Rolling US Economy Into The Shitbin Thread

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i mean, there are always doomsday scenarios. that is flippant, but i think it's true. there is no reason the US can't get on a sane path. break up the banks, break up the tech giants, forgive student debt, raise the minimum wage to a living wage even for gig workers, make healthcare and education accessible, invest in green infrastructure—this isn't "free stuff" but a way to put the country on a path where people feel they have some opportunity and a stake in the health of the society.

treeship., Monday, 11 May 2020 13:29 (one month ago) link

the US is in a unique position in that it can, if it wants to, move heaven and earth to transform the society. greece, for instance, couldn't due to their limited means.

treeship., Monday, 11 May 2020 13:32 (one month ago) link

America was already becoming too poor a society to have functioning public goods, like healthcare or retirement for all. Coronavirus is going to seal that fate. America will be poor now — far too poor to ever really make the transition to having decent public goods.

what does this mean - should already poor countries give up on having anything better bc once you're "too poor a society" nothing can ever get better? we already don't have healthcare or retirement for all.

Mordy, Monday, 11 May 2020 14:31 (one month ago) link

i mean, there are always doomsday scenarios. that is flippant, but i think it's true. there is no reason the US can't get on a sane path. break up the banks, break up the tech giants, forgive student debt, raise the minimum wage to a living wage even for gig workers, make healthcare and education accessible, invest in green infrastructure—this isn't "free stuff" but a way to put the country on a path where people feel they have some opportunity and a stake in the health of the society.

― treeship., Monday, May 11, 2020 9:29 AM bookmarkflaglink

you're not wrong. we won gay marriage and a form of universal health care not even that long ago. we just need to be free of the grip of Republicans and Trump and also Libertarians and also a pandemic that is being subverted for political purposes.

genital giant (Neanderthal), Monday, 11 May 2020 14:33 (one month ago) link

the US will continue to be wealthier than many countries and someday in the future maybe 10 years from now coronavirus will be over and the depression will be over. we already know the US is willing to spend huge amounts of money to get the economy rolling again. making the case otherwise requires a much more sophisticated and evidenced argument than the author includes.

Mordy, Monday, 11 May 2020 14:34 (one month ago) link

yeah, i don't understand the fact that america was "too poor a society" for basic public services. that was never the reason we lacked free healthcare and college.

treeship., Monday, 11 May 2020 14:37 (one month ago) link

yeah. it's this devotion to meritocracy from some voters, asking classist questions like "what money do burger flippers/retail employees DESERVE", which really means "what level of comfort and quality of life do these peons deserve", often uttered not just by the haves, but also have-nots who are working equally menial jobs and making little money (ie, the temporary inconvenienced millionaire syndrome).

we focus on the 0.1% that refuse to work and assume all unemployed people are lazy people, all people on food stamps are eating Ruth's Chris quality meals, and all welfare recipients use drugs AND any recreational drug use means these are subhuman people who deserve no aid.

the mindset has to be eroded, which will be helped by millions of boomers dying, but also if these talking points aren't validated by the President and/or Majority Senators. but we're years away from any of this eroding.

genital giant (Neanderthal), Monday, 11 May 2020 14:42 (one month ago) link

80% of Americans lived paycheck to paycheck before Coronavirus. Who can afford to pay an extra 5% or 10% in taxes for decent social systems?

vs

the top 3 richest americans have more wealth than the bottom 50% of the country

porlockian solicitor (Karl Malone), Monday, 11 May 2020 14:42 (one month ago) link

it's impossible! there's nothing that can be done to fix it! and whatever you do, do NOT look over there at those three old guys

porlockian solicitor (Karl Malone), Monday, 11 May 2020 14:42 (one month ago) link

it's "funny", I was watching New Jack City yesterday and in 1991, it was talking about the deepening gulf between rich and poor and wage inequality, and I just screamed at the screen "OH, IF U ONLY KNEW!"

weirdly the tv answered me back with "SHUT UP BITCH", so I decided I needed sleep

genital giant (Neanderthal), Monday, 11 May 2020 14:43 (one month ago) link

it's not even about direct aid, it's about structuring the economy so people aren't ground into the dirt. that makes them better workers, better consumers, more likely to take risks and be entrepreneurial, and better citizens as they feel like they have a stake in american society.

treeship., Monday, 11 May 2020 14:49 (one month ago) link

a large middle class is just better

treeship., Monday, 11 May 2020 14:50 (one month ago) link

America will be poor now — far too poor to ever really make the transition to having decent public goods. Think of that full half of the American population who’s now not employed. How exactly are they going to afford the higher taxes it takes to have a European or Canadian style social contract? They struggled to before — and after Coronavirus, it’s going to be flatly impossible.

is this guy a Republican speechwriter? what taxes is he even talking about? Like, "taxes" aren't monolothic. There isn't just "one" type of tax, assessed in one way ... Maybe if he is talking about property taxes, which are often not contingent on the owner's income ... but then not everyone pays property taxes.

sarahell, Monday, 11 May 2020 16:39 (one month ago) link

yeah. my belief is that there is enough wealth in the economy to invest in a better future.

treeship., Monday, 11 May 2020 16:42 (one month ago) link

it's impossible! there's nothing that can be done to fix it! and whatever you do, do NOT look over there at those three old guys

― porlockian solicitor (Karl Malone), Monday, May 11, 2020 7:42 AM (one hour ago)

also DO NOT LOOK AT THE DEFENSE BUDGET; do not think about how much more the US spends on the military and weapons than countries that make sure people have housing and food and healthcare ... nope, don't do it, Bill, just don't! It's the fucking destroyed statue of liberty out there in the forbidden zone

sarahell, Monday, 11 May 2020 16:42 (one month ago) link

i'm not an economist but you don't have to be. it's not like we made a good-faith effort at securing "decent public goods" and failed due to lack of money. we've never acquired the political power to really enact this stuff.

treeship., Monday, 11 May 2020 16:44 (one month ago) link

you're not wrong. we won gay marriage and a form of universal health care not even that long ago. we just need to be free of the grip of Republicans and Trump and also Libertarians and also a pandemic that is being subverted for political purposes.

Notable that gay rights/marriage was the one thing that didn't challenge the economic status quo and Obamacare is a permanent subsidy for all the interests that make healthcare awful.

Better things are going to require way more than breaking "free of the grip of Republicans [etc.]."

Greta Van Show Feets BB (milo z), Monday, 11 May 2020 19:52 (one month ago) link

The real death grip is the plutocracy.

A is for (Aimless), Monday, 11 May 2020 19:54 (one month ago) link

gay rights/marriage was the one thing that didn't challenge the economic status quo

Gay marriage is a net economic plus.

but also fuck you (unperson), Monday, 11 May 2020 20:07 (one month ago) link

I think this is a good thing?

https://www.engadget.com/tsmc-12-billion-chip-plant-arizona-083518143.html

DJI, Friday, 15 May 2020 16:45 (one month ago) link

Do economists not know how much things cost pic.twitter.com/dMdSoaL3tA

— Keezy Young 🌸👻 (a ghost) (@KeezyBees) May 17, 2020

𝔠𝔞𝔢𝔨 (caek), Sunday, 17 May 2020 17:49 (one month ago) link

it's one banana michael

silby, Sunday, 17 May 2020 18:04 (one month ago) link

(of course that was in the twitter replies, my referential humor is so feeble!)

silby, Sunday, 17 May 2020 18:05 (one month ago) link

"might not have a reason to buy a new car with fewer places to visit"

uh huh uh huh, tell me more

Fuck the NRA (ulysses), Sunday, 17 May 2020 18:12 (one month ago) link

I'm close to paying mine off (for the first time in my life, I'll have a pink slip", and I hope to not buy another one for 27 years

I am a free. I am not man. A number. (Neanderthal), Sunday, 17 May 2020 18:31 (one month ago) link

In case you’ve been wondering “I wonder what fucked up shit lurking under the surface is going to be brought up by this crisis” here’s a good candidate.

https://www.propublica.org/article/whistleblower-wall-street-has-engaged-in-widespread-manipulation-of-mortgage-funds

longtime caller, first time listener (man alive), Sunday, 17 May 2020 20:11 (one month ago) link

ProPublica closely examined six loans that were part of CMBS in recent years to see if their data resembles the pattern described by the whistleblower. What we found matched the allegations: The historical profits reported for some buildings were listed as much as 30% higher than the profits previously reported for the same buildings and same years when the property was part of an earlier CMBS. As a rough analogy, imagine a homeowner having stated in a mortgage application that his 2017 income was $100,000 only to claim during a later refinancing that his 2017 income was $130,000 — without acknowledging or explaining the change.

Is this the right analogy though? Wouldn't it be more like inflating the property value of the house by saying it was purchased for more than it actually was? Or are these loans not made based on LTV but other criteria? idk

sarahell, Monday, 18 May 2020 04:29 (one month ago) link

I think commercial mortgages are a lot more tied to the amount of income a property is supposed to produce rather than a static "value."

longtime caller, first time listener (man alive), Monday, 18 May 2020 04:31 (one month ago) link

In the case of a commercial mortgage, the lender is willing to lend based on whether the property produces enough income to service the mortgage. In a residential mortgage, the lender is willing to lend based on whether the owner earns enough income to service the mortgage. In both cases the question is whether the mortgage can be paid, not what the property is "worth."

longtime caller, first time listener (man alive), Monday, 18 May 2020 04:33 (one month ago) link

In the case of a commercial mortgage, the lender is willing to lend based on whether the property produces enough income to service the mortgage

yeah, and that income (or projected income if the property is "underutilized") is what comprises the "value" right? It's investment property. It's value -- what it's worth -- is how much income it can generate (also factoring in expenses and other debt), yeah? Like isn't it the standard thing that a commercial lender won't do more than 80% of the "value" of the property? ...value doesn't equal "assessed value" of the building, as opposed to a residential loan which is based both on the assessed value of the building (e.g. the underwater issue) AND the borrower's ability to pay.

sarahell, Monday, 18 May 2020 04:42 (one month ago) link

a lender for a residential mortgage generally isn't going to loan the borrower more than they believe the house can be re-sold for, because the house is the collateral securing the loan.

sarahell, Monday, 18 May 2020 04:59 (one month ago) link

Yeah, the "value" of commercial property is basically the present value of the future cash flows as I understand it.

longtime caller, first time listener (man alive), Monday, 18 May 2020 05:03 (one month ago) link

yeah ... I like a lot of propublica's coverage, but it has a tendency to oversimplify and/or make not-so-good analogies to explain things to readers (which, some of these topics are complex, and it is really good that they are covering them in an accessible way). I think there was an article a few weeks back about taxes/tax policy (something like that) that was like 90% right, but 10% misleading/inaccurate but I don't recall the exact article.

eh ... i might be being too negative ... maybe it was more like 95% right/5% misleading/inaccurate

sarahell, Monday, 18 May 2020 05:19 (one month ago) link

Not sure I understand what the problem is with the analogy

longtime caller, first time listener (man alive), Monday, 18 May 2020 06:30 (one month ago) link

the analogy equates the income value of the commercial property with the income of the homeowner -- which is fine, if you are looking at it from an "ability to repay" standpoint, but the income value of the commercial property determines the maximum loan value (regardless of the borrower's ability to repay / their credit / etc), which is more accurately equated with the assessed value of the house -- the underlying property that secures the loan.

sarahell, Monday, 18 May 2020 07:18 (one month ago) link

the subprime crisis was partly loans being made to people who couldn't afford them, but also partly the overinflated values of the properties because of the lax lending standards, such that the actual re-sale value of the houses securing the loans wasn't nearly enough to pay off the outstanding debt -- it's like student loans and college tuitions which are partly so high because it is easy to get loans for that much. If they regulated student loans like they did residential mortgage loans (well, like since 2008), tuitions would not be/have gotten that high.

sarahell, Monday, 18 May 2020 07:22 (one month ago) link

the analogy is about lying, not the underlying value of assets

Greta Van Show Feets BB (milo z), Monday, 18 May 2020 07:41 (one month ago) link

the distinction isn't meaningful from the perspective of commercial properties, which is what the argument is about The value of the property and its income-producing ability are one and the same.

longtime caller, first time listener (man alive), Monday, 18 May 2020 15:17 (one month ago) link

The distinction is meaningful wrt a residential property because you could have a loan secured by a correctly valued property and a buyer who lied about his income, meaning that the buyer can't pay but the bank still has sufficient collateral.

In a commercial mortgage, the only value the property has is as income-producing property, so if the income is overstated the value is per se overstated. People buy houses to live in. People only buy commercial properties for income. Therefore the analogy to overstating a residential buyer's income is more apt.

longtime caller, first time listener (man alive), Monday, 18 May 2020 15:20 (one month ago) link

People only buy commercial properties for income.

nope -- there are people who buy commercial property to live in (this is something i deal with on a daily basis for work); there are people who buy commercial property to run their business(es) out of -- active vs passive income. Different things are required on the loan docs

sarahell, Monday, 18 May 2020 17:16 (one month ago) link

In a commercial mortgage, the only value the property has is as income-producing property, so if the income is overstated the value is per se overstated. People buy houses to live in. People only buy commercial properties for income. Therefore the analogy to overstating a residential buyer's income is more apt.

I get that, but, I would argue that overstating the income (bu under-reporting expenses) is closer to not disclosing some physical flaw in the house or misrepresenting the size of the lot -- as in, "Yes, this house is worth $600k but it needs a new sewer lateral and foundation that will cost $50k, but we hid that fact from people."

sarahell, Monday, 18 May 2020 17:24 (one month ago) link

ugh -- typos -- (by under-reporting expenses) like, the house is only worth $550k because in order to get that $600k value, you would have to spend $50k on foundation work and the new sewer lateral.

sarahell, Monday, 18 May 2020 17:27 (one month ago) link

I think this is kind of point-missing. These are commercial mortgages that get bundled and sold as mortgage-backed securities. Mortgage backed securities provide a stream of payments. The ability to provide that stream of payments depends on the ability of the property owners to service the mortages, which in turn depends (in nearly all cases) on income produced by the properties. No one buys a mortgage backed security with the hope that the underlying properties will be foreclosed. In the same sense, RMBS are also a stream of payments based on the ability of the property owners to pay, except from their own income instead of income from the property. So in that sense it is a very good analogy. Using the underlying asset value instead would make no sense. The point is that the payment generation ability of the property in each case is overstated.

longtime caller, first time listener (man alive), Monday, 18 May 2020 17:31 (one month ago) link

Using the underlying asset value instead would make no sense. The point is that the payment generation ability of the property in each case is overstated.

I can see that, if you are only looking at it from the perspective of the CMBS investor, which is ostensibly what the article is about, though the issue of fraud in commercial mortgage lending is also discussed quite a bit in the article, and is perhaps more interesting/relevant to a general audience, and the underlying asset value definitely plays a part in that. Also, comparing it to more regulated disclosures and valuations of residential properties w/r/t underwriting.

sarahell, Monday, 18 May 2020 17:47 (one month ago) link

That is 100% what the article is about, and it is 100% relevant to a general audience, because this is the commercial mortgage equivalent of what caused the last financial crisis. That's the whole point.

longtime caller, first time listener (man alive), Tuesday, 19 May 2020 03:16 (one month ago) link

the resale value of the properties was a secondary consideration at best in the subprime crisis -- mass foreclosures are bad news for banks even if they get collateral of value.

longtime caller, first time listener (man alive), Tuesday, 19 May 2020 03:34 (one month ago) link

I wasn't saying that it wasn't relevant. I was saying, in addition to the parallels with the subprime crisis, it also reveals a disparity in regulation and valuation of real estate owned by more affluent/powerful people/business interests vs. low and middle income individuals, which is also relevant, and the article talks about as well.

sarahell, Tuesday, 19 May 2020 15:02 (one month ago) link

https://www.reuters.com/article/us-boeing-jobs-idUSKBN2332EP

Ah! Well, nevertheless,

Li'l Brexit (Tracer Hand), Wednesday, 27 May 2020 21:12 (one month ago) link

thought this was pretty interesting and honestly a little surprising. i don't think this is going to be a common vector for transmission to i think it's probably good news?

https://medium.com/thumbtack-blog/data-exactly-how-hard-covid-19-is-hitting-local-services-cf7737775f6e

i think these %s are compared to march 1 rather than compared to, e.g. what they were on that day a year ago. so the fact that home services work is *up* is not necessarily surprising because people work on their homes in the summer. but still!

𝔠𝔞𝔢𝔨 (caek), Thursday, 28 May 2020 03:32 (one month ago) link

"i don't think this is going to be a common vector for transmission to i think it's probably good news?"

"this" = an electrician or something coming to do work on your house, not like a peripatetic singing teacher coming to your house.

full data here goes back to march 1 https://docs.google.com/spreadsheets/d/e/2PACX-1vSLW6qVKKs9-SpvFVki3ZRrsr8EWfLokMg5JGn6upbw1pg1krEkwgcxED3jfLE7dqSZ1WkS5zVlvjJg/pubhtml#

𝔠𝔞𝔢𝔨 (caek), Thursday, 28 May 2020 03:36 (one month ago) link


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