of planet ghg carrying load or something
hell man will burn anything
to squeeze out energy
at 3n % type costs of fuels

if we turn our backs on climate change
we can expext the wretched of the earth
to take the hit right ?

not err.. blankenstein
or count cheney

i never write about this
because our type
are ready to go
bright green
at a moment's notice

and if the truth be told
my personal soylent green brain
has no internal doom mechanism
beyond the obvious
distribution of the coming adjustment
on the planet's living souls

personally i'd no doubt
a soylent spring
if i was not partly
responsible for it

take away my marxism
i'd have ended up
near this guy




I am a bit skeptical about the givenness of this supposed spontaneous desire for the suburban mortgaged house and the car.

But let's say there's something to it. Even so it's not clear to me that Homer would have pined away in sorrow if he couldn't have it. There are lots of nice things that we would have if we could afford them -- starlets and ski chalets, or fill in your own blanks; but our lives are not necessarily blighted if we can't afford them. You can't always get what you want, as the song says, though you certainly ought to have what you need -- should insist on having it, in fact.

Of course you well know that coming from me, these are not the opening measures of a market-hegemony argument. Subsidized housing and transportation by all means. What form those should take is open to argument, though, and needs to be based on something a little more solid than pastoral fantasy, popular though this particular brain-bug may be.

Op-san, of course we'll burn anything. But there's a physics as well as a macro-econ to it, isn't there? What's your analysis of the EROEI concept? Jive talk, or not?

I need to have all the angles in hand, if I'm to finish my car-bashing book project, so do tell.


"there's a physics as well as a macro-econ "
to get our total human energy
production consumption ratio to macro unity
might not be enough
to get us to limitlessly ongoing sustainable production/consumption

we prolly need
to run a slight above unity macro EROEI ratio
for x hundred years
using the slight surplus to power
a restoration of planetary balance

car bashing is a fun indoor sedentary sport
but mjs wants me to cycle myself about
where mass transit won't take me

hell i'd rather pay 15 dollars a gallon for gas
and whatever kilowatts for electricity
then leave these supple soft muscles
taut to fright tendons shallow breathing
and pleasant midlife tire
behind spread over 10,000 miles of road work


as to inner dreams society helps construct
as well as realize or refuse to realize or fractionally realize
i'm sure a ranch house of my own
and a car and a truck
all covered in finance paper
makes a mockery of itself
not too far from heroin addiction

but these systemic internalizations have dialectical limits

the soft wear programs
in our meat computers
the ones that drive
the "aquisition desire (bordering on need) "
inside us
that expresses itself in dreams of
my own personal ranch house property
my personal 2-3 unit fleet of vehicles
are not purely
elite social engineering products
anymore then our language parole

the equation
private property = personal freedom
is a legacy almost as spontaneously passed on with modification and subject to additional
as our brand of english

the swiss seem to have far less of this dream
i guess the alp behind the alp people
runs counter to the alp that loves wide open spaces and private dwarf fortresses
of cozy basement solitude
and family and friends
type private celebrations and escapes


harrington redux
homer's champion

"if the whole people be landlords, or hold the lands so divided among them that no one man, or number of men, within the compass of the few or aristocracy, overbalance them, the empire (without the interposition of force) is a commonwealth"



"law fixing the balance in lands is called agrarian, and was first introduced by God himself, who divided the land of Canaan to his people by lots, and is of such virtue that wherever it has held, that government has not altered, except by consent; as in that unparalleled example of the people of Israel, when being in liberty they would needs choose a king. But without an agrarian law, government, whether monarchical, aristocratical, or popular, has no long lease"

translated to burbville
agrian peoples lot law
fixed personal lawn law

morgages require a jubilee however
as the antique hebrews knew


"of the profound and admirable device of Panurgus, King of Oceana, in making farms and houses of husbandry of a standard; that is, maintained with such a proportion of land to them as may breed a subject to live in convenient plenty, and no servile condition, and to keep the plough in the hands of the owners, and not mere hirelings. And thus, indeed," says he, "you shall attain to Virgil's character which he gives of ancient Italy."

of course the urge to have a lot of one's own
has become a vestigal mockery of itself
no longer does a personal lot equal
personal liberty

the neutering of the yoeman pleb
is the removal of his ability to produce his own household easy sustenance
with a marketable
or taxable or debt paying surplus

but the sterile lot owner of burbville
a Eunuch's life
where he once grew corn and grazed cattle
now he grows grass and
raises hourly wage laborers

MIchael Hureaux:

When I was a kid, I had to live on the street for a few months, and met many marvelous folks who simply stopped participating in the bullshit this culture calls living. But that was back in a day when the largesse of the infrastructure still allowed those few hardy souls who decided to take their chances dumpster diving and living in and out of the missions and the street shelters to just be who they are. I won't say it was ever a respected lifestyle, but the meritocracy of 30 years ago was a lot more honest about the basic scammery of this system then our current bunch are.

Ours is a time when people are actually forced by economy into a life of scarcity; a time of scrupulously numbered chits at the old street centers; city council shitheads who build their careers criminalizing the so-called "indigent". Street life now in places like Seattle is very often dominated by cliques of brutal down and out gangsters out of a Brechtian nightmare. Driven out of the class of the hardest hard, such folks now terrorize many people who fell through the cracks unwillingly. It's a terrible life.

Anyway, if I could see evidence that the refusal to pay mortgages was anything but isolated desperation, if there were evidence that it was a conscious movement ready to tussle with the pissants who own this culture, I'd be with them tomorrow. But I fear this is just one more symptom of a system that has an infinite capacity to absorb loss, and merely punish those who won't go along so long as there's never a conscious element among them.

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