Misblog

Originally Published June 10, 2008; Updated and Republished June 16, 2008:

The direct and indirect cost of the sub-prime market mess will be massive¹, but its implications are overwhelmingly massive—propping up the inflated real-estate values isn’t in the sustainable solution set, it’s a symptom of the problem!!

Why are lenders finding in necessary to “innovatively” lend to NINJA (No Income No Job Applicants) markets? Hint: It isn’t because our policy makers and representatives have been busy creating our next generation high income jobs and developing the complementary advanced workforce!²)

Web:

• UPDATED 06/16/2008 WP, The [Mortgage] Bubble Let's try it the "old fashion" way—ensuring our low-income and minority borrowers actually have a meaningful opportunity and ability to earn income and accumulate wealth!

  We'd get the added benefit of reduced spending on alternative and very expensive sub-standard housing (aka prison), too!

-----notes-----

1. We need to study these costs as they ripple through our economy for decades. Restructuring the sub-prime mess in bankruptcy will likely reduce the long term costs more than the written-down short term costs.

Of course the class of bond-holders may disagree, which is precisely why we need to track the costs and use the relatively open and public bankruptcy process to do so (augmented by longitudinal tracking studies). As opposed to the back room banking process where the mess will be quietly and semi-secretly shifted onto the taxpayer and repeated!

2. Notwithstanding all the rhetoric saying "give me a tax break and I'll give you a [next generation] job". If we had a next generation job for each time this statement is made (and will be made this year) we'd be good to go for the next century at full employment! And the sub-prime mess would not have occurred!