>Death Of Another Right Wing Myth

>[UPDATE] 2:

At least some Democrats are paying attention:

Tomorrow the newest Blue America endorsed candidate, Fred Johnson (D-MI) will be joining us for a live chat at Crooks and Liars. This morning he told me that the Times report is “typical of the mindset. When it was working class folks who were underwater on their mortgages it was all about ‘duty’ and ‘keeping your word’ and everyone was supposed to just suck it up and keep paying their mortgages for the good of society. Now it hits the wealthy and suddenly a house is just a bad investment that they can simply walk away from. How about they start pulling on their own bootstraps for a change, instead of preaching to the rest of us? Of course, many of these folks got where they are through the very types of financial gimmickry that put the economy in the mess it’s in now, so I guess it just shows that you reap what you sow.”

Yes that sounds about right.
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[UPDATE]:

Haven’t had time to really delve into this one but it looks like we have another one:

CHARLOTTE, North Carolina (Reuters) – A government program to bail out banks at the height of the financial crisis has so far turned a profit, according to a report by investment bank Keefe, Bruyette & Woods Inc.

The Capital Purchase Program, part of the $700 billion Troubled Asset Relief Program, has generated an average return of 10 percent on the initial investment in 61 banks that have fully repaid the aid, said the report, issued on Wednesday.

“Its pretty clear that unless the economy just craters, the bank portion of TARP will be profitable,” said Fred Cannon, bank analyst with Keefe, Bruyette and Woods.

About $137 billion, or two-thirds of the initial government investment, has been paid back, with $65 billion still to be repaid, the report said.

Death of yet another right wing meme?

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Today’s New York Times front page brings us the death of yet another cherished right-wing meme:

Biggest Defaulters on Mortgages Are the Rich

Whaaa…? You mean …. not those shiftless, irresponsible brown people in the projects which the big, bad Community Reinvestment Act forced banks to throw money at?

Whether it is their residence, a second home or a house bought as an investment, the rich have stopped paying the mortgage at a rate that greatly exceeds the rest of the population.

More than one in seven homeowners with loans in excess of a million dollars are seriously delinquent, according to data compiled for The New York Times by the real estate analytics firm CoreLogic.

By contrast, homeowners with less lavish housing are much more likely to keep writing checks to their lender. About one in 12 mortgages below the million-dollar mark is delinquent.

Though it is hard to prove, the CoreLogic data suggest that many of the well-to-do are purposely dumping their financially draining properties, just as they would any sour investment.

“The rich are different: they are more ruthless,” said Sam Khater, CoreLogic’s senior economist.

Well, that’s certainly nothing new.

I’ve been spending a lot of time debunking cherished right wing myths these days. There’s the “Obama has halted all offshore oil drilling” myth, which I’ve devoted several posts to debunking. Fat lot of good it’s done, as the oil industry’s false claims about lost jobs has worked on some bought and paid for judges. Still, let me repeat:

The administration’s order halted 33 exploratory drilling projects and suspended new permits, but did not affect more than 3,000 platforms already in production.

Thirty-three risky, ultra-deep wells operating in dangerous conditions. Such is the power of Big Oil that they’ve been able to spin this as a sad over lost jobs.

One of my favorites is the “Obama took more money from Big Oil than McCain did” myth, sometimes presented as “Democrats are now the party of Big Oil.” Sorry, FOX News fans, it’s not true:

Without getting into whether the administration’s response has been adequate, we can say that the oil and gas industry leans heavily Republican in its campaign contributions, and the 2008 presidential race was no exception. Republican candidate John McCain and his ticketmate Palin took in nearly three times the amount of money from the industry’s political action committees and employees as did Obama and running mate Joe Biden from industry employees: about $2.4 million compared with $890,000, according to the Center for Responsive Politics. (The Obama presidential campaign did not accept any PAC money.) Obama, however, received about twice as much from British Petroleum’s executives as McCain did: $71,051 compared with $36,649. Neither received money from BP’s PAC.

So, personal donations from BP employees to the tune of $71,051 somehow trumps the millions the Republican tickets received from oil and gas industry PACs. Okie dokie.

Paul Krugman regularly debunks right wing economic memes. Here’s a good one, about fear of government hampering investment:

Truly, we live in a time of mass delusion — or maybe make that elite delusion — where there are lots of things that everyone believes, without a shred of evidence to back that belief. Here’s one more: everywhere you go, you encounter the claim that businesses aren’t investing, they’re just sitting on piles of cash, because they’re worried about future government policies.

There is, of course, a much more prosaic alternative: businesses aren’t investing because they have lots of excess capacity. Why build new structures and buy new machines when you’re not using the ones you already have?

There’s a neat little chart-y thingie with red and blue lines and it shows basically this “fear of socialism” meme is bunk.

Finally, we’re seeing serious fearmongering about the deficit, which most right wingers seem to have swallowed whole. This despite the fact that just a few years ago, Republicans were the ones telling us that “deficits don’t matter,” something which “Reagan proved.”

So what happened? Krugman has an idea, and it’s not what you think. It’s not a sudden stab of conscience or realization that they were wrong for Bush’s two terms. No, it’s far more heinous:

There’s only one way to read this: it’s not about the deficit — it’s about the deficit as an excuse to dismantle social programs.

So you people yammering about wanting the government’s hands off your Medicare and Social Security just may get your wish.

4 Comments

Filed under economic stimulus, economy, right wing

4 responses to “>Death Of Another Right Wing Myth

  1. Jim

    >I wonder what the total dollar value of million dollar loans in default vs. lower mortgages in default is? It is a little misleading to state that 1 in 7 million dollar homes is in default vs. 1 in 12 smaller mortgages without a concept of the overall figures in question. If there are only 10,000 million dollar mortgages vs. 10,000,000 smaller mortgages than the default rate on the smaller mortgages has a bigger effect on banks and the economy.

  2. >?????"More than one in seven homeowners with loans in excess of a million dollars are seriously delinquent …" vs "one in 12 mortgages below the million-dollar mark is delinquent…"You find that misleading?And:"The delinquency rate on investment homes where the original mortgage was more than $1 million is now 23 percent. For cheaper investment homes, it is about 10 percent."

  3. Jim

    >SB – there is a difference in the rate of foreclosure vs. the total number of forelclosures as I pointed out in my post. I am pretty sure that there are several times more mortages that are less than $1,000,000 than those over $1,000,000. So yes, the rate of foreclosures on the over $1,000,000 is higher at 1 in 7 vs 1 in 12, but the overall number of foreclosures and their total value could well be higher in the less than $1,000,000 mortgage category.

  4. >Jim:You're missing the point of the story. The point is the difference in attitudes. "The rich are different." They feel like they can walk away for their mortgages, treating them as a bad investment and just default. The working class on the other hand are more likely to stay in their homes and try to make things work. As I posted in my update:"When it was working class folks who were underwater on their mortgages it was all about 'duty' and 'keeping your word' and everyone was supposed to just suck it up and keep paying their mortgages for the good of society. Now it hits the wealthy and suddenly a house is just a bad investment that they can simply walk away from."The post is about class warfare, social attitudes and the right-wing's continued portrayal of working class people as shiftless, lazy and irresponsible when the wealthy seem to embody those same traits.As far as placing the blame on the Community Reinvestment Act goes, it's already been well established (I've posted about it a lot here) that the Community Reinvestment Act "was irrelevant to the subprime boom, which was overwhelmingly driven by loan originators not subject to the Act."You're correct that the NY Times story doesn't answer every question. The point of interest to me is in how these facts inform the narrative. It's fine for wealthy people to walk away from their million-dollar plus mortgages but walk away from a $100,000 one and you're irresponsible?