Is Your Religion Your Financial Destiny?

Foreclosures and Asymmetrical Morality

Like most Americans, I do not believe that morality has a place in business transactions between a consumer and a business. Business is governed by applicable law and no more. Does Visa show clemency to consumers who can not pay? No, they charge default interest. Accordingly, I am confused as to why so many home owners who are underwater, do not walk away from their homes.

A provocative paper by Brent White, a law professor at the University of Arizona, makes the case that borrowers are actually suffering from a “norm asymmetry.” In other words, they think they are obligated to repay their loans even if it is not in their financial interest to do so, while their lenders are free to do whatever maximizes profits. It’s as if borrowers are playing in a poker game in which they are the only ones who think bluffing is unethical.

Gentrify or Die

New York Magazine addressed a beef that I have had for a long time with the displacement myth, noting that there is no causal relationship between gentrification and displacement. The piece is in reaction to a n+1 essay that reads like an undergrad book report.

Also, the Times notes that blacks are no longer a majority of the population in Harlem. The article notes “Because so much of the community was devastated by demolition for urban renewal, arson and abandonment beginning in the 1960s, many newcomers have not so much dislodged existing residents as succeeded them. In the 1970s alone, the black population of central Harlem declined by more than 30 percent.”

Below more from the New York Magazine article:

 

Back in 2003, Lance Freeman, an associate professor of urban planning at Columbia, wanted to find out just how much displacement had occurred in two predominantly black, rapidly gentrifying neighborhoods: Clinton Hill and Harlem (Freeman’s home). But “much to my surprise,” he wrote in his book There Goes the ’Hood, he didn’t find any causal relationship between gentrification and displacement. More surprising, he found that “poor residents and those without a college education were actually less likely to move if they resided in gentrifying neighborhoods.” How does that square with our beliefs about Ikea-hoods?

Foreclosures & the New Carpetbaggers

The Times ran another piece on the foreclosure mess in Florida. What strikes me about the foreclosure era is the special type of entrepreneur who is able to profit off other people’s misery. Reminds me of Goldman Sachs cashing in on the way up and the way down. Who says you can’t get 2 bites from that apple?

The Debt Economy

The New Yorker has a revealing piece that speaks to the government’s inherent lean toward keeping its citizens in debt.

Foreclosure to Rental

Interesting tact on profiting from the foreclosure waves. 

“Every weekday morning, Lou Jarvis drives the sun-baked suburban streets looking for investment gold: a family that will lose its house in a foreclosure auction within a few hours. When he wins, he offers to let the family stay in the house and rent for much less than their mortgage payment.”