Bullshit.

Housing loans are not based on the belief that the borrower will pay the money back because his honor is at stake. They are based on a contract, which spells out exactly what the lender can do if the borrower stops paying back the loan. The lender can choose to take the house and sue the borrower for the difference between the house’s value and the loan amount (unless it is a non-recourse loan).

There’s also this refrain of unease that not only is the decision to default immoral, but it’s just too easy and trivial to do. That the borrower somehow escapes punishment-free for buying too much house or getting a terrible loan.

But losing your home and getting sued is not a trivial thing. Not to mention the massive hit your credit score will take. For the borrower who defaults, it means that credit will either be unavailable or offered at exorbitant rates. Moreover, employers and landlords often do credit checks prior to hiring or renting, which will further limit the borrower’s options.

Nor is it necessarily easy! The lender has the option to take the home, but no obligation to do so. If there’s a glut of inventory in a particular submarket, a backlog of defaults to process, etc., the lender can choose to send nasty letters to try to get the borrower to pay, but may hold off on actually seizing the property. In the meantime, the borrower still owns the property and any liabilities that go along with it.

Finally, there are those that mention other effects of the foreclosure, such as declining house values and higher borrowing costs within the submarket or economic cohort. But aren’t these effects the natural outcomes of a market? We are coming off a 7 year bubble; houses are going to go into foreclosure, prices will drop, costs will increase, and to expect anything else is insane.

The bottom line is that the decision to take a loss, just as the decision to purchase, should be evaluated rationally by the individuals involved. There are a lot of things to consider beyond the value of your house, the amount of your loan, your monthly income, and the monthly expenses, but morality is not one of them.

Of the 21,312 registered voters in the 13 City precincts (see page 24 for a map of precincts and voter breakdown), Korbatov came in first by a margin of just nine with 1,907 votes (32.74 percent of total). Manaster came in a close second with 1,892 votes (32.49 percent of total). The other two candidates, current Board President Nooshin Meshkaty had 1,892 votes (26.91 percent of total), while Craig Davis had 458 (7.1 percent of total). 2009 voter turnout has decreased by 1,455 votes over the same election in 2007.

via Beverly Hills Courier: Korbatov, Manaster Win Seats On The School Board, New Majority To Control.

It strikes me as somewhat anti-democratic to allow anyone to take a seat with only a plurality of votes, especially when that plurality represents less than ten percent of the registered voters in the jurisdiction. The fact that two-thirds of the voters didn’t vote for Korbatov should count for something, don’t you think?

• Nominate a good candidate that can bring out the base
• Campaign as a centrist to sway the independents
• Run against an incumbent or incumbent party

I know it sounds like an oversimplification, but at least it’s not a gross oversimplification like “This is a referendum on Obama.”

“I think, you know, any data that you have, I completely – I can’t possibly think applies to my practice or my husband’s practice or what I’m seeing. Every doctor, every day, practices defensive medicine. There’s no doubt about it.”

via Op-Ed: ‘I’m A Doctor. So Sue Me. No, Really.’ : NPR.

Nevermind whether the data is correct or not. Would you want your doctor to rely on anecdotal evidence (her own experience) over data? to refuse to consider data that conflicts with her pre-conceived notions?

New York Times: Boy, Oh, Boy by Maureen Dowd

…

The congressman, we learned, belonged to the Sons of Confederate Veterans, led a 2000 campaign to keep the Confederate flag waving above South Carolina’s state Capitol and denounced as a “smear” the true claim of a black woman that she was the daughter of Strom Thurmond, the ’48 segregationist candidate for president. Wilson clearly did not like being lectured and even rebuked by the brainy black president presiding over the majestic chamber.

I’ve been loath to admit that the shrieking lunacy of the summer — the frantic efforts to paint our first black president as the Other, a foreigner, socialist, fascist, Marxist, racist, Commie, Nazi; a cad who would snuff old people; a snake who would indoctrinate kids — had much to do with race.

I tended to agree with some Obama advisers that Democratic presidents typically have provoked a frothing response from paranoids — from Father Coughlin against F.D.R. to Joe McCarthy against Truman to the John Birchers against J.F.K. and the vast right-wing conspiracy against Bill Clinton.

But Wilson’s shocking disrespect for the office of the president — no Democrat ever shouted “liar” at W. when he was hawking a fake case for war in Iraq — convinced me: Some people just can’t believe a black man is president and will never accept it.

….

Other people have come out with columns, statements, and comments along these lines, but I think they’re missing the point. Joe Wilson might be a racist, he might not like black people, but I think it’s more likely that he just couldn’t contain himself during the address because he hates Mexicans.

Thank you for writing to me regarding Internet gambling. I appreciate you taking the time to contact me on this important topic, and I welcome the opportunity to respond.

There is no doubt that the Internet and related technologies have had a remarkable effect on the U.S. economy in recent years. The flow of commerce on the Internet has enhanced American industry’s ability to distribute goods economically and efficiently. The continuing development of this technology in California has provided hundreds of thousands of new, well-paying jobs, and I am committed to strengthening online commerce and preserving and expanding this vital job base.

While the advent of the Internet has its benefits, I believe the same cannot be said for Internet-based gambling. Internet gambling has become too easily accessible to minors, subject to fraud and criminal misuse, and too easily used as a tool to evade state gambling laws.

I understand your thoughts on internet gambling, and as you may be aware, I have supported legislation aimed at curbing Internet gambling during my tenure in the Senate. For example, I supported the SAFE Port Act, passed into law as Public Law 109-347, which included the Unlawful Internet Gambling Enforcement Act of 2006.

Please know that I have read your letter with interest and value your thoughts. While we do not necessarily agree on this particular topic, be assured that I will certainly keep your thoughts in mind should this issue come before me during the 111th Congress.

Again, thank you for your letter. I hope you will continue to keep me informed on issues of importance to you. If you should have any additional comments or questions, please feel free to contact my Washington, D.C. staff at (202) 224-3841. Best regards.

Sincerely yours,

Dianne Feinstein
United States Senator

I’m pretty sure I’ve never actually voted for her. Instead I’d skip the Senate race and fill out the rest of the ballot. Unfortunately, her position on this issue isn’t likely to lose her enough votes among the indifferent majority in this State.

It won’t take too long for society to forget that we voted in favor of ballot initiatives like Proposition 8; there won’t be any collective sense of shame because we are not only shameless, but brazen in our shamelessness. Jim Crow? That’s old news. Ditto Executive Order 9066, which put over 100,000 Japanese-Americans in internment camps, because they were trusted less than Americans of Italian or German descent. Women’s Suffrage and Alien Land Law? That’s really old shit. The Trail of Tears, Chinese Exclusion Act, and slavery? What century are you living in?

It’s really unfortunate. We keep patting ourselves on the back about how we are the most-free, the most-tolerant, the hands-down pinnacle of human civilization–which in many ways we are–but we forget about the decades and centuries of struggle and death that got us where we are, we like to think that every generation gets a fresh-start without the baggage of the previous generation, and we don’t recognize the disconnect between what we say we are and what we actually do.

It’s easy when you’re a straight, married man with some education and a decent job to file this away under “Abstract thing that I’ll voice an opinion about in polite conversation but doesn’t affect me” (along with single mothers, homelessness, and at-risk kids). But maybe when your life’s biggest problems are whether you could have saved more money buying from newegg.com or whether you want to buy a BMW or lease a Porsche you should take advantage of that human gift of looking outside yourself and fucking do it.

Far East Gizmos: While in Korea download a 120-minute film in just 12 seconds!

Korea is to acquire the world’s fastest wired and wireless Internet service at 10 times the speed of the current service by 2012. The government and the communications industry plan to invest some W34 trillion over the next five years in the project. The Korea Communications Commission finalized plans for Internet services at an average speed of 1 Gbps through fixed lines and 10 Mbps through wireless. One Gbps allows users to download a 120-minute film in just 12 seconds. The aim is to give users seamless access to large-capacity, high-quality convergence services such as IPTV.

Although the super-speed internet will be available mainly in large cities, fixed-line subscribers in smaller towns in Korea will also have access to 50 to 100 Mbps Internet service allowing them to watch IPTV programs without a hitch.

TJ asks: “Why the hell is the US so far behin​d?​”

I think the primary reason for this is density:

Korea has 49 million people living in a 38,622 sq mi country. By contrast, California has 37 million people in a 163,696 sq mi state.

Korea’s ten largest cities hold 29 million people (60% of the population). The United States’ ten largest cities hold 25 million people (8% of the population). The #10 city, San Jose, doesn’t even break the 1 million mark.

When you can reach most of the population by wiring up your biggest cities, the task is not only achievable, but you’ll also be able to find the political will to take it on.

The Koreans’ willingness to let the government do and mandate big things (e.g., giant international airport, high speed rail system) gets stuff done:

The Koreans are willing to spend $24.4 billion ($498 per person) to get awesome Internet for everyone (100Mbps – 1 Gbps).

By contrast, we Americans are considering $9 billion ($29 per person) to kinda sorta catch up to what Korea already has for many of its citizens (5Mbps – 100Mbps). On the sidelines, some people criticize the incentive as a giveaway for Verizon.

NY Times: Verizon Could Get $1.6 Billion in Senate Stimulus Plan

…

Jessica Zufolo, an analyst with Medley Global Advisors, said that last phrase–”or any residential subscriber” — means that a company could receive the tax credit for service to any home, whether or not it is in a rural, low-income, or unserved area.

Moreover, right now Verizon’s FiOS service, which runs fiber optic cables to customers’ homes, is by far the largest provider of Internet service that meets the 100 megabits-per-second hurdle.

“On first blush it appears that this will be very beneficial to Verizon,” Ms. Zufolo said.

At this point I think we need to be grateful that Verizon even has a product/service that can reach the 100Mbps threshold. We need to give them that per subscriber tax incentive of $29. We should also give them that jobs creation incentive they’ve been talking about so that every neighborhood can relish the sight of the Verizon FIOS van mucking around with the tubes. Hell, for good measure we can let them depreciate all their old DSL equipment. Give me FIOS!

• Time Warner Cable – West LA
• Los Angeles County Metropolitan Transportation Authority
• State of California

Other than that, I think I would like more pay.

Amen.

Sincerely,
glyphic

OPINION: NOVEMBER 17, 2008

Why Bankruptcy Is the Best Option for GM
Chapter 11 would better preserve the valuable parts of the company than an ad hoc bailout.
By MICHAEL E. LEVINE

General Motors is a once-great company caught in a web of relationships designed for another era. It should not be fed while still caught, because that will leave it trapped until we get tired of feeding it. Then it will die. The only possibility of saving it is to take the risk of cutting it free. In other words, GM should be allowed to go bankrupt.

Consider the costs of tackling GM’s problems with some kind of bailout plan. After 42 years of eroding U.S. market share (from 53% to 20%) and countless announcements of “change,” GM still has eight U.S. brands (Cadillac, Saab, Buick, Pontiac, GMC, Saturn, Chevrolet and Hummer). As for its more successful competitors, Toyota (19% market share) has three, and Honda (11%) has two.

GM has about 7,000 dealers. Toyota has fewer than 1,500. Honda has about 1,000. These fewer and larger dealers are better able to advertise, stock and service the cars they sell. GM knows it needs fewer brands and dealers, but the dealers are protected from termination by state laws. This makes eliminating them and the brands they sell very expensive. It would cost GM billions of dollars and many years to reduce the number of dealers it has to a number near Toyota’s.

Foreign-owned manufacturers who build cars with American workers pay wages similar to GM’s. But their expenses for benefits are a fraction of GM’s. GM is contractually required to support thousands of workers in the UAW’s “Jobs Bank” program, which guarantees nearly full wages and benefits for workers who lose their jobs due to automation or plant closure. It supports more retirees than current workers. It owns or leases enormous amounts of property for facilities it’s not using and probably will never use again, and is obliged to support revenue bonds for municipalities that issued them to build these facilities. It has other contractual obligations such as health coverage for union retirees. All of these commitments drain its cash every month. Moreover, GM supports myriad suppliers and supports a huge infrastructure of firms and localities that depend on it. Many of them have contractual claims; they all have moral claims. They all want GM to be more or less what it is.

And therein lies the problem: The cost of terminating dealers is only a fraction of what it would cost to rebuild GM to become a company sized and marketed appropriately for its market share. Contracts would have to be bought out. The company would have to shed many of its fixed obligations. Some obligations will be impossible to cut by voluntary agreement. GM will run out of cash and out of time.

GM’s solution is to ask the federal government for the cash that will allow it to do all of this piece by piece. But much of the cash will be thrown at unproductive commitments. And the sense of urgency that would enable GM to make choices painful to its management, its workers, its retirees, its suppliers and its localities will simply not be there if federal money is available. Like AIG, it will be back for more, and at the same time it will be telling us that it’s doing a great job under difficult circumstances.

Federal law provides a way out of the web: reorganization under Chapter 11 of the bankruptcy code. If GM were told that no assistance would be available without a bankruptcy filing, all options would be put on the table. The web could be cut wherever it needed to be. State protection for dealers would disappear. Labor contracts could be renegotiated. Pension plans could be terminated, with existing pensions turned over to the Pension Benefit Guaranty Corp. (PBGC). Health benefits could be renegotiated. Mortgaged assets could be abandoned, so plants could be closed without being supported as idle hindrances on GM’s viability. GM could be rebuilt as a company that had a chance to make vehicles people want and support itself on revenue. It wouldn’t be easy but, unlike trying to bail out GM as it is, it wouldn’t be impossible.

The social and political costs would be very large, but if GM fails after getting $50 billion or $100 billion in bailout money, it’ll be just as large and there will be less money to soften the blow and even more blame to go around. The PBGC will probably need money to guarantee GM’s pensions for its white- and blue-collar workers (pension support is capped at around $40,000 per year, so that won’t help executives much). Unemployment insurance will have to be extended and offered to many people, perhaps millions if you include dealers, suppliers and communities dependent on GM as it exists now. A GM bankruptcy will make addressing health-care coverage more urgent, which is probably a good thing. It would require job-retraining money and community assistance to affected localities.

But unless we are willing to support GM as it is indefinitely, the downsizing and asset-shedding will have to come anyway. Even if it builds cars as attractive and environmentally responsible as those Honda and Toyota will be building, they won’t be able to carry the weight of GM’s past.

GM CEO Rick Wagoner says “bankruptcy is not an option.” Critics of a bankruptcy say that GM won’t be able to get the loans it will need to guarantee warranties, pay its operating losses while it restructures, and preserve customers’ ability to finance purchases. While consumers buy tickets from bankrupt airlines, electronics from bankrupt retailers, and apartments from bankrupt builders, they say consumers won’t buy cars from a bankrupt auto maker. But bankruptcy no longer means “liquidation” or “out of business” to a generation of consumers used to buying from firms in reorganization.

GM would guarantee warranty support with a segregated fund if necessary. And debtor-in-possession (DIP) financing — loans that provide the near-term cash for reorganizing companies — is very safe, because the DIP lender has priority over all other claimants. In normal markets, it would certainly be available to a GM that has assets to sell, including a viable overseas business. Such financing is probably available even now.

In any event, it would be lined up before a filing, not after, so any problems wouldn’t be a surprise. As a last resort, we could at least consider a public DIP loan to support a reorganizing GM with a good chance to survive — as opposed to subsidizing a GM slowly deflating.

The fate of Daewoo — the Korean auto maker that collapsed in 2000 after filing for bankruptcy, leaving about 500 dealers stranded in the U.S. — is often cited as “proof” that a GM bankruptcy won’t work. But Daewoo was headquartered in a part of the world where bankruptcy still carries a major stigma and usually means liquidation. Daewoo’s experience is largely irrelevant to a major U.S. company undergoing a well-publicized positive transformation, almost certainly under new management.

GM as it is cannot survive without long-term government life support. If it gets that support, it can’t change enough and won’t change fast enough. Contrary to Mr. Wagoner’s brave declaration, bankruptcy is an option. In fact, it’s the only option that merits public support and actually has a chance at succeeding.

Mr. Levine, a former airline executive, is a distinguished research scholar and senior lecturer at NYU School of Law.

NaBloPoMo 19