link round-up

[cellio]

Maritan Headsets (from Joel on Software) is a long but worthwhile article on software standards -- both not having them early enough, and having them and trying to enforce them. Parts of it made me laugh out loud, like the paragraph containing this passage: "[...] but of course when you plug the headphones into FireQx 3.0 lo and behold they explode in your hands because of a slight misunderstanding about some obscure thing in the spec which nobody really understands called hasLayout, and everybody understands that when it's raining the hasLayout property is true and the voltage is supposed to increase to support the windshield-wiper feature, but there seems to be some debate over whether hail and snow are rain for the purposes of hasLayout..."

Rescue me: a fed bailout crosses a line seems (to this non-expert) like a good analysis of what just happened to the market and the dollar. (Need a login ID? Try BugMeNot.) I am more scared, and more angry, about our government's economic policies than I've been in a while. As someone on my subscription list said (I forget who), the people who actually took personal responsibility and saved rather than spending recklessly are the ones who are going to get hammered by this, while the idiots who bought houses (or corporate holdings) they couldn't afford and racked up tons of debt will be bailed out because we can't stand to say "too bad you were an idiot".

As long as I'm saying "too bad"... too bad, Michigan and Florida. Agreed.

On a lighter note: Garfield Minus Garfield is surreal. And since seeing it a week or so ago, I haven't been able to read Garfield "straight".

Comments

[sethg]

The banks weren't throwing money around to people who weren't grabbing it thinking they'd sell in 2 years for huge amounts more.

Not necessarily. Some of those people were deluded by mortgage brokers into taking on more debt than they could afford, for a house that they intended to live in. Remember that the brokers made money by writing loans, not by making sure that those loans were viable. They had every incentive to defraud the borrowers.

I would whole-heartedly support some kind of licensing system, where you had to demonstrate you knew some basic things about compound interest and financial planning before you were allowed to take on certain kinds of debt. However, considering how much banks have been profiting from high-interest loans to the ignorant, I suspect they would fight this tooth and nail.

(A few years ago, when there was a big reform in the laws for personal bankruptcy, someone proposed a law requiring credit-card issuers to tell borrowers, on every statement, how long it would take to pay off the balance if they only made the minimum payment every month. The proposal went down in flames. That should tell you how much of a vested interest the industry has in ignorant customers.)

And you can sneer at other people's financial stupidity all you want, but that doesn't change the fact that if you are surrounded by neighbors who overextended themselves to buy their houses, and they get foreclosed on or they resell at fire-sale prices, then your home's market value plummets.

[cellio]

Some of those people were deluded by mortgage brokers into taking on more debt than they could afford, for a house that they intended to live in.

To be clear (because I failed to say this originally), I think lenders that were reckless should pay for it and I think ones who committed fraud should face criminal charges (as well as paying for it). That's what I meant when I referred to corporate holdings, but it was way too murky.

I agree with the comment about needing better financial education. And it's more fundamental, even. I astonished my realtor by insisting on reading the contract before signing. What, I'm supposed to take on the biggest debt of my life without reading it first? Apparently most people do (or did), at least around here. When buying the first time I asked for certain forms in advance and paid a lawyer to review them for me. The few hundred dollars for the lawyer was trivial compared to the mortgage; I treated it like another inspection. (Actually, I think the lawyer was cheaper than the home inspector.)

I'm not being smug here. It never occurred to me not to do these things. What did I get in my education and upbringing that (according to the realtor) many others didn't get? We need to fix that.

A few years ago, when there was a big reform in the laws for personal bankruptcy, someone proposed a law requiring credit-card issuers to tell borrowers, on every statement, how long it would take to pay off the balance if they only made the minimum payment every month.

While my end goal is extremely-minimal government, we can't jump there. As a step toward encouraging the meme of personal responsibility I would totally support that law. (Alas, I'm not surprised it didn't make it.)

[hrj.livejournal.com]

I'm all for personal responsibility as long as it applies to the industry as much as the individual consumer. On someone else's blog on the same topic, I idly wondered how much of the current "crisis" could have been avoided if there were a requirement that the institution that approves the mortgage has to continue to hold it (and bear the consequences of bad loans). My mortgage was sold twice during the first three months of its existence -- how can that promote responsible behavior on the part of the lending institutions? Unfortunately, any government bailout is going to primarily save the industry from the consequences of it's bad decisions and greed, rather than saving individual home-buyers from the consequences of their bad decisions and naive optimism.

Of course, I'm not in any of the current classic home-buying categories: neither an over-extender, nor an under-buyer, nor a wait-and-seer, nor an intended-to-flipper. So I can be annoyed at the possibility that other people might get rescued from the consequences of their own short-sightedness, but my own decisions would have been exactly the same even if I'd been omniscient.

[zare-k.livejournal.com]

I astonished my realtor by insisting on
reading the contract before signing.

People sign mortgage contracts without reading them? Seriously?

[cellio]

So I'm told. I can't verify this personally. (Ok, when I sold my first house I saw no evidence at the closing that the buyer did, but I also didn't ask, so he might well have asked for the forms in advance like I did.)