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good point, but then I would argue all the people involved in the "value" cahin of mortgages is/was a cheater.

To say that cheating is ok because others do it is the wrong way. Cheating is always bad.

I would rather argue the other way and say that the big boys should be punished for their cheating and not cheat because the others did it. If every one cheats then this equates to lawlessness and then society is doomed. In many ways I think this process is already underway in some countries and this will lead to revolution-like stuff happening. Unless of course, everything magically becomes good again...

That the big banks got rescued by honest little people tax payer money is not fair, sure, but it is no reason to be a cheater like the big boys too. At least that's how I see it...

by crankykarsten (cranky (where?) gmx dot organisation) on Thu Aug 26th, 2010 at 07:25:48 AM EST
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In an environment where cheating is more profitable than any other activity, those who do not cheat go bust or are bought out. Either way, they cease to exist as independent economic actors. Call it a variant of Gresham's Law.

Individual homebuyers do not have enough market power to resist this mechanism, even if they don't get caught up in the speculative frenzy. Large financial houses may have that power, and the sovereign certainly has, should it choose to exercise it. So "cheating" is the wrong sort of framing for this - it is a political failure, first on the part of a deregulation-obsessed sovereign, then on part of quasi-sovereign banking houses.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Aug 26th, 2010 at 07:37:04 AM EST
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I think you're fundamentally misunderstanding how this works.

Finance and politics do not have the same morality that ordinary people do. Certainly not ordinary decent people.

The whole point of finance and politics is to screw everyone else for personal advantage to the maximum extent possible. That's the basis of Wall St and Washington morality.

The problem isn't that this 'isn't fair' - of course it's not fair.

The problem is that most people in Western democracies don't appreciate how systemically dysfunctional these cultures are, and they expect moral standards from so-called leaders, experts, and powerful people which those people have absolutely no interest in.

As for mortgages - this kind of creeping immorality corrupts everything it touches, so it's not difficult to understand why people will do the strategic default thing.

But a lot of people in strategic default have no choice, because they'll have lost jobs they would have preferred to keep, or suffered pay cuts they would have preferred not to suffer, and they haven't been given an affordable housing option.

There's a clear difference between that and someone who has no financial issues simply walking away from a debt because they can, and don't care to repay it.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Thu Aug 26th, 2010 at 07:40:21 AM EST
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call me optimistic dreaming naive young guy, but I always thought that at least part of the political sphere was there to represent the people...

But I do get your point, as soon as the government does not represent the poeple anymore but is bought by wall street and big oil, well, then that's the beginning of the end as soon as things don't go continually up for everyone (some more than others) thanks to practically free energy the last 50 or so years.

The energy credit will soon be gone and then it won't be that easy and those socities where citizens are still more or less represented by their government will fare better than those ruled by dictator-like cartels of MBA alumni...

by crankykarsten (cranky (where?) gmx dot organisation) on Thu Aug 26th, 2010 at 07:46:13 AM EST
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Government is supposed to represent the people, and there's a narrative that it represents the people. But in practice - not so much.

In the UK in the last century there was maybe a decade when government was truly popular and representative. And as we've just seen - when there's danger of instability or change, the posh boys always ignore their nominal party labels and close ranks.

It's not unlike the US where one party despises poor people and wants them to die or live as slaves, and the other party despises them but understands that some concessions to their welfare are expedient.

I don't think it's a coincidence that offshoring has made it possible for those in power to ignore the working poor and shift policy right-wards. All those workers are no longer necessary, so there's no longer any need to pretend to be polite to them.

If more people realised how excluded they are, it might not be a bad thing.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Thu Aug 26th, 2010 at 08:37:48 AM EST
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If we brought in some medieval usury laws and gave whippings - with the number of lashes depending on how much you got - to everyone involved in a speculative bubble, maybe people would think twice. (Or the rich would become bloody pulp.)

When it comes to the houses I have no problem with people using their limited liability on mortgages. The bank gets the collateral that was put up, ie a house. The bank can then sell it or rent it out or build something else on the lot. If they absolutely did not want a house, they should not have made a loan with it as collateral.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Fri Aug 27th, 2010 at 04:02:35 AM EST
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Better than whipping, those involved should be made responsible to the full extent of their personal wealth and future earnings for high financial crimes.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Aug 28th, 2010 at 12:03:20 AM EST
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