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Another perspective is that jinglemail rules simply confer on homeowners a privilege that stockholders already have, namely limited liability in part of their business ventures. If a company is underwater, the stockholder can (and indeed is expected to) walk out of his commitment for no other reason than the fact that it is underwater. Stockholders are not asked whether they are in actual financial difficulty when they do their equivalent of jinglemail.

I don't think that limited liability is inherently counterproductive in the mortgage market (though the mortgage market itself may well be, because the pwnership society it promotes is counterproductive). Similarly, I don't think that exercising limited liability as a matter of convenience rather than necessity is inherently immoral, whether in the stock market or in the mortgage market.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Aug 26th, 2010 at 07:56:46 AM EST
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