Sean Olender

Isn't the Fed Monetizing Housing Debt?

Yes, and there are a lot of poor people who scrape together enough money for antidepressants or illegal drugs. Part of it is the absence of community and living in the lonely topography of the land of happy motoring.

It is true that many poor people could live more comfortably if they gave up alcohol, television, marijuana and prescription drugs. But then what would they have? What would they do then? There are no community centers, there isn't anything here anymore except places to work and places to shop. Everything else has been demolished so as not to distract the public from the task at hand.

It's true that if people had a little more backbone they could give up all of it and live comfortably and happily on a less than median income. But this place is packed to the gills with hucksters and so apparently the average person is unable to resist. The average person has been hopped up on high fructose corn syrup, antidepressants and momentous loud explosions in action movies. It's hard for someone accustomed to the loud, incessant bombardment of the behaviorally deranged television personalities always talking loudly in funny voices and making ridiculous facial expressions nonstop -- it's hard to go from that to normalcy. It's hard to know what normal is. But it's sure not the newscaster/sitcom/prim... histrionic freakshow. And so quiet, for many people, is probably a bit jarring at first.

Isn't the Fed Monetizing Housing Debt?

I agree with you that it's not the whole country. But I think it's more than you may realize. I live in the Silicon Valley where 20 year olds often pass by in brand new Tesla Roadsters or Mercedes SL convertibles and you see at least four times a week a Lamborghini Gallardo parked at a restaurant.

There are no homeless people in Saratoga or Cupertino. I don't see any poverty here either. But I know there's a lot of poverty. I know it because I read the news and the data.

More than HALF of all bankruptcies in the United States are primarily due to unpaid medical bills and there are a lot of bankruptcies in the United States right now and over the past ten years.

More Americans commit suicide than are killed by another person. Only 4% of violent deaths are "gang" related. But if you watch the TV, you get the sense that "gang" violence is the big threat to the average person who then wants to buy a gun and live in a "gated community" and is happy to see the local police department wearing uniforms and carrying weapons that look more like the getup of a Latin American paramilitary unit than the old fashioned civilian police we used to have in the United States.

None of my information comes from tabloids. Tabloids are a distraction just like much of the main stream news. The main stream news makes people afraid that they are likely to suffer violence at the hands of gang members or terrorists and the tabloids chronicle the lives of desperately unhappy rich celebrities (because apparently even the rich aren't happy here). Neither source comes out and says that according to the numbers, the hard facts, the data, that the most likely person to kill you, is, well, YOU.

The reason it's gotten like this here is that people have a false image in their heads about what it's like to live here. That image is deposited in the mind by television and advertising. Just try to take a walk from your house to the grocery store and take a look around you. Look around at what's going on. The first thing you'll notice is that you are the only person walking anywhere. The sidewalk is 24 inches wide and next to it is a 20 yard wide street with cars passing by pretty fast with one person in each car. Give a try to talk to some of those people. You can't. They are isolated.

Part of what's happened here in the United States is that we've built out a topography of isolation where everyone is alone at their house and alone in their cars and alone at the mall, etc. The only time you're with loved ones and friends usually is at home with your family, or at work (or school for kids). But that's it. If you stop by the grocery store or the mall, the odds you'll see someone you know are close to zero because everybody drives everywhere which isolates people. There is no community. There is only a topography of ugly tract houses piled on broad flat streets packed with cars and garages and more cars.

And because we're human beings, we get used to it. We can get used to almost anything. But it's unpleasant. It's unpleasant to even walk to the grocery store because of how we've built this place and that's why no one walks there. It's nicer to drive because with the windows up, you don't get dirt kicked up in your face and the loud thunder of street traffic everywhere all the time.

And there are consequences to this. People are isolated in their cars, we have bad air because of it and people don't hardly walk around because it's unpleasant to walk around outside most places. We've managed to make "outside" unpleasant unless you drive to a special, designated area like a park or a shopping mall that is designed to not be unpleasant to be outside.

So yes, I think it's great that you made it and you worked hard and I respect that, but if you look at the numbers, you are an anomaly. A majority of Americans watched their wages decline over the past ten years at the same time that health care costs and other costs rose. So hard work alone isn't enough.

And success may not be enough here soon either. Because if there are enough poor people, it will become as violent as Mexico here and wealthy people will need bullet proof cars and briefcases with machine guns built in (they sell these things to all wealthy people in Mexico City).

I grew up in Los Angeles and because I used to drive on the freeway from Woodland Hills to Sherman Oaks and then to Westwood or West Hollywood or Santa Monica, I got the sense that LA was a really nice place and people lived comfortably there. But one day I was bored (25 years ago) and I just drove around a bit and I was stunned to figure out that 4/5 of the surface area of the City of Los Angeles is occupied by fairly poor people and maybe 1/3, or half of it is occupied by very poor people.

Americans are 41st in the world now in life expectancy, but we pay more than double on health care that the number two biggest spender does. So we're number one in spending by double, but 41st in life expectancy. That has got to tell you something about what's going on here that has nothing to do with tabloids. And you can't say, "Oh, it's because we're so wealthy we can afford to get fat." Because that's nonsense. Poor people get much fatter than rich people and countries like Switzerland with a high proportion of wealthy people living there have much lower obesity rates.

I talked to a lady in a cafe in San Francisco about health care and the wars and some other things a few days ago. She told me that she had been disappointed by those things, but that it was too much to think about it, so she "blocked it out" and tried to think happy thoughts.

While I can understand that, it's the reason why this place is falling apart. Everybody wants to think happy thoughts rather than look around and be honest. Some of this place is nice and some of it is crap. Some things are just fine, and some desperately need to be changed. But I get the sense that most Americans don't want to think about what is really going on in front of them because it's unpleasant and so why not think happy thoughts since there's nothing you can do about it anyway?

That apolitical culture where Americans are relatively uninformed about the activities of their government is what has led to these enormous frauds. If the public isn't paying attention to the laws that are passed and reading some of these bailout bills and putting politicians' feet to the fire, you can bet that corruption will result and every law passed in this country will be like the bank bailout bill written by Bank of America and introduced by Chris Dodd, or whoever.

The politicians and economists always tell us that self interest is what powers this place and that pursing self interest is good. But the singleminded pursuit of self interest leaves the commons vulnerable to pillaging and it's been fairly well picked clean while we were watching reruns and eating popcorn (with partially hydrated oil and artifical butter flavor).


On Nov 13 02:57 AM dondon wrote:

> It seem Sean has taken every nasty headline story from every tabloid
> and news rag and made those stories the de facto truth about the
> US. I am not sure where in the US Sean lives, but I have lived here
> all of my life starting out poor and working my ass off to get where
> I am today. I employ people and pay them well. The US Sean is pointing
> out is but a small part of our existence and while it should be highlighted
> to help bring attention to problems it should not be thought of as
> how the entire citizenry works.

Isn't the Fed Monetizing Housing Debt?

I'm not talking about someone scamming welfare. I'm talking about the general lack of dignity and compassion that has developed in American society. I'm not anti-capitalist, but it seems like there is nothing else here anymore. There is no real community. There is no real citizenship. There is no real common or common interest.

There are fake "common" interests, like people very concerned about the quality of their local schools because they influence property values. But ultimately there is nothing except vanity, envy and greed. I read an interesting article in the Atlantic a few days ago about "prosperty churches" where people pray to get rich and where people genuinely believe that Jesus cares a lot about money and rewards the faithful with Lexus SUVs and low interest refis on zero down investment homes. I couldn't believe it. But then, I sort of could.

Happiness is not a "metric" worth measuring any longer Nor is satisfaction. We're building a sociey without any thought of whether anyone here is every happy.

We even victimize children. I remember when the closed the school lunch program for hungry poor children. They just couldn't "afford it." And those kids were probably "scamming" the schools. They should have gone out and gotten jobs in factories or something.

I don't think that the United States should provide a comfortable living for people who do not work. But I do think that things have become so stark here that our rich civilization for many people is little different than living in the wilderness with all of its attendant dangers and deprivations. Actually, I imagine that the wilderness is more forgiving in many respects than everyday American life. At least the cops don't come to roust you in your tent with tasers and pepper spray if you are camping in the wilderness as opposed to that tent city in Sacramento.

I can't imagine where this is going. It seems like a day will come soon when Americans are so sick that they are completely politicaly neutralized. They will have to beg for their "insurers" not to cancel their coverage and beg the government or hospitals for their chemotherapy and cholesterol lowering medication and diabetes medication and bypass surgeries. There is a time coming soon when everybody will require some medical care and because it's not a "right" to get medical care, it will mean that the entire population is highly vulnerable and politically weak because they'd trade anything for another vial of insulin.

This is not the stuff of democratic governance. It's the stuff of a population living in fear and afraid to act politically, afraid to speak up. Debt and sickness, obesity and variable interest rate loans. They all do the same thing to the fabric of republics: weaken people into nothings.

You can't have a functioning society where there isn't so much as a tiny bit of dignity for an ordinary person.

The median income family of four in the United States makes $65,000 a year. After taxes that group qualifies as spectators -- half the country are spectators who dare not speak because a three weeks out of work might mean homelessness, or it might even be a death sentence (if you get cancer and you can't get treatment).

What I'm saying is that we ought to rebuild this place from the ground up. Everything in the country has become a con game. Even "higher education" with university administrators and admissions offices taking illegal kickbacks and bribes and extravagant vacations to promote certain lenders on campus and through the financial aid office. Even university has become a racket where tuition is driven up by federally guaranteed loans with the lenders and the schools working together to figure out what is the maximum lifetime debt that some poor young kid can take on. And this is the "path to success" that is tauted as what "responsible people do."

Everything about this place has taken on the appearance of some dark 19th century carnival with its side shows and snake oil salesmen. Every institution from the SEC to the Fed and Treasury to HUD, Department of Education and so many others have been caught making policy that is handed to them by private industry along with some kickback like a $500,000 a year job for their idiot niece or nephew.

And it's not entirely government because business encourages it. They fight in court every day to get their right to bribe our Congress declared protected under the First Amendment. They fight every day to find new ways to funnel money and favors like Friend of Angelo mortgages to Chris Dodd and Bank of America writes the $700 billion bail out bill and hands it to Dodd marked "confidential" so that Dodd can have his secretary retype it and then introduce it like it was Dodd's idea.

These private, anonymous people make our laws now and hand them to our elected legislators along with pamphlets of retirement spots in Nice and Cannes and St. Tropez.

So what I'm saying is how can we say that some sick soldier is trying to "scam" the VA with a claim and use taxpayer money to litigate the claim for seven years until the soldier dies or commits suicide just to "make sure" that he wasn't "scamming" the system for his $10,000 in medical and psychological treatment, but hand out $1 trillion to anonymous billionaire bond investors?

You can't have a society without any compassion or dignity like this. People will start killing themselves and killing others and generally behaving very badly. And if you look around, that's what you see. You see people walking into employers where they were laid off and opening fire. You see young people age 13 raping and murdering people. You see violence and sadism at every age and every corner of the society from the young to the old, from the cops to the criminals.

Everybody says, "well, we've got to jail more criminals and maybe just start bugging everybody's phone so we know what's going on." But the United States already has the largest percentage of its population in prison of any society in human history. You know who number two was? The USSR under Khrushchev when they had so many political dissidents. And the solution is to lock up more people?

Americans take huge amounts of illegal drugs resulting in these horribly violent drug wars in Mexico and the US and people say, "We need to punish users more to put a stop to this." And another question you could ask, is "Why are people so unhappy here that half the population is stoned?"

Because more people die now from prescription drug overdoses and complications than from illegal drug use and I think someone should ask the question why are so many people taking legal and illegal drugs? What's wrong with this place that 20% of the population is on antidepressants and another 20% is smoking marijuana? Why is this place so unpleasant that half of the people living here have to be sedated legally or illegally to tolerate it?

It's neither practical nor desirable to build a society where people are so unhappy that you have to drug them on the one hand and then on the other threaten them with imprisonment or in the case of medical care, with death, if they don't drag themselves through life doing what you want them to do.

The effect on a whole generation of children will be painfully evident. Kids today don't even wander around their neighborhoods because everybody is worried that someone is going to kidnap them and sexually molest them. People claim, "Oh, I live in the most posh and wonderful neighborhood. Home prices never go down here. It is 'highly desirable' to live here." But then they will tell you that they would never let their kid walk five blocks to their friend's house alone because they could be kidnapped, raped, and killed. And I ask them, so this is what a nice, expensive neighborhood is like in America?

So all the kids now grow up with "play dates" where their parents choose who their friends are and they are confined to odd, Orwellian one hour blocks of playtime often indoors or at least under the watchful eyes of adults. Just the stuff to stimulate creativity and a love of freedom.

If we don't do something about all of this, it is we who will suffer. And our children.

Most people seem to have the strategy that they will make a lot of money so that their kids can buy Mercedes S-Guard sedans (although the E-Guard is more manageable) and live in guarded compounds with lots of Prozac running through their veins so that they can "block out" the unpleasantness and get to the important job of living life to the fullest by working, shopping and watching TV.

And now the broadest public policy goal seems to be to trick people into borrowing a lot of money and doing some serious shopping this Christmas. Nothing is said of buyer's remorse and all of the unhappiness that will come when people get the bills from their guilt-fueled shopping binges to make sure their children love them as much as the other parents' children (an emotion measured in dollars spent by a ruthless spectacle of advertising-enforced shame).

Something has got to give here before this place just collapses in one big heap of suffering.

We can change this in one day. Literally, one single day. If even a substantial number of people in this country became genuinely fed up, in just one single day everything would change.

As regards Iraq and Afghanistan, Americans could just say, we're not going anywhere until those troops come home. We're not going to work, to school, to the mall. We're not going to drive anywhere and we're just going to sit around until someone puts a stop to that war. I bet within one day, enormous joy would break out in the streets with everyone talking with their neighbors in a way that has not occurred here since the 19th Century and then within two or maybe five days, those troops would come home.

70% of Americans wanted troops out of Iraq at the 2004 elections -- FIVE YEARS ago -- and they are still there. I don't know about you, but I am ashamed of my impotence as a US citizen. I'd love to feel like the majority had at least a small influence on something as important as the life and death of young Americans and Iraqis too.

And so we have some time to work this out. But it's like I said, a sick, indebted population is much less likely to make trouble and do something than one that is healthy and debt free.

And for that reason, I think these trends in obesity, diabetes, illegal and legal drug use and the unbelievable indebtedness of Americans, I think this is not a coincidence. It's by design. If you encourage it, you end up with a population that is weak and afraid and even if 70% want something very badly, you can just say to them, "No. And what are you going to do about it? That's what I thought."

The SEC Panics

Felix is right on here. So is Ackman. Fannie and Freddie are certainly insolvent. The reason it doesn't appear so is that their write downs bear little rational relationship to what they are actually holding. Fannie and Freddie did wade into the toxic subprime and Alt-A pools and they are an abomination because their executives get paid like hedge fund managers and their shareholders (till recently) made out very well and this is all with some vague implicit taxpayer backing, but without the taxpayer getting anything in return for it.

Fannie and Freddie ARE the US mortgage market and the US mortgage market is secured by real estate that peak to trough is going to fall 30% or more. I'd say that will put Fannie and Freddie ultimately underwater by $1 trillion or so. It won't look like that now, but how about when nobody can buy a house without 20% down (or even 30% down) and everyone suddenly learns that only 15% of Americans can afford to do that? That realization will send prices down another leg for sure.

I think that if Fannie and Freddie's shareholders want to speak up about their right as investors in a capitalist system to not be jerked around, then that right should be respected and Congress should pass a resolution very clearly stating that there is no federal backing for either entity other than the paltry $2.25 billion credit line each has with the US Treasury. That's it. Period.

The problem is that implicit promise (to socialize losses by backing them with taxpayer money) combined with ridiculously weak regulation and huge potential gains for investors and managers creates a perverse incentive for management to take big risks right now - HUGE risks. If they win, everybody makes out great. If they lose, the Feds come in and make sure bond holders don't lose anything. I wish the US Treasury would back me in my business decisions like that with taxpayer money.

Fannie and Freddie have hurt the US housing market for 30 years by pushing up prices. They've not made housing more affordable. They've made it far less affordable by working with a coterie of corrupt banks, real estate agents and appraisers to push up prices as high as possible to expand their lending as widely as possible because it's how they make money. If it weren't for Fannie and Freddie, home prices would probably be 30% lower than they are right now and that means that 90% of Americans would need mortgages 30% smaller than they need right now.

The key is less lending not more. Lower prices make houses more affordable. Bigger loans do not make houses more affordable. Bigger loans make houses more expensive and hence less affordable. Banks will always claim lending makes things more affordable and the sellers who work with banks (whether the real estate industrial complex, universities in student lending, or any seller) will claim that loans make the product more affordable. But the racket is that sellers and lenders work together to push up prices because they both benefit from higher prices.