Borrowers vs Lenders: Everyone Loses

I watched a short segment on CNN today about a person who had decided to let the bank foreclose on his house, even though he could afford to make the payments. I kind of thought that we were getting past this issue, but I guess not. So anyway, apparently this guy was under water on his house and the bank declined to work with him to restructure the mortgage, so he decided it would be better for him to just give the keys back to the bank. They called it "strategic defaulting," I think. In any case, the anchors were really on this guy about him being irresponsible - especially Ali Velshi. Ali was saying that, because of this guy's irresponsible behavior, it would be harder for Ali to get a mortgage. The other anchor was also on about how, if everyone violates their contracts like this, then contracts would be worthless. Both hyperbole.

Well, first of all, I don't think that Ali Velshi - CNN's Chief Business Correspondent - is really going to have much of a problem getting a loan, unless he is trying to finance a purchase of the Chrysler Building or something. But speaking to the point of his argument, maybe it's okay if people have a bit harder time getting loans. The ridiculously low bar set for lending is routinely cited as a major reason for the financial collapse in the first place. Besides, why is it that it is okay for a major business to default on loans and contracts, but not an average Joe?

And as for that charge that this guy was violating his contract, I am not sure that I see it that way. Sure, in a mortgage, the consumer agrees to make monthly payments, but there is also language in the contract for the possibility that defaults. In such a case, the property serves as collateral and the bank takes it back. It's all in the contract. Okay, I am far from an expert on this, but I have had a tiny bit of experience on it and I am pretty sure that is how it works. Anyhow, it seems to me that this guy just exercised his option to give back the collateral rather than to continue paying for a house that wasn't worth the payments anymore. And it's not like he didn't try to negotiate with the bank, they just refused. So it seems like the "contract violator" charge is a bit unfair.

I know that it might be a bit scary to think that there are all these people out there who are about to default on their mortgages, and that might send us into a second financial crisis, but there is a part of me that believes that, however painful it might be, this is part of the overall correction from our irresponsible past. Anyway, it is completely unfair to put all the blame on the consumer and none on the banks, whose predatory and irresponsible lending practices are a major reason for this whole mess. It is partly the fault of people who bought houses for investment purposes, rather than for living accommodations and it is partly (greatly?) the fault of major lenders who put the financial security of the entire country in the hands of risky borrowers with unstable incomes. There is also blame to be laid on us, The People, who believed in deregulation as the unassailable path to prosperity. In reality, I could keep going on and on about who is to blame, but the important thing is that there is plenty of blame to spread around so there is little sense in targeting some guy who has decided to exercise his right to opt out of his mortgage in exchange for losing his house.

Kayaking

I went kayaking on the Santa Fe River today. It was a great idea. Thanks for taking me along, Angel. It wasn't kayaking like anything in Oregon. Most of my friends back home, when asked about kayaking, would think of class four rapids and wetsuits. This was a decidedly more relaxing experience. Most of the time was spent just floating and only using the paddles for steering rather than propulsion. As soon as we put in, I found myself immediately at peace. I was mesmerized watching the water gently part as it relented to the bow of my kayak. And not just watching it, but I could hear, smell and feel all of the interactions between the water, my kayak, and - through it - myself. It was an amazing connection with nature that I have not felt for some time. I also found entertainment in scaring the turtles off the logs where they were sun bathing. That's probably because, despite my appearance, I am still really just a ten-year-old boy that likes to harass wildlife.

I don't know if I will be able to find kayaking like that in Oregon, but I would love to try. Sure, there is plenty of kayaking in Oregon, but it is a more challenging and exciting brand and I am looking for that relaxation on a warm summer day. I am looking to enjoy nature and to be a part of it, not to challenge it. Sure, maybe I will be open to the idea of taking on some easy rapids, but first things first. I want a kayak now. Oh, and of course, time to use it.

Donating

I just found this statistic about how the different generations of American tend to give. I don't keep track of how much my wife and I give, but I have a good general idea (or so I should hope...). On my estimation then, the report shows that I am in the median for my generation in terms of giving, but at the same time, I am below the average. It is pretty disappointing for me. Maybe it is just vanity, but I would like to think of myself as an above average philanthropist. When I lived in Eugene, for instance, I could take pride in the fact that I donated much of my time, if not money to charitable causes or the promotion thereof. Or so I thought. I guess I got a little too high on myself, and for that, I am a bit ashamed. I am going to have to remedy this.

Also, this statistic shows that generation X - my generation - is below the average for all the generations in terms of percent who give. Poor form, my people. Poor form. Now I am ashamed on both my own behalf and on that of my generation.

So what is the next step? Find out a way to give (time or money) in a way that will maximize the efficiency of my efforts. This should help, but suggestions are welcome. I like the idea of local charities and those are just the kind that are likely to get overlooked by a broad assessment such as this one.

It's fine to criticize the government for not reacting fast enough to the Gulf oil spill. Healthy criticism should always be welcome and I am sure that there were mistakes in the response to this disaster. What I have a problem with is unfounded conspiracy theory masked as expert commentary. This is why I have such a problem with Fox news. They bring on Mike "Heckuva Job" Brown to Cavuto (itself a news commentary show disguised as journalism) in order to give him a platform to rant about the supposed ineptitude of the Obama administration in light of the recent oil spill. As if he has room to talk. Remember that this is the guy who, during Hurricane Katrina, denied that there was a refugee crisis building in the Superdome days after the media had been filling their news with it. This is the guy who said that he was an "assistant to the city manager with emergency services oversight," when he really had no managerial responsibilities. As if that were experience worthy of a directorial position at FEMA anyway.

So of all the subject matter experts that Neil Cavuto could have brought on to his show, he chooses the most discredited laughing stock that he could possibly find. Maybe I am giving My Cavuto too much credit. Maybe he really didn't have a lot of experts to choose from because they know that their mere appearance on his show could damage their reputations as respected experts. I am of course not saying that is the case; I am just supposing. Speaking of which, that's exactly what Michael Brown did on Cavuto's show. He didn't directly accuse the Obama administration of letting the spill go, he just put the possibility out there in no uncertain terms. Fox loves to do this in general, but shows like Cavuto, Glenn Beck and O'Reily are especially guilty in this game.

But let's just take a look at the accusation (which is exactly what it really was, veiled or not). What did Mr. Brown use as evidence? Pure supposition:

"...I think the delay was this: It’s pure politics. This president has never supported big oil. He has never supported offshore drilling. And now he has an excuse to shut it back down.

You’ve already heard Bill Nelson, senator from Florida, talking about offshore drilling is DOA. They played politics with this crisis and left the Coast Guard out there by themselves doing what they’re supposed to do."

There is no hard evidence. Not emails, nor citations of speeches. No witnesses to the conspiracy. Nothing. And yet, half of this country is now going to believe that there is a conspiracy by the radical, environmentalist Obama administration to cause billions of dollars of damage and untold environmental damage to the economies and coasts of the five Gulf Coast states so that they can dismantle the entire off-shore drilling industry and cause further shocks to the American economy and workforce. All of this in the middle of the worst recession since the Great Depression. It makes perfect sense, right?