Among many other things, McArdle is ignoring the multiplying effect of securities. It's not just about her ability to get a loan to buy a house that will increase in value. That ship has sailed for a while.
Most perniciously, factoring in the risk of house price depreciation will not
focus bankers on whether lenders can make their payments; it will focus them on
whether the neighborhood is likely to appreciate. Bankers will strenuously
attempt to avoid lending into "marginal" neighborhoods, which is where, any real
estate agent will tell you, prices fall farthest during a bust. That means
some exurbs, and a whole lot of cities. The more they factor in home price
risk, the less your qualities as a buyer matter--ultra-responsible yuppies
buying in a gentrifying neighborhood still look like an awful risk if you know
that house prices might fall, and your principal might at any time be written
down by 10%. And, of course, that's a self-fulfilling prophecy--if banks won't
lend on houses that have recently spiked in value, the value of those houses
will fall back to the level where banks will lend. It's hard,
in fact, to imagine a deliberate policy that could more effectively
halt the urban renaissance that has taken place in neighborhoods like
Subsidized crack in schools, maybe.
The key problems here are bank capital and mortgage foreclosures. ForeclosedAs always, it's all about her. I don't know enough about economics to refute McArdle properly, but I know the dfference between thoughtful analysis and bullshit.
mortgages are approaching about 10% of total mortgages, with an average recovery
rate of only about 50% of the mortgage value when the foreclosed home is sold.
The resulting loss of value, approaching 5% of the U.S. mortgage market, has
thrown the economy into disarray, because the losses have been borne by highly
leveraged institutions. For many institutions, each $1 of their own capital
(equity contributed by the company's own shareholders) has often supported $10,
$20, or even $40 of loans, security investments and other assets. As a result,
wiping out a few percent of their assets completely wipes out their own capital,
leaving customers and depositors without a “capital cushion” and triggering
withdrawals. This process started with the most egregiously leveraged companies
like Bear Stearns and Lehman, and continues to put stress on enormous but capital-thin institutions like Citibank.
This post just shows you how warped Megan is. She gets her new "business channel" at The Atlantic and this is how she fills space, by picking a fight with a dead blogger, by all accounts a very nice woman who died very tragically at a very young age. Megan posts about 1,000 words lecturing this dead person about how wrong she was in a post from last October. Gee, I'm sure no one would suspect that maybe Megan might have an ax to grind with Tanta, given Tanta's post from around the same time smacking Megan down about five notches. Of course not. Megan just decided, as editor, that it is important for her readers to know that some one on the Internets was wrong about something--like some kind of modern Diogenes always seeking out truth, Megan feels its her responsibility as an econoblogger to correct everything ever written about mortgages on the Internet. What a fucking jerk.
And another thing that bugs me about this. Tanta was an amateur; blogging was a hobby she engaged in while on disability. Megan, for some unknown reason, gets fucking paid for her "work" at the fucking Atlantic. It's really shitty of Megan to allocate space in a commercial publication that she edits to harass and torment a dead person, whom Megan obviously still hates. It's simply disgusting. But it really shows the deepness of Megan's sick character.
The dead can't argue back, correct your mistakes, or provide solid, well-argued proof that you have no idea what you are talking about. They can't even misunderstand your point.
I agree with Flautus - she's a downright jerk.
This time she's responding to critics in her comments, who are telling her off for ignoring corrections. They brought up Tanta to point out how bad Megan is. Megan's still a jerk, of course.
This new business page might not be good for Megan. She might not be able to get away with such egregious errors in the future--I hope.
Flautus refers to Tanta as an amateur, meaning her status as a blogger. Just to clarify for anyone not familiar with the blog Calculated Risk, Doris 'Tanta' Dungey worked as a mortgage broker for 20 years.
So unlike Megan, Tanta knew what she was writing about and wasn't receiving wingnut welfare to write about it.
McArdle is probably working on her rebuttal to Glenn Greenwald, so it will be ready to post immediately if Glenn happens to die unexpectedly.
Yes, she actually knew what she was talking about. I had a very hard time following her posts, but they were worth the effort.
LOL--yeah, she'll show his estate that she means business!
Post a Comment