I'm worried that the economic crisis is going to do more to pit people against each other than to encourage us all to work together. The former will make things worse quicker, and the latter is our only hope...

You're right, Myriad. That's a real issue, and can reveal the worst in us. Makes me feel sad. But, dang, don't ya love Saturn and her take on all this?

I heard someone talking about their concerns about class warfare today, Myriad, and I thought -- no, that doesn't explain it, because many of the people who are so outraged aren't of the wealthy class -- but the divisions are still certainly there. I worry, too. I think government taking the lead should be a good sign that everyone's starting to work together, but... the backlash makes it also seem impossible.

Aw, thanks, Wakingup.

there is a feeling---i can only think to call it mean-spiritedness.

and saturn, i agree, many of these comments are coming from the non-wealthy, working class----but that only makes the i've got my, screw you attitude more reprehensible.

M.a.h, yeah. I've settled on calling it "the politics of resentment," because I can't seem to find a clearer phrase. But I've got mine, screw you is also a good way to put it.

Excellent post. Some people were greedy, especially on Wall Street, but most homeowners just got sucked into something that was bigger than them. I still don't see how the U.S. government allowed the banks to get away with this -- I've never heard of unregulated banking before.

saturn - for the most part, I agree with you and I think the blowhards on TV should just ease up.

BUT, OTOH, I can see where there is a bit of resentment from "the rest of us" who played by the rules, bought houses we could afford, pay our insurance bills and mortgages on time, etc. Like you, I will always side with the people who were taken advantage of and who have lost jobs and are struggling.

Where it becomes a bit more gray are the folks who bought $750,000 brand new homes (pick a number based on your city) in the exurbs with no money down and an interest only mortgage, who are driving big-ass SUVs or BMWs, it does beg the question - WHAT THE HELL WERE THEY THINKING? (and yes, I know some of these people and they are nice enough folks, but still WHAT THE HELL WERE THEY THINKING?) and my husband's retirement investments just went POOF! (so what the hell were we thinking? I guess)

the whole thing is a big ole' frackin' mess and I don't know what to think

so...

I am PISSED up and down the line that it has come to this. I guess I am more pissed off at the banks/investment houses who over-leveraged to high heaven, so that goes to your point. I do think since we (the US govt) waded into the bailout, we should try to shore up the mortgages, but I do have just a little bit of pause about the whole "moral hazard" of the whole thing.

Ah, Saturn is the best. I don't get those talking heads at all. That guy was yelling on the floor of the Chicago exchange...a branch of Wall Street. Was he complaining when TARP happened? Since this just another part of TARP what is exactly his issue?

Americans have to take care of their own. PEOPLE have to take care of their own. The whole that's not my problem arguement kind of is the opposite of the path we should be taking.

And seriously...who cares what a CEO thinks?

http://www.nytimes.com/2009/02/20/opinion/20brooks.html?th&emc=th

Read This!!!!!

Thanks, Saturn

The tough thing here is that we are, indeed, talking about people losing homes. Even if underwater, however, a loan can remain performing if you are making the payments.

So let's not think of this as throwing out innocent bystanders. It is the result of some shift, be it their income level, or the fact they took an ARM that is coming due, that is causing the angst.

Perhaps kicking out ARM adjustments can make some sense, but all that happens to be is a hidden tax on the mortgage lender by forestalling their ability to enforce the CONTRACTUAL arrangement.

Pushing home ownership and pushing ARMs happen to be at the root here. But to simply point at the evil and greedy businesses and banks on this completely absolves people for having some responsibility for their own actions. (Yes, you have offered the example of the family who trusted their legal advice. We can all go out and find the isolated example that will bolster our contention, but that is a time wasting exercise.)

My beef with these things is really pretty simple. It's not stimulus. It's social spending that should stand and be debated on its own merits rather than bundled into a so-called stimulus bill.

Where's the shovel ready activity associated with forcing banks to eat mortgage terms to keep people in homes?

That's my beef. It should have been a completely separate bill. One focused on jobs creation, one focused on social welfare relief.

Thank you for putting this so well. In my corner of the world, the resentment is ratcheted up pretty high - as if President Obama invented this mess. And I want to call everyone of them on their triades against the new president for not being team players. Then I find myself caught in the conundrum of how utterly pissed I have been for the last eight years and would NOT support any of Bush's policies and be his team player. It goes round and round in my head. Keep on pointing the way out for me! Thanks.

Saturn - I am way you girl.

Yesterday MSNBC was playing this rant over & over and it made me sick. Then Mike Branicle, hosting Hardball got into the act... even had Rick on. I immediately fired off emails to Mike and gave him a huge piece of my mind.

First off - Rick 'someshit' @ CNBC was preaching to the choir, when he ask those floor traders what they though of this Housing Package. What the "fing - k" do they know what is happening out in the "hurtland" - they have a damn job, they have health care benefits - hell they probably got Christmas bonuses from the Banking $750 Billion bailout ---------- Where was their rant or Rick's rant then, I ask?

If Rick 'someshit' @ CNBC wants to know what a Americans think of this Housing Package - then damn it, he should leave the comfort zone of the trading floor and go to some unemployment agency and ask that question there.

But, no - he thinks they are losers.............

The loser here is the workers of America who have lost their jobs in an economy that is control by a few Wall Street traders who bet on what the price of oil is going to be - what the price of corn & porkbellies are going to be ----------- it makes me sick to see this type of rant, by an uncaring CNBC annalist get the constant airtime it did on television yesterday.

I don't wish Rick "someshit" (I don't remember is last name) the 'hurt aches' of the 3.5 million plus unemployed workers, but I do wish he would get is answered from other places besides Wall Street.

Rated

THIS.

"First, once you pay your taxes, it's not your money."

Maybe it's just that these guys lack the vocabulary to understand.

Let's just declare that as of this minute, there will be no more taxes in this country. There are only "Shares in America," and once you purchase them, the CEO invests them as he sees fit.

Waking, Saturn - I think what happens is that people who have a little bit are terrified of being dragged down by having to share with those who are drowning... The old base chakra *survival* thing kicks in at a primitive level.

But, Hipployta, while I would like to not care what CEOs think, they do have their hands on the levers. (And when the survival thing kicks in, even those who have A Lot, not just the hanging-on-by-their-fingernails people, start to get mad.)

Hey, Hip, get home safe, hear?

That whole thing by Santelli made me throw up a little in my mouth.
The fact that it was run and re-run over and over just made it worse.
They seem to think that the current administration created the problem rather than inheriting it.

(rated) I'm getting sick of network and cable news coverage, period.

lpsrocks, they were probably thinking "Isn't this how everyone else does it?"

As a society, we don't talk about money. We would rather talk about sex than money. I know intimate details about my friends sex lives, how often they do it, their favorite way to do it, their frustration that when they don't do it.....but I have no idea how much money they make. I don't know how much debt they have, whether they own or lease their cars, if they made a down payment on their house. As a society, money is taboo. Don't ask how much people make, don't ask how much it costs. It's secret....dark....and we all know, bad things can happen in the dark.

It's interesting, because when my husband and I bought our first house two years ago, I did a ton of research. My parents had always been very open with me about money, I knew in elementary school how much our house cost, how much money my parents made and when we bought another house, how much money we put down, what the payments were, etc. My mom marched me down the bank with my first paycheck and made me open an account. They were very vigilant about monitoring my spending and income and constantly preached about credit cards, car payments and getting in over your head. So, trying to be prepared when it came time to get my own mortgage, I researched all of the requirements before meeting with our lender. I hounded my husband for his pay stubs (I need the last two weeks! Last month won't do!) I collected our monthly bills, I got our 401K statements, went to the bank to get our checking account and savings statements...and collected it all in a nicely organized folder (cause I'm just like that) and headed off to meet with the lender.

He didn't look at a single paper.

He asked us our income, the MINIMUM payments on our debt (which we pay way more than minimum) and approved us for a 350,000 loan.

The home that we were wanting to make an offer on was listed for 175,000 (which was within our 175-200k price range we had decided we could afford). Then he tried to talk us into an ARM. Forcefully. "I can get you a low payment, the home value will go up, you can sell this house in 5 years and basically live here for free!" he said.

"Ummmm, NO", I said. Multiple times.

So, wrapping this up because I'm probably droning on, I can understand how people get into these situations. What they are thinking is "Hey, this guy works for a bank.....this is his job. I trust him because he knows more than me. Why would they give me money if they didn't think I was qualified....this must be how other people do it...it must be the way it's done".

We have to start talking about money! Knowledge is power! We need to shine some light!!!

I wish I could rate this 100 times. Thank you so much for this line: I didn't want my money going to kill Iraqis for the last six years." I don't know why people don't think twice about spending $650 billion a year for death and destruction in these wars we've got going on, but the idea of spending $800 billion ON OUR OWN COUNTRY is such an abomination. Terrific piece as usual, Saturn.

The people in power are not going to let their power and influence go without a fight. When anyone tries to help working class people, those who have benefited by status quo policies will scream and yell injustice. This is what 'Change' is like in the real world. To all of those who are lamenting current policies changes, I say," Sit down and shut up." You and your policies that favor the rich over the working class had a long ride. One that failed miserably. Great post, Saturn.

"Yes, no matter how right the wall may be and how wrong the egg, I will stand with the egg. Someone else will have to decide what is right and what is wrong; perhaps time or history will decide."

Again, rated for honesty.

i think what happens is people don't want to throw good money after bad. you hear things, i'm not sure if they're true about people not paying their mortgages on purpose so they too can get in on the bail out. some even say that this may just prolong the inevitable of these folks losing their homes anyway. i think the guidelines for someone to qualify will be so strict that the really desparate won't qualify anyway. also i assume those that apply will have to prove they have income to pay the renegotiated rates. if you have no job that's hard to do. making the mortgage payment 38% of someone's income doesn't help if there is no income. neither does extending the mortgage to 40 years. the agrument is always made that nobody held a gun to head when you signed the papers. and i think that's true. if i bought a car and didn't make the payments isn't the repo man going to be coming soon? how is this different? if you can't afford it you can't afford it. the treasury secretary can even sell this this garbage...the president has to be the front man. it's a huge waste of money, but these days what a few hundred billion.

"The Politics of Resentment" is definitely a linguistic improvement (and more) over "The Politics of Personal Destruction."

The first might invite a bit of introspection, but the second only raises the blood pressure.

God Bless Rick...Hold on to your seats because this is going to get real nasty....you can't sit on your ass and expect those who work to support your bad decisions.

Emma, precisely -- the lift of regulations that allowed for banks to merge into investments is an ugly thing.

LPS, I do understand the example you're talking about, the huge home and overspending in every area. From what I understand, though, the refinancing parts of this, and the additional funding to FMae & FMac only help those with conforming loans, so only mortgages with values under $417,000. And I would guess banks won't take the offered government incentives to refinance on those being foreclosed on enormous homes who also have a ton of outstanding debt, such as what would be accumulated with massive overconsumption like you're talking about. So in a way, I'm hopeful that some of these problems -- which certainly exist, and are certainly worth some anger -- are addressed here in a reasonable way. But it's the government, so... execution doesn't always follow intention.

Hipployta, I sincerely hope we're moving back into a national mindset of better taking care of one another. It would benefit us all at every turn!

Wait, Geoff, it is a separate thing from the stimulus. None of the money in the stimulus package, unless I'm reading it completely wrong, is going to the housing plan. And I don't think the banks *are* being punished for what were at best overzealous loan promotions; they are instead receiving cash grants (something like $1,000 per loan) from the government for every mortgage they refinance. Incentives for good behavior, not punishment for bad -- which is a topic that certainly deserves some debate. And this plan actually offers very little assistance to people who are underwater in their mortgages for exactly the reason you mention -- you can be underwater and still successfully continue your payments. It only becomes a problem, practically, if you have to move during that time, because you won't be able to sell the house for what you owe.

PoetTess, I, too, have to stop myself some days from just going "Ha HA! See how it feels?" Because it has been a long eight years.

GM, I saw that Hardball, too! It was hard to sit through the smarm and resentment I saw there. I particularly liked when Santelli held up his Blackberry and said it was full of supportive e-mails. Who had his e-mail address in the first place, his enemies? Doubt it.

Verbal -- "Shares in America" -- I love it! Which reminds me I need to do my Investment Forms (formerly known as Taxes) this weekend.

The irony of him ranting about bailouts from the trading floor seems to have escaped only Santelli.

There are economist who agree that the housing market hurts everyone. I'm not certain the mortage bailout propose by Obama is going to "fix" it all, no one is and no one is sure that it won't but John and Jane Doe learning a lesson about responsible spending isn't worth one single percent of my home price, or my job, or higher interest rates or inflation. I'm trying not to jump to conclusions based on emotion and some misplaced sense of justice.
The dollar knows no justice.

Wow, Lisa S.W., thanks for the link. I hadn't seen Brooks's column, but I agree whole-heartedly with his last paragraph:

And they seem to understand the big thing. The nation’s economy is not just the sum of its individuals. It is an interwoven context that we all share. To stabilize that communal landscape, sometimes you have to shower money upon those who have been foolish or self-indulgent. The greedy idiots may be greedy idiots, but they are our countrymen. And at some level, we’re all in this together. If their lives don’t stabilize, then our lives don’t stabilize.

Greg, the overplay was the worst, I agree. Cable news is very dicey for me before 6 o'clock (Rachel Maddow time!).

Elizabeth, what a great (if troubling, on the loan front) story. Thanks for sharing it. And I so agree that money should be more openly talked about in America, but I fear we may never get past attaching monetary worth to status in society enough for that to happen.

Thanks, Lisa. Glad the parallel is on your mind, too.

Yeah, let's hope we're headed for more positive changes, Idahospud. Thanks for the comment.

And thank you, Deborah. Lovely quote.

MC Gott, I think the difference between car repossession and house repossession is a significant factor, here -- almost no one would become homeless after that kind of money mistake. I'm sure there are people who were hoping to game the system when they heard a homeowner "bail out" was coming, but if they flat-out stopped making payments in anticipation of it, I think they'll be sorely disappointed, because that money will still come due. I do share some concerns about the plan not being helpful enough, but mostly because it's perhaps not bold enough. If people who are underwater start to default in large numbers, that will be a huge catastrophe -- and one that right now can only be avoided by increasing confidence, I guess.

And, ktm, currently I think we're all running higher than we should from this mess.

T.S. -- really?

"First, once you pay your taxes, it's not your money . . . "

Does that mean I'm not supposed to care what happens to it?

I wonder how many of these people the programs will actually help. For the people with the "ninja" loans -- no income, no job, no assets -- you could probably cut the mortgage payment in half and it still wouldn't save them.

Other people with these "interest only" mortgages don't even have any equity in the house, and still wouldn't have had even if housing prices hadn't dropped.

As I understand it, a large percentage of subprime loans were actually refinances, in which people used their homes as checking accounts in order to buy toys or remodel. (When I looked around the neighborhood and saw all these snowmobiles and boats and beautifully remodeled houses I always wondered how people were able to do that. Now I know.)

And then there were the large number of people who just bought more house than they could afford and didn't pay attention to the terms of the loan. The caller "Carrie" seems to be in that category. What are we supposed to do to "save" her? How many tens of thousands of dollars of public funds should be used to subsidize, directly or indirectly, her unfortunate decisions?

As I look through these categories I'm trying to figure out who I'm supposed to feel sorry for. It's different when we use public funds as a safety net to help individuals who lose their jobs or get sick. It's a different kind of thing to use public funds as a safety net to protect people from the consequences of their own bad decisions.

Well, we're going to do that anyway, so my tax dollars will go to subsidize Carrie and millions like her around the country, and I guess this is seen on Open Salon as "working together."

m.a.h. writes: " . . . many of these comments are coming from the non-wealthy, working class----but that only makes the i've got my, screw you attitude more reprehensible."

Reprehensible? In what way? Maybe what's reprehensible is people buying things they can't afford. Maybe it's reprehensible not to even look at the terms of your own mortgage. Maybe it's reprehensible to use your home equity to buy consumer goods. I'm not screwing these people. They screwed themselves. While some no doubt were taken in by crooks a great many of them simply made bad decisions, and now when my tax dollars are used to subsidized those bad decisions suddenly I'm the reprehensible one?

Yes, I have "mine." I have mine because I bought a house I could afford, even if the economy went south. I actually -- gasp -- made a down payment on it. I actually looked at the terms of the mortgage. I actually didn't use the equity to go on vacation -- haven't even been on a vacation in 15 years. I have a house that's ragged around the edges because I didn't pull money out of it to remodel. My furniture is mostly all "Goodwill" quality because I didn't use the house like a credit card. The result? I don't need to be "rescued." I don't need your tax money to subsidize something I couldn't afford in the first place.

Myriad writes: "I think what happens is that people who have a little bit are terrified of being dragged down by having to share with those who are drowning... "

They aren't drowning. They are taking a financial hit for having bought property they couldn't afford. Life is hard, and when you make bad decisions it's harder.

I suppose it makes sense to try to help people who can be helped, as long as it doesn't cost too much. I just don't think that there are going to be all that many people who can be helped for a reasonable amout of money. I suspect what will happen is that we'll end up throwing tens or hundreds of billions of dollars at people with homes worth $300K and mortgages worth $400K, and not a dime of equity behind any of it, all in the name of "working together."

In the U.S. any time we decide to throw money down a rat hole we always need a good euphemism for it. In Iraq it was "freedom and democracy" and with the mortgage rat hole it will be "working together." Those of us reprehensible people who resent both will simply call both of them "rat hole."

Again and again, the right-wing response to economic hard times: Blame the victim, rinse and repeat. Ad nauseum.

Mishima, I understand your frustration over the refinancing, but I can't get on board with the idea that it's reprehensible for people to have taken out ARM's without knowing what would be the result. The banking and lending institutions had such incentives to loan to people who couldn't pay that they often convinced them they could. Not everyone is as capable as you seem to be of separating what's true from what they're being told by a respectable-seeming banker or real estate agent.
I do think one of the discussions we need to have during this crisis, that's still not as front-burner as it should be, is the discussion of what's "appropriate consumption." I agree we've hit a frightening high point in irresponsible overconsumption as a country, and sure, those who didn't buy into the national wave of always wanting/buying more have every right to feel frustrated. But I don't think that grants a right to feeling superior or, more to the point, of making others feel inferior because they did exactly what they thought they were supposed to do in pursuit of "the American dream." I don't think we can even *have* an honest discussion of how much and what people should be consuming unless we can get past the resentment on the one side and the fear and then reactionary resentment on the other.

Blake, yes, there is a pattern, you're right.

I just can't understand how (and it's been said 258 million times) the people who caused this mess can continue to attack those who are trying to clean it up...without offering one doggone coherent alternative!

Where would we be, right now, if the same loudmouths who are stinking up the airwaves had retained their position of power?

As for the young ones who are angry about the bill: maybe this will help...you didn't pay a dime for your K through 8 education. You CAN go to college and get a higher education at taxpayer's expense, even if you have to start at a local community college and work part time. You haven't been drafted to serve in Iraq or Afghanistan. That means you won't have to put your education, life, health, and pay in limbo for years. If you get pregnant, you and your child will get housing, food, and care whether you work or not. You will get rescue and medical care for your risky skateboard and ski injuries whether you have a job or not. You will have housing and food whether you work or not. You will have excellent medivac and trauma care when you drive drunk or act like a fool. You didn't get the horrific and deadly versions of MMR and you're not handicapped from polio. You ride on freeways, drive on streets and shop in malls that someone else built, using someone else's dollars. You are entitled to a legal defense if you are arrested, even if you cannot pay. You can work out payment plans or file bankruptcy if you cannot pay your debts, as opposed to going to debtor's prison. No one can deny you the right to vote or speak your mind. There's a host of other party loot that you've been given, and it cost other people a lot of life, money and work.

We built this up. The Repugnicans screwed this up. Now we all have to pay up, one way or another. We have to put some money and energy into our crumbling infrastructure. We have to prevent further collapse of our housing and other economic Ponzi schemes.

No solution to this insane mess is the optimal (or even desirable) solution, but I just would like to hear some viable and coherent alternatives to what is being done before I hear any more complaining or mindless Right Wing attacks on the solutions that are being implemented.

Saturn: This is a little off subject but it goes to the heart of why way less than wealthy folks are upset by the bailout.
Last Oct. my very little house was damaged by hurricane ike. the Govt. offered SBA loans to help with repairs. I applied. When I went to sign papers they told me my raste would be 5.75%. I asked why are people I know getting rates of 2.5% ( a friend of mine with a way too large house and every big boy toy currently available to mankind and the monthly credit card debt to match, was offered 2.5%)
I was told that because I didn't have any credit card debt and have paid off my very small mortgage (because that's what I could afford) I was, in their eyes able to afford a higher rate.
I don't see the fairness there. When you start punishing those who have been responsibe (higher interest rates and use of tax dollars) in favor of those who haven't, resentment is an inevitable by-product.
I understand that not all of those needing a mortgage bailout were irresponsible but many were.
I'm really surprised at those who are surprised at the resentent.

I heard this guy on the radio this morning in Chicago - he sounded so reasonable - but I just couldn't get my head around his premise. I keep thinking I've seen/heard this somewhere before - ah yes, it was me - driving past all the gorgeous mansions under construction on Lake Shore Drive in New Buffalo and Union Pier and wondering over and over again - how could there be so many bank presidents??? For sale signs are proliferating.

"Insane mess" captures this well, you're right, Zuma. And of course, I'm with you on the value of taxes and civic participation -- and social welfare -- over all. Great point.

John, I can't begin to explain, because I can't begin to understand, the calculations of mortgage rates by the government or lenders. I do think that the Fannie/Freddie money in this plan is meant to go to folks (like you) who would like to refinance at a lower rate but haven't been able to because all lenders are tightening their belts. So maybe there's some hope, but I doubt lending will ever be completely rational. Sigh.

Dolly, it does seem like they're everywhere, doesn't it?

Saturn - thanks for your clarification on my above comment. That makes me feel better.

I've reread all the comments and the ones since my semi-rant above. While on one level (mostly emotional) I completely agree with mishima's and others' POV that we really are subsidizing poor decisions, I have come to the conclusion that it is a necessary step anyway. The pieces are all too interconnected.

If the housing part of the bailout can stem some of the bleeding, we need to support it. The alternative (the let them fail approach) impacts us all. In simple terms, studies have shown that even one foreclosure in a neighborhood brings down the surrounding housing values. One study cited here
http://www.smartmoney.com/spending/deals/3-factors-that-reduce-a-homes-value-23085/?print=1
indicates that EACH foreclosure brings the values down almost 1%.

I've seen statistics that a cluster of foreclosures can depress values anywhere from 8% to 25%, on top of already declining values.

Thus, I think the "working together" mentality is more focussed on meeting the greater good than necessarily providing a hand-out.

I totally agree that we need better information, education, and regulation. I'm reminded that our mortgage broker tried to talk us into an ARM and I was jumping up and down screaming at my husband later - DOES NOBODY REMEMBER THE CARTER YEARS? - of high interest, inflation, etc. But, I do admit, it was tempting to go for the lower monthly payment, thinking "oh, we'll just refinance again."

(Un)fortunately, I had the opposite experience growing up and learned from the school of "mistakes not to make" from watching my parents who didn't instill sound money advice to us. I guess that made me conservative (or fearful) in big spending decisions.

So, I guess I'm still confused, but glad that folks like you, Saturn, are providing a context and discussion around these bigger issues.

Then again, when we find ourselves agreeing with David Brooks, you know the world has become very strange indeed.

meant to say - opposite from Elizabeth Taylor (in more ways than one :-)

This is so appropriate. I swear the repugs and neocons would prefer to have this country go down the toilet before they'd support the President of the United States. That's what I call real patriotism. cy

lpsrocks, you are at least lucky that you were able to learn from your parents mistakes, which says to me that even though they didn't try to instill you with money values, they were at least open enough to share with you their struggles. There are many many families who don't....the mistakes are hidden and covered. That's why it's so easy to see how people get into financial messes, because people don't talk about money.

Rick Santelli can't take credit for a voting referendum. That's my idea.

http://open.salon.com/blog/dean_petkanas/2009/02/15/restoration_hardware

As a 'renter', I completely resent my funds being used to bail out homeowners. Your position that 'once you pay your taxes it's not your money' is so wrong on so many levels, it renders the word 'country' useless.

This Rick Idiot's rant is typical of what we are hearing from the Right about the financial crisis: it's due to government pushing low-income home ownership... it's due to dumb people not knowing what their mortgage contract said... it's due to old ladies dying and leaving their credit balances unpaid... blah... blah ... blah...

You never hear these rants discuss what share of this crisis the big financial institutions bear. You know, the ones that did all the slicing/dicing of the mortgage loans and sold, resold, sold again as financial instruments. The ones that used "Credit Default Swaps" (ie, NOT "insurance" because that is regulated) to "secure" these transactions... This all became a big house of cards, a big gamble, that has now come crashing down.

I don't pretend to understand all of the complexity, however I do submit that while there may have been individuals behaving foolishly or irresponsibly when getting these mortgages, please let's not diminish the role that big finance/banking has played in all of this mess. If all those banks were actually made to keep those mortgages for a period of time as they used to, then maybe they wouldn't have been so damn reckless in their loan application requirements.

And if all those Republicans wouldn't have been pushing so damn hard for deregulation, we might not be in as bad a mess as we are today.

I'm with you, Saturn. I'd rather forgive the housing loan mistakes of some who should have known better, and help those who were victims of predatory loans, than to give even more tax breaks and cuts to the jerks who messed up this economy to begin with. When I first saw this temper tantrum, I was in the faculty lounge. I let loose with "Ah, shut up, you republican douchebag!" Certain "elements" are churning up the waters to help (they think) the neo-cons get Congress back in 2010. I think it will backfire.

FYI... there have been renters who have also felt the impact, when they've faced eviction because they're in a house that's under foreclosure, even though they've been paying their rent regularly.

@Jay: "As a 'renter', I completely resent my funds being used to bail out homeowners."

Why?

Why Neighbor A is resentful of Neighbor B.

Neighbor A and Neighbor B both buy houses valued at 300,000 and begin payments in January 2007.

Neighbor A puts down 25% and chooses a 5.75 fixed 30 yr mortgage.

Neighbor B chooses to finance 110%, and chooses a 2% fixed for 2 years then variable mortgage. The extra 10% is pocketed, or spent on furniture or some other non-house thing, so it's considered cash to Neighbor B.

2 years pass. Housing prices plummet, the house is now worth 225K.

Let's check the relative position of our Neighbors.

Neighbor A (all figures approximate).
Equity: $6,000
Cash out of pocket: $108,000

Neighbor B.
Equity: -$88,000
Cash of of pocket: $500 (not a typo)

Neighbor B's rate has jacked to 6%, and they can't make the payments (because that 30K has now run out as well). So they will get some "mortgage relief." Maybe they'll even get a cramdown so they don't have to worry about that negative equity, either. Neighbor A not only gets to help pay for Neighbor B via taxes, they also have to live with being over 100K more out of pocket already.

Even with incredibly modest relief to Neighbor B (refi to a low rate so payment stays roughly the same, no cramdown), it takes many, many years to make up that out of pocket difference that was supposed to be the result of the cost of risk. If all cost of risk is removed via bailouts or "help", Neighbor A's choice just makes him a sucker.

Neighbor B chose risk over cash and they should have to live with the results of that risk-loving position.

And, for what it's worth, I imagine fiscally prudent banks and credit unions are resentful of the big guns in much the same way, and have every right to be.

I saw this rant this morning before heading to work. I have never heard of this guy before but what really got me was the $#!& eating grin on his face as he delivered his rant.

He was acting like a self-indulgent two year old brat and he knew it, and he knew the tape of his tantrum would be played endlessly on an otherwise slow news day.

President Obama didn't wreck this economy. I have lost retirement savings and our principal investments in our nascent kid's college savings accounts have been sliced in half. We keep buying, because it is good to buy low. I don't make the trading decisions, the fund managers do. So, no, Mr. Santerelli, that was not "America Talking." It was fund managers, wall street traders and investment bankers talking. Get a grip and grow up.

Politics of Resentment. Poetic.

I saw this little santelli weasel this morning (my first experience - I missed yesterday) and he kept cutting off whomever he was asked to speak "with." To me, the issue is so G-D'ed many people get so excited about their face on TV they'll do and say anything to keep it there (a la Suzi Orzman) regardless of their lack of connection with reality.

But resentment is really something bred of fear, and as the last 8 years have taught us so well, at least half of this country still votes for "leaders" whose coin of the realm is just that; fear. Yes, even though Obama won by 9mm votes, McCain did pull 59mm. So in the coming months and years, we are going to see a lot more of this because people are just plain scared and there are others who will push the fear of loss and the resulting resentment as hard as they can.

Elsewhere in the comment line here someone speaks about financial education. Lord knows thats way overdue. As a person whose career has been built on closing and insuring real estate transactions, the stories I could tell here about people's ignorance and the predatory behaviors of those in positions of trust (realtors and lenders) would frighten even the most jaded amongst us all.

"Here is the problem with making yourself the victim: when you make this a contest of emotion, I will always side with the weeping mother over the screeching CEO. I will always side with the family who, speaking no English, was sold a predatory loan on a home they were told they could afford over the talking head in the thousand-dollar suit. I will always side with those facing real hardship, and never with those creating it for the sake of their own outrage, or for the priviledge of hearing their own voice. "

bravo!!!!

The Repubs haven't a leg to stand on - the implementation of their looney ideaology is the obvious cause of this worldwide disaster. So why should we have to put up with listening to and watching the media spokespeople pander to the "base" as if nothing ever happened. I'm sick of it and I'm going to write these media outlets and complain. If 1 second broadcast of a bare breast can result in a network being find a half a million because the "base" raised hell about it then maybe if the networks got enough feedback form the rational people in this country things could change.

Thanks for your post--my thoughts exactly. I am not resentful o f my neighbor getting this deal--all the better for getting us out of this mess.

What no one has explained to me is why it's more important for me to contribute to the bailout of some guy who bought a no-down, interest-only house in the hope of being able to "flip" it a few years later for a big profit, than it is for me to keep that portion of my tax money so that I can spend it on something that in my opinion is more important.

In the Calculus of the Greater Economic Good, why it is that helping a guy save a house he never should have bought in the first place trumps me spending that money on something else? I mean, we're not talking about keeping the guy from starving to death, or paying for his chemotherapy.

In the Calculus of the Greater Economic Good, why it is that helping a guy save a house he never should have bought in the first place trumps me spending that money on something else?

Mishima--please see lpsrocks's excellent answer to that question above.

Like it or not, our economy lives and dies AS ONE. If all of the defaulting borrowers fold, the economy folds with them. And it takes YOUR job, and YOUR home, too, when it goes. It takes your kids' futures.

If you're lucky enough to be extraordinarily wealthy, you can probably ride out the collapse in an armed compound, living in fear that your loved ones will be abducted and ransomed. (Sound hysterical? Google "mexico + kidnapping.")

I'm sorry that you feel your prudence is personally diminished by the fact that you share a nation with the less-prudent. Your feeling this way, however, doesn't make it so. If you want the economy to recover, you MUST accept that some people will be spared ultimate punishment for their bad choices.

If punishment is more important to you than your society's survival, well, you're entitled to that. Enjoy your compound.

Saturn, there are multiple sad ironies in your post.

1. You don't like the politics of resentment? This is surprising because the Democratic Party's whole basis to exist is to bundle together interest groups filled with resentment and try to guilt money out of the government. I've endured a lifetime of liberal resentment campaigns and have paid dearly in taxes for it. Which brings us to...

2. “Once you pay your taxes, it's not your money.” It is precisely because I pay taxes that I have a right, an obligation, and 100% moral standing to criticize how that money is spent. I opposed the original TARP, the stimulus, and this mortgage plan. And, if you lob back the criticism that if I and my Representative think these plans are wrong, then we shouldn’t take the money….my answer is that I will happily decline the money if you let me keep what I paid in taxes.

3. “Since your taxes most likely aren't going up this year, I'm confused at how this is causing you such immediate pain…” This is exactly the attitude of the people who got in trouble with their mortgages. I’ll just spend money now that I don’t have in hopes that I’ll be able to pay in the future. Well, for the mortgage borrowers, the future is now and they screwed up. For our country’s finances, maybe we should pause for a minute and think, “If I borrow this much money, what might happen?” If you think this economic situation is bad, just wait until we have a national bankruptcy. That collapse would be much worse than some middle class person getting foreclosed on and having to live within their actual means.

Anyway, that’s my feedback on just your first paragraph. I can easily see why you want to bail out people who were irresponsible…you are that person and want Obama to run the government that way. A couple of years of spending glory and then national bankruptcy....

Man, you all discuss well in my absence. I'm going to start just posting stick figure drawings or something just to have an excuse to see what you'll say!

I do want to hit something that's brought up a few times -- the line from the first paragraph about "once you pay taxes, it's not your money." I stand behind that, but I don't want to minimize at all the responsibility of citizens to watch and care about the way money is spent. But I think people like Santelli who scream about "my money!" make it sound too much like they're physically being robbed at any given moment, or like they're being asked to give more than usual. That's not true, at least not right now.

Thanks, all, for the comments, and links, and discussion.

I know I'm late to the postings, but I also have seen Santelli's rant far too much and I haven't even been watching TV much for the past 2 days.

Santelli is indulging in the time-honored trick of deflection so no one will examine him and his "friends" too closely. Even his label of "losers" for foundering homeowners is an attempt to deflect from the fact that Wall Streeters and bankers are just corpses in suits, presiding over institutions that are going to collapse totally within months, if not weeks.

Please notice that he was ranting about mortgage "losers" while surrounded by stock traders. Notice how he couldn't find one single, solitary way he could link the fall of Wall Street to the "losers" on the street. Bank stocks didn't make up the totality of Wall Street's failures - Wall Street has been in trouble for years, and it's kinda hard to blame that on the average guy. Gee, is it possible that Wall Street was guilty of the same thing they accuse everyone else of? Depending on high profits, never having a plan B, unable to perceive that things would not fly so high forever?

I'm old enough to realize that there is always going to be a small segment of the population that can be perceived as the "real" problem, because unfortunately they do exist. Ask almost anyone to describe the average welfare recipient and the image that will first pop into their head (even though they might know better) is the women (usually "ethnic" or African-American) single, with 6 kids and driving an expensive car. After 40 years, nothing will dislodge this image - not the fact that most welfare recipients are white, not the fact that most welfare recipients collect for a short period of time and then move on with their lives - nothing seems to dislodge this image.

So now the cliche of the irresponsible person who bought too much house, too much car and too much everything, even though they should have know better, is being thrown out as the majority of people in foreclosure. I'm sure there are some out there and I'm sure everyone can say they know one. But are they the majority?

The drug wars in this country are insane, but even in that battle the pusher is held in more contempt than the user. BOTH have to shoulder their responsibility.

I have no doubt that the banks and mortgage industry pushed and pushed and cajoled and then pushed some more for more refinancing, more sales, more money. Now they are trying to blame their clientele because they are totally tapped out.

How about this, Santelli? Since I know for a fact that there are bankers and mortgage houses and financial advisers that were criminally fraudulent at worst or liars at best, that is how I going to perceive ALL bankers and mortgage houses and financial advisers from now on. Not fair? Tough.

Well, what writes: "If you're lucky enough to be extraordinarily wealthy, you can probably ride out the collapse in an armed compound . . . "

Wouldn't that be nice.

Here's an example of what I'm talking about:

I need eye surgery, but I have crappy insurance and can't afford it. I'm almost blind in my left eye. I can't read anything and I can't recognize people 10 feet away with that eye. I have a job in which I sit in front of a computer screen all day but the left eye is useless. By the end of the day I see double in my good eye. Because of the left eye problem I avoid driving at night.

Probably more than you wanted to know, but there it is.

Rather than contributing money to pay for other people's bad mortgage decisions, I'd rather keep that money and save it up for eye surgery. For me having two functional eyes is more important than bailing out someone who bought too much house for his income. But that's just my resentment talking.

Well, what: "If punishment is more important to you than your society's survival, well, you're entitled to that. Enjoy your compound."

I'd like to enjoy having two good eyes, but apparently that is not the priority of the day. As Saturn said a "Carrie" called in on a radio show and cried about her mortgage, so she needs to be taken care of first, and my tax dollars are required for that. Of course, I can't actually see the tax forms with one eye, but as long as I'm not totally blind I guess that's Ok. Because if I become totally blind I'll get an extra deduction, and that will leave less tax money for the mortgage bailout. And then what will happen to poor Carrie?

Actually, Santelli was pretty bitter about the TARP as well. You should have seen him and Steve Liesman go at it.

But I do understand where that resentment comes from. I'm one of those dumb fools who pays his mortgage on time like he's supposed to. And I'm one of those suckers who didn't get a no money down liar loan where my monthly payment didn't even cover the interest due on my loan, thus causing my loan balance to go UP every month.

And I'm supposed to feel sorry for dumb sons of bitches who wanted the McMansion they couldn't afford? I'm supposed to feel sorry for people who either were so ignorant that they didn't realize that a loan where the amount owed went UP each month was a bad thing or even worse, realized it was a bad thing and took it anyway because they wanted a McMansion? I'm supposed to feel sorry for those jokers who took the "equity" they had in their houses and borrowed against it so they could buy a boat and another SUV?

Baloney.

I do not feel sorry for them. I do not like my tax dollars going to bail them out for their stupidity and greed.

I understand that it is necessary in order to keep our economy from plunging into another depression versus a very bad recession, but that doesn't mean I like it.

I'm irritated when I see the government bail out another group of irresponsible individuals -- or as they call them in Dilbert, in-duh-viduals. I don't care if they're Wall Street IB types, Fannie and Freddie, or in-duh-viduals who bought more house than they could afford.

Yes, we do need to bail them out. But it still pisses me off.

A-fucking-men. Preach on.

I'm a fairly decent communicator, but you've put into words what I've been trying to say to some of my more conservative friends.

Way to go, Saturn! Thanks.

Rick Santelli, a financial "service" executive, hedge fund hero etc. etc. He is exactly the problem with our society. He does not make anything or do anything that has tangible value for society. He has gotten rich feeding off of others. Now he is a victum of losers who work for a living and have lost their jobs and savings to financial experts that let everything fall apart. Santelli should look in the mirror and ask what kind of a loser does not even know how corrupt and broken is his own "profession" .

hey.
anything seen or heard on cnbc now has one goal-- covering their own sorry asses for standing by while watching, knowing and not reporting what was/is going on that leads to right now.
to see it repeated on nbc tells you how much they ( ge and all the rest) have hanging out there.
for you who are part of the 30% or so who continue the delusion that average folks really call the shots, write the stories and rule the world please look more closely at news reports showing entire parts of communities in foreclosure. do you see lots of mansions (mc or otherwise) there? for every spec/flipper there are a thousand families trying to keep a roof over their heads. do you get that or have you too gotten sucked into the relentless pursuit of money? tb

It's troubling how the mainstream media are increasingly not just driving stories but creating them. This is also another sickening example of how the line separating news and entertainment is now almost entirely blurred. It's telling how Santelli's propaganda has been replayed ad nauseum by all the networks, but was especially exploited for ratings by affiliates of NBC, CNBC's parent company. And we the sheeple happily oblige.

Ah, marvelous, Saturn! This tends to be one of those topics that makes me spend hours shaking with suppressed fury.

We are all human here. We are all struggling to get by. These people are so blinded by their own privilege they can't see past the ends of their noses.

Very good thinking, Saturn --so many good points. I think the major problem here is that there is no simple fix. The anchors and networks are lazy in their thinking and research, pure and simple. They want a black and white, blue vs red answer to everything in their efforts to keep news reporting at the fever pitch of some big sporting event.

Life is not like that for those that don't make their living taking sides or pitting one group against the other. Part of humanity's lesson in all of this is to start thinking, again. Walking a mile in another man's shoes -- developing some much-needed empathy. There is no one-size fits most answer to this problem. Every homeowner's case is different.

The President has laid out good options within parameters that are likely to help those most in need. There will be people who fall into the cracks that truly need help -- the lenders need be empowered to push beyond parameters to work with homeowners based on merit as well as uncontrollable misfortune due to a broken economy.

I am tired of the selfish screechers on this issue. I know up close and personal as a real estate agent that most people in our economically challeneged county are where they are not for trying to live above their means, but because most of their means have been depleted by job losses.

We cannot forget the toll that the high gas prices took on average Americans. Just because that situation has normalized with aceptable prices at the pumps does not mean that savings accounts were not emptied in the past to keep up with the gouging they received at the hands of the oil companies.

Add to that sky-rocketing property taxes as well as the greed of property insurers -- everything worked to put normal dect-to-income ratios out of line for borrowers. In your scenario above, having to pay 62% of your monthly net to a mortgage makes your position untenable as a homeowner. These are people whose homes are an overwhelming burden to them.

These anchors need to have to sit in a basic economics class as they do not seem to understand basic economic principles. After that, be made to sit in a high school home economics or business class to make try to make a working household budget for a middle class wage.

Even if they are no more empathetic when they are finished, at least they will have hands on experience of the reality that these "losers" are enduring...I am sooo sick of this...I could write and write. Maybe I will? Thanks, Saturn, I don't have to with you at the helm!

Every homeowner will be stuck in his/her current home if the market is stalled and many ships are sinking. We may have to float the Pirate Ship along with the other, troubled vessels in order to save the fleet.

Great post, and some excellent, thoughtful comments.

There's a disingenuous tendency, when discussing "resentment politics," to pretend that the world is divided neatly into haves and have-nots. In that view, it's fair that the rich haves, with their lives of excess, are being forced to share with those they've disenfranchised.

The "problem" is that there's still a middle class, made up of people who are barely making it themselves. They don't want the government to leapfrog others over their heads, at their own expense. It's not that they don't want the "lower classes" to pollute their McMansion neighborhoods; it's that they, themselves, have actively chosen responsibility over McMansions, and have seen their standard of living slip year after year. They see this stimulus package as another burden on the middle class, and they believe — in most cases rightly — that this plan still gives the upper class an unfair advantage over the middle.

Excellent post.

The way I see it is we're like rats in an enclosed space and the water is rising.

No way out? Simple, let's start fighting each other. At least it makes us feel as if we're doing something other than just waiting to drown.

I guess most of us don't need to really worry until we start eating our young.

Keep spreading the word
-Stan

Another fine post, Saturn.

I was at a party last month when a friend of a friend challenged me and another friend about bailout money going to public transportation. In the course of our very civilized debate (no Santelli's invited to this party, thank you), he made it clear that he believes that the government shouldn't provide infrastructure in a meaningful way, because it impedes the private market. While too calm and nice to rant, I suspect that for people with his philosophical faith, this is the most painful of times as it challenges their faith in a way it hasn't been in decades. They'll adapt and calm down if the recovery plan leads to some recovery.

High Lonesome, your point on the usual divisions is well-taken: I don't see this being a "typical" class war for exactly the reasons you're talking about, and those being expressed throughout the comments. There's resentment on all sides, which is why I prefer that term to "class war." It's not class against class here -- it's much more fractured than that.