Liars all the way down

LI recommends this article by Gretchen Morgensen today. Although it scares the living bejesus out me – since one of the things about the temporary collapse of capitalism is that poor people tend to get wiped out first, and I tend to be a poor person. Shit. In the dream, I am at the wheel of the car, and the brake stops working, and the accelerator jams, and there is a brick wall looming just ahead.

There is a conservative mindset which pops up among the Clinton liberal set that is all about balanced budgets. I think that is fucking braindead. Debt is not a bad thing – for instance, the European economy, with its paralyzed fear of inflation, did not do the necessary in the past six years, ease up lending requirements and use the European real estate market, in classic Keynesian fashion, to operate as a multiplier at the same time as it transferred savings into investment - but reading this made me sick. This is when the evaporation of savings becomes, uh, real:

In 2000, according to Banc of America Securities, the average loan to a subprime lender was 48 percent of the value of the underlying property. By 2006, that figure reached 82 percent.

Mortgages requiring little or no documentation became known colloquially as “liar loans.” An April 2006 report by the Mortgage Asset Research Institute, a consulting concern in Reston, Va., analyzed 100 loans in which the borrowers merely stated their incomes, and then looked at documents those borrowers had filed with the I.R.S. The resulting differences were significant: in 90 percent of loans, borrowers overstated their incomes 5 percent or more. But in almost 60 percent of cases, borrowers inflated their incomes by more than half.

While the poet in me experiences a certain frisson that the Weltgeist so brilliantly propped up the liar war and the liar government on the back of the liar loan economy - the poor forked creature who is worried about bread and shelter is not happy. I do get antsy when bad things impact the "$6.5 trillion mortgage securities market" - I'm funny that way.