Friday, July 17, 2009

Quote for the day

I am a little late in reading this article, but it is good. And here is my favorite quote:
"By now almost everyone knows that for decades mortgage dealers insisted that home buyers be able to produce a down payment of 10 percent or more, show a steady income and good credit rating, and possess a real first and last name. Then, at the dawn of the new millennium, they suddenly threw all that shit out the window and started writing mortgages on the backs of napkins to cocktail waitresses and excons carrying five bucks and a Snickers bar."
-- Matt Taibbi, author of The Great American Bubble Machine

Economic charts to come.... Rebecca Wilder


  1. Matt's great -- a long-time writer for Rolling Stone. He has quite the knack for putting things so sharply and frankly. Great Quote.


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  3. Just read the Taibbi article about Goldman Sachs - remember the gal from there with the 3 barrel name who was all the rage back in the 90's? Everyone moved wherever she pointed. Thanks for tagging it!

  4. I think the important idea behind the hyperbolic quote you pulled is that there was something of a rational basis for increasing home ownership as fast as possible. It correlates to crime rate, personal financial responsibility, and a host of other positive behaviors we have a vested collective interest in encouraging. I remember Bush's speeches on it before 9/11/2001. The Republican impulse to deregulate as much as possible was simply not the correct implementation -- the amount of regulation should have stayed the same, but for example provided incentives which would have led to writing higher quality debt, if not so much of it. If Davos gets its way and we refinance everyone's underwater third vacation rental mortgage, then it still remains to be seen whether there was actually any irrational behavior at play.

  5. Hi James,

    Thanks for the comment - You are right; the intermediaries (i.e., the banks) are not the only ones to blame.

    There was policy - as you suggest (which goes back to Clinton, as well)

    There was the buyers of the securities, and their over-reliance on the ratings agencies.

    And there was the households themselves, who sometimes mis-represented their qualifications on mortgage applications and over-extended their budgets.

    Hyperbolic is a good description; but I believe that was the direction in which Taibbi was going.

    Good to hear from you, Rebecca


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