US Homeowners vs. Current Housing Slump (Continued)

It just doesn’t seem right if we leave this issue without delving with some seriousness into the all too human factors that helped this all along, which are the human proclivity or predisposition for greed, and maybe, fraud. Yes, because SEC and state-initiated investigations are still ongoing as we speak. Which by the way made this not only a grave domestic issue, but eventually reverberated globally in summer, when a world-wide nail-biter of a credit crunch gripped the global economy necessitating gargantuan infusion of capital funds from various sources to bail out the strapped players involved. Even world's largest bank Citigroup as I recall had to sell away a good chunk of itself to a group in Dubai.

And for some basic understanding we have to dive into the shadowy world of “derivatives”, particularly sub-prime derivatives which a group of Wall Street bankers made available to investors in 2005.

Now these particular derivatives consisted of sub-prime mortgages, which became very prevalent during the peak of the housing boom. Mortgages almost indiscriminately granted to risks that normally would not merit credit-worthiness. Thus we had mortgages where the tests for income and capacity and ability to pay were summarily dismissed and set aside. Mortgages where normally necessary documentations and processes were shunted aside, and even where no or only very minimal down payments were required in granting the loans. And remember this was during the frenzied peak of the housing boom when house values soared high and fast.

So these derivatives were packaged by security firms and marketed as collateralized debt obligations, cleverly hidden and mixed with investment-grade securities as to merit appropriate ratings. But in reality were not only more risky, but their real values could not easily be ascertained.

With very lucratively high rates of return, they easily got lapped up not only domestically but across the globe by investors only too eager to make extra money, counting our now glum friends from Norway as mentioned in the first blog entry. Inventoried by a large numbers of big and renowned banks across the breadth of the economic universe. Even school districts and hospital management companies based in the US went for shares of the large rich pie. Old father greed made sure those interested got their rightful shares.

But poor sub-prime borrower, written of as bad by any logical standard right from the get-go, suddenly started defaulting, unable to pay higher than teaser rate monthly mortgage amortizations. Does he walk away from his precious and newly-acquired palace? With no other viable option available, and realizing too late that the re-finance window had never really been open to his not credit-worthy record to start with, he walked away.

With no other recourse for themselves, security firms who sold those mortgages started plugging the leaks incurring great losses, and understandably they started getting jittery. And the careening ball went for the investors from near and afar who had pocketed those nice and neat investment packages with contented thoughts of great returns.

In due time, by July about 14% of sub-prime mortgages ceased paying. Now that represented only about 5% of total US borrowers.

But it was enough to freeze the world’s credit markets. Suddenly, sub-prime mortgages were toxic to all to them and their marketability fell to zero.

But 2008 finds us in a somewhat appeased mode, with the financial institutions writing off their losses and licking their wounds; and as a result, easing the credit crunch somewhat. And those awash with capital, maybe like surplus-rich China or those wallowing in escalating petro-dollars, go into bail-out mode where needed.

And it may be ironic to mention that there is an unheralded group that actually made the right choices and thus minimized losses. Those who bet against the mortgage market, those who predicted that the mortgage market would go into a tailspin and invested correspondingly.

World Wants America!

New Year came not only as a good commencement for a fresh global outlook but as proper timing to start thinking what the 2008 US presidential election will bring in US leadership.

But apart from what Americans look forward to for the coming year, it might be good to listen to those from outside looking in.

In an article boldly titled, World Still Hungers for United States, Mr. Moises Naim, editor in chief of Foreign Policy, tersely lays out his optimistic thesis about America’s place in the world stage, though some harsh sniping was not spared.

Though possessed of an MSc and Ph.D degrees from MIT, Mr. Naim is Venezuelan and once served as department minister in his home country; and as reported, is well respected and serves in some prestigious Latin American organizations.

It most probably would serve us well to listen to how Mr. Naim proceeded to present his case. Here are excerpts from his insightful piece:

1. “For the next several years, world politics will be reshaped by a strong yearning for American leadership.”

2. “Of course, the America that the world wants back is not the one that preemptively invades potential enemies, bullies allies or disdains international law.”

3. “Naturally, the world also wants a superpower willing to foot the bill with a largess that no other nation can match.”

4. “Appearing too closely allied with the United States is a risky political position for elected politicians everywhere. Still, some have shown a surprising readiness to stand with America.”

5. “Many foreign leaders will therefore be willing to pay the price that comes with American leadership. They ask only that the price not include subservience to the whims of a giant with more power than brains and whose legitimacy is undermined by regular displays of incompetence, recklessness and ignorance.”

I suppose many, including here in the US, will generally like and be gracious about the complimentary statements that Mr. Naim has brought out in the open. But a more than cursory review may reveal for us a more balanced insight into how things really are.

First, has the world ever lost not only its yearning but presumption that the US ought to lead in any global concern, most especially if it involves large financial outlays and the use of military power with no possible hope of any visible recompense? I doubt it. Even in these difficult times, the US grudgingly continues its solitary role as default sheriff, deep-pockets financier, and solicitous father, to the rest of the world, whether in providing assistance of material goods and services during calamities of any nature, or using its fearsome military presence to keep the rest of the world from imploding or turning upon each other. What could possibly be the paramount self-serving logic for keeping substantial military forces in Europe, Korea, Japan, etc, if not to keep the entire world engaged and tied together, even if the result is only an uneasy and precarious peace? Granted that the resultant peace and security also bodes well for the US and its interests.

Thus, I do not see any “reshaping” of world politics but simply, more business as usual, as always, except maybe that this time some countries may be honest enough to accept their self-serving motives for allying with the US. But I doubt even that.

The second statement gives one an implied sense that the US must be perceived as some kind of recalcitrant bully disdainful of law and order, while the rest of the world is a herded flock of obeisant sheep, stubborn adherents to law and order, and avidly desirous to live in peace and harmony with each other. Do we simply push under the rug the many iniquities and unfairness that the US has had to bear from the rest of the world, at times resignedly, unloaded on it simply because it is the US, the lone superpower? Even the illegal immigrants within its borders are bold enough not only to fly the flags of their countries of origin, or openly seek public services, but even demand rights proper only to citizens. Or many radical groups or hostile countries can proclaim open season for destroying American lives and interests in any part of the globe, but be it damned if it should initiate aggressive precautionary or defensive measures to protect itself because that would be bullying. Or what is now the more PC thing to say, any retaliation would easily be labeled as asymmetric response.

If the last three statements be how to aptly describe the rest of the world, then it speaks poorly of its own leadership, with regard to its own integrity and the nobility of its actions.

Yes, we want your leadership, which translated means your material and military assistance, but we cannot really be identified with you because nobody likes you. And also, should you provide assistance to us, do not expect anything in return whatsoever. Do not expect us to do our rightful share, or tell us what we should do, or to even care what happens to you and your country. We just need your help, period. Just take care of our needs. And by the way, since half of us want to go and live in your country, no territorial borders or laws on migration should obstruct entry of those wanting to.

Now doesn’t one get the feeling that this global leadership thing is one wide one-way street? Wide and easy access for everybody else but.

Kind of reminds one a bit about Shylock’s lament (in Merchant of Venice)

I am a Jew. Hath not a Jew eyes? hath not a Jew hands, organs, dimensions, senses, affections, passions? fed with the same food, hurt with the same weapons, subject to the same diseases, healed by the same means, warmed and cooled by the same winter and summer, as a Christian is? If you prick us, do we not bleed? if you tickle us, do we not laugh? if you poison us, do we not die? and if you wrong us, shall we not revenge?

Might not the US be wise to ask to renegotiate the “terms” under this informal, and not mutually agreed upon, global leadership thing, and plead for equal and fair treatment?

To which august body does it turn to?

Image Credit: Downloaded from Library of Congress

A Special Tribute: US Major Andrew Olmsted, R.I.P.

Major Olmsted was one among three of the first casualties in Iraq for the New Year. He was also an active blogger in his own blog, for other blogs and the Rocky Mountain News.

Olmsted, 38 years of age, died from small-arms fire when his unit was ambushed.

Why the special tribute?

Before dying, Major Olmsted starting writing his last blog post, with instructions to a friend to post after his death. Read it here. While the posthumous act itself was quite unusual, more awe-inspiring were the ideas that he committed to words for that last post.

But more significant for me were the words that came from somebody else:

“…it was important to know that Olmsted died doing what he loved to do — not just being a soldier, but posting his blogs for The Rocky and other sites.”

Now, isn’t that what life is all about? Doing what one loves to do. Regardless of the amount of time involved. Maj. Olmsted was 38.

Aside from what was mentioned in the quote above, Maj. Olmsted loved seeing his favorite baseball team win the World Series twice. And he was mighty proud of his extensive 80’s songs library, downloaded and ready to be listened to.

About the moustache? Was he going for the macho look? No, he just thought that Iraqis did not look too kindly on those without facial hair.

This fine soldier died in a war-torn country so the rest of us in the comfort of our homes and in the fullness of time can give pause and ponder on the wantonness of this soldier’s early demise.

This fine soldier died so the meek and gentle can gather thoughts and ask why with the utter uselessness of wars they are still breaking out in the world, with regularity and almost with necessity.

This fine soldier died so the rest of us can think and express ourselves in whatever way we desire, with freedom and without fear.

This fine soldier even died for those who may find dread or be squeamish about the brutally violent nature of a soldier’s job.

But as always things still fall neatly in place, since to each life there is a season.

What Is Art, again?

Maybe the above question is something we ought to ask often if only to highlight the attendant difficulties and uneasy confusion people encounter when trying to define what art is. The oft-quoted cliché that beauty is in the eye of the beholder could apply also in judging what art is, whether serious, pop, or whatever.

This untended difficulty reared its head during the last entry on my poster collection of Norman P. Rockwell works. Many critics had panned Rockwell’s works by denying him the honor of considering his work as serious art; instead that he was simply an illustrator however gifted he was as such.

And I always have a problem with such restrictive delineation because my mind has not really been able to grasp the exact parameters of what serious art really is. Should one rely strictly on the judgments of the art critics? But don’t they disagree amongst themselves? And many would go further and decry the lack of objectivity or relevance in many admired critics.

Anyway, I am not making this orphaned confusion my personal problem, because I simply follow my gut feelings and try to work up inspiring vibes about the works that appeal to what I could consider my sense of what is beautiful, tasteful, or extraordinary.

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Poster Collection: Norman P. Rockwell

Posters of different sizes and for different subjects have also been a popular pastime for many enthusiasts. Those enamored with films go for the very catchy, colorful, and artful movie posters that are seen in movie theatres and malls and which surely easily draw the captive attention of the onlookers. While others more into hero adulation may go for sports posters whether of racing cars and their drivers, professional sportsmen, etc. In short, there are posters and posters for most popular fancies and passions.
As for me, I was fortunate enough to have acquired over time a precious number of them (about 76) all about one subject, poster prints of the the paintings/illustrations of the late artist, Norman P. Rockwell, a very popular symbol of things Americana.

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