on not needing a weatherman...

I'll be the man with the broom
if you'll be the dust in the room

Under the “You don’t need a weatherman to know which way the wind blows” department, this story in the NYT about a town where everybody is below average – that is, 90 percent of the owners of houses in the town owe more on their mortgages than their houses are worth – the story of Gerry Martinez leaps out. The town is one of those jumped up suburbs of the Bay area, built because the Bay area is way too expensive. The Martinezes don’t proclaim their income in the article – but one guesses it is South of 100 thou a year. Here’s the infarction graf:

“The Martinezes bought their house in early 2005 for $630,000. It is now worth about $420,000. They have an interest-only mortgage, a popular loan during the boom that allows owners to forgo principal payments for a time.
But these loans eventually become unmanageable. In 2015, Mr. Martinez said, his monthly payments will be $12,000 a month. He laughed and shook his head at the absurdity of it.”

12,000 per month Not in lira. Not in yen. Not in penguin dung. They are called dollars. That was the hook he and his wife evidently thought they would be spared – the fish would sell the hook to the other fish. And thus, everybody would get to dine on big, sloppy fat worms. It would be the ownership society. Paradise, man!
It would be interesting to see how many people in this country are hooked into the same kind of deal, and don’t know it.

That economists were still generally talking, this spring, about a turnaround in the fourth quarter should tell you all you need to know about the priesthood. Like all priesthoods, its goal is to weave stories around the wealthy to make them appear mythically heroic. Besides that, they have no function. Their predictions are shit. Mr. Martinez is a much better indicator of what our near future is gonna be like, economy-wise. It is going to be ugly.


JCD said…
Any bets on how many more returns to the trough it will take before AIG finally gets told to get stuck? I'm going to go with 4, because I like arbitrary declarations.
roger said…
You'll notice that AIG and USA have the same number of letters. Surely we aren't that attached to USA? Come, let us reason together - doesn't AIG just have that, that sound of financial prowess? What I'm saying here is, why not simply let AIG take over, a sort of leveraged buyout thing, that whole silly treasury department? Besides the very important expenditure to the Pentagon - which I'm all for raising 50 percent to meet the truly unprecedented terrorist threat - I'm thinking that nothing really is as important as making sure counterparties in the derivatives market can sleep soundly under their duvets. Can't we agree on this simple proposition?
Brian said…
Two million jobs. That's the number impacted by a GM bankruptcy. Still...is there a single American nameplate car that you would ever consider buying (absent your chosen carlessness) In California, that answer is pretty clear (no)
roger said…
Brian, but you know, this isn't true overseas. Ford, apparently, makes nice 60 mph cars for the European market, makes a nice profit in Brazil, etc.

I'd say the bankruptcy of the faux truck undercarriage model plus the state begging people to buy SUVs by using tax breaks - my God, the things that have happened in the last eight years - is now evident.

But crisis points don't necessarily mean the end of a corporation. IBM climbed out of the hole in 1990. A GM Chrysler merger, and conditions on the kind of cars being manufactured in return for a bailout, seems to me like a very winning idea.

Of course, Ford just successfully begged money and is now revamping its supertruck, with about 14 mpg on the highway. I'm not saying this will be easy.
Brian said…
Maybe the problem is not the companies, but a certain segment of the population that demands Excursions. I' thinking of the George Carlin misanthropic rant "Maybe it's not the politicans. maybe its the public"

Of course, I am not one to talk, as I have a car that gets terrible gas mileage
roger said…
Well, I hate to sound all capitalist roader like, but... this is an opportunity. The whole transportation system, all those huge cars, they are going to have to go and sooner than later. And I'm supposed to think that the only thing we should bail out is the banks? And tough love General Motors? That's typical American ideological thinking, in which we have to be punished after dessert.

I gotta say, that seems upside down to me, to put it mildly.