tom moody

Thanks to Lektrogirl for the shout.

And a couple of nice posts from Chris Ashley: 1 (read the comments on the Cedar Tavern vs last June's Rhizome chatboard debacle) and 2.

It is not, as the bigots on the right love to say, because of increased lending to "minorities." It stems from (1) Too much unregulated securitization of mortgage loans, and (2) Too many of such loans made in bad faith by unregulated mortgage brokers. Barry Ritholtz of The Big Picture blog explains:

Nothing in any of these Bush speeches [quoted by Ritholz at the link] that pushed for more lending to minorities and increased lower income home ownership caused the problem. Neither did any similar Clinton speeches. Nor did related the legislation related to the Bush speeches, nor did the CRA, nor Fannie Mae or Freddie Mac. Indeed, none of these actions required the sort of reckless lending that we saw from 2002-2007.

Understand this simple fact: In an ultra-low rate environment, where prices are appreciating rapidly, and mortgages are being securitized, ALL THAT MATTERS IS THAT THE BORROWER NOT DEFAULT IN 90 days (or 6 Months). The goal was to make a loan that did not default in that period of time, it cannot be put back to the originator.

As a mortgage salesman, you only lose your a fee if a borrower defaults within 3 or 6 months. What do you do to maximize your returns? The best way to do that -- to put people in houses that would not default in 90 days -- was the 2/28 ARM mortgages. Cheap teaser rates for 24 months, then the big reset. By then, it was no longer your problem.

Can you grasp what a monumental change this was? Instead of making sure that borrowers could pay back ALL OF THE 30 YEAR FIXED MORTGAGE, you only had to find people who could afford the teaser rate for a a few months. THIS WAS AN ENORMOUS AND UNPRECEDENTED SHIFT IN LENDING.

This is the key to the housing boom and bust, and ultimately underlies the entire credit freeze. And, it would not have been possible without the Greenspan ultra-low rates, which made the teaser portion (the "2" of the 2/28) of these mortgages so attractive.

Discussing the future of banks in the ongoing financial panic as they navigate the reality of federal assistance, the Associated Press offers this quote:

"This is Darwinism finance, literally the survival of the fittest for the banks," said Chris Johnson, chief investment strategist at Johnson Research Group. "This is Wall Street's version of the Amazing Race where these companies are going to jump through hoops and rings of fire to rebuild their businesses as quickly as possible."

A brief refresher on how Charles Darwin's "survival of the fittest" works in the evolution context: "Teams of two people who have some form of a preexisting personal relationship race around the world in competition with other teams," the British naturalist wrote in The Origin of the Species, elaborating further:

Contestants strive to arrive first at "pit stops" at the end of each leg of the race to win prizes and avoid coming in last, which carries the possibility of elimination or a significant disadvantage in the following leg. Contestants travel to and within multiple countries in a variety of transportation modes, including planes, taxis, rental cars, trains, buses and boats. The clues in each leg point the teams to the next destination or direct them to perform a task, either together or by a single member. These challenges are related in some manner to the country or culture where they are located. Teams are progressively eliminated until three teams are left; at that point, the team that arrives first in the final leg is awarded a large cash grand prize, usually one million U.S. dollars.

It's amazing that we have so many species on Earth today given what they had to go through.

From Don Markstein's Toonopedia:

Unlike most parody publications, Not Brand Echh had continuing characters. Charlie America stood in for Captain America, The Inedible Bulk for The Incredible Hulk, Mighty Sore for The Mighty Thor, Scaredevil for Daredevil, etc. Eventually, the title fielded a resident superhero of its own, Forbush-Man (aka Irving Forbush, another letter column schtick, this one going back to 1955). The latter, in the grand tradition of superhero spoofs (e.g., Supersnipe, Captain Klutz, Super Goof), wore red long johns as a prominent element of his costume.

By the ninth issue (December, 1968), it appeared Not Brand Echh had become a sales sensation — that was the first in its new format, extra-thick but costing about twice as much as most comics. But perhaps not, as the next one, billed as "The Worst of Not Brand Echh", consisted entirely of reprints from early issues. After #13 (May, 1969), it was canceled.