The Daily Sandwich

"We have to learn the lesson that intellectual honesty is fundamental for everything we cherish." -Sir Karl Popper

Location: Boston, Massachusetts, United States


Monday, December 10, 2007

Mondays with the Krug

I always wondered why the most religious people I know also tend to be the most rapacious capitalists, and I have no idea why observation struck me as a sensible way to begin this post, because... well, I guess it's because of the way they're becoming so inextricably combined in this century through the decades-long effort of the GOP to make them that way. And the rather blatant manner in which they are coming together to resemble the opposite of what they profess to be.

I'm speaking, of course, about the sub-prime mortgage market, the inaction of anyone to take meaningful action, and the slow-motion train wreck of watching another corporate bailout in the making.

As Elizabeth Warren, the Harvard bankruptcy expert, puts it, “The administration’s subprime mortgage plan is the bank lobby’s dream.” Given the Bush record, that should come as no surprise.

There are, in fact, three distinct concerns associated with the rising tide of foreclosures in America.

One is financial stability: as banks and other institutions take huge losses on their mortgage-related investments, the financial system as a whole is getting wobbly.

Another is human suffering: hundreds of thousands, and probably millions, of American families will lose their homes.

Finally, there’s injustice: the subprime boom involved predatory lending — high-interest loans foisted on borrowers who qualified for lower rates — on an epic scale. The Wall Street Journal found that more than 55 percent of subprime loans made at the height of the housing bubble “went to people with credit scores high enough to often qualify for conventional loans with far better terms.”

And in a declining housing market, these victims are stuck, unable to refinance.

So there are three problems. But Mr. Paulson’s plan — or, to use its official name, the Hope Now Alliance plan — is entirely focused on reducing investor losses. Any minor relief it might provide to troubled borrowers is clearly incidental. And it is does nothing for the victims of predatory lending.

And I really don't think it's far-fetched to suggest that a meltdown would culminate with the American public footing the bill for massive corporate mismanagement-- after being victims of corporate crimes. It wouldn't be first time, and it wouldn't even be the first time a Bush was involved. But it would be a classic example of what wingers pretend is 'the liberal way': let the mugger keep the victim's wallet, and order the muggee to pay for his rehabilitation program as well.