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  1. 25 Jan '10 01:09
    http://www.nytimes.com/2010/01/24/business/economy/24view.html

    Underwater, but Will They Leave the Pool?

    By RICHARD H. THALER
    Published: January 23, 2010

    MUCH has been said about the high rate of home foreclosures, but the most interesting question may be this: Why is the mortgage default rate so low?

    After all, millions of American homeowners are “underwater,” meaning that they owe more on their mortgages than their homes are worth. In Nevada, nearly two-thirds of homeowners are in this category. Yet most of them are dutifully continuing to pay their mortgages, despite substantial financial incentives for walking away from them.

    ...

    Some homeowners may keep paying because they think it’s immoral to default. This view has been reinforced by government officials like former Treasury Secretary Henry M. Paulson Jr., who while in office said that anyone who walked away from a mortgage would be “simply a speculator — and one who is not honoring his obligation.” (The irony of a former investment banker denouncing speculation seems to have been lost on him.)

    ...

    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.

    ...
  2. Subscriber Wajoma
    Die Cheeseburger
    25 Jan '10 01:16
    Originally posted by zeeblebot
    http://www.nytimes.com/2010/01/24/business/economy/24view.html

    Underwater, but Will They Leave the Pool?

    By RICHARD H. THALER
    Published: January 23, 2010

    MUCH has been said about the high rate of home foreclosures, but the most interesting question may be this: Why is the mortgage default rate so low?

    After all, millions of American homeowners ...[text shortened]... playing in a poker game in which they are the only ones who think bluffing is unethical.

    ...
    Commendable, those that have struck a deal and stick to their word.

    They seem in short supply at times, it is heartening to see there are still those with principle.
  3. Subscriber AThousandYoung
    It's only business
    25 Jan '10 01:21
    Originally posted by zeeblebot
    http://www.nytimes.com/2010/01/24/business/economy/24view.html

    Underwater, but Will They Leave the Pool?

    By RICHARD H. THALER
    Published: January 23, 2010

    MUCH has been said about the high rate of home foreclosures, but the most interesting question may be this: Why is the mortgage default rate so low?

    After all, millions of American homeowners ...[text shortened]... playing in a poker game in which they are the only ones who think bluffing is unethical.

    ...
    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.

    Very interesting.
  4. Subscriber AThousandYoung
    It's only business
    25 Jan '10 01:24
    Originally posted by Wajoma
    Commendable, those that have struck a deal and stick to their word.

    They seem in short supply at times, it is heartening to see there are still those with principle.
    How do you feel about the business principle that a business exists to make profits? As the quote I selected implies, this means that businesses feel perfectly comfortable "breaking their word" as you put it if it's in their financial interests.
  5. Subscriber Wajoma
    Die Cheeseburger
    25 Jan '10 01:57
    Originally posted by AThousandYoung
    How do you feel about the business principle that a business exists to make profits? As the quote I selected implies, this means that businesses feel perfectly comfortable "breaking their word" as you put it if it's in their financial interests.
    Profit is the difference between what it costs to produce and what it's value is.

    This has nothing to do with fraud, whether committed by business or individuals.
  6. Subscriber AThousandYoung
    It's only business
    25 Jan '10 02:12
    Originally posted by Wajoma
    Profit is the difference between what it costs to produce and what it's value is.

    This has nothing to do with fraud, whether committed by business or individuals.
    So, as a business exists to make profit, and profit is independent of fraud, then profitable businesses - being groups of people who choose to prioritize profit over not committing fraud if they can find a way to profit via fraud - are not honorable. This is why they are profitable.

    They keep their costs down and "increase the value" of their product with advertising that does it's best to hide flaws in the product and slick, smooth talking salespeople.

    Lots of them are funded with inherited money, some of which is due to fraud but well laundered via the inheritance system.
  7. Subscriber Wajoma
    Die Cheeseburger
    25 Jan '10 02:46
    Originally posted by AThousandYoung
    So, as a business exists to make profit, and profit is independent of fraud, then profitable businesses - being groups of people who choose to prioritize profit over not committing fraud if they can find a way to profit via fraud - are not honorable. This is why they are profitable.

    They keep their costs down and "increase the value" of their prod ...[text shortened]... inherited money, some of which is due to fraud but well laundered via the inheritance system.
    Compare the two posts:

    The first, unambiguous, diamond clear, to the point.

    The second, full of exaggeration, faulty logic, collectivism, wild assumption, nightmare chiropractic contortions.

    I'll stick with English, thanks.
  8. 25 Jan '10 04:06
    i guess it is not fraud to walk away from a loan if you're underwater, otherwise the walkers would be arrested.
  9. Subscriber Wajoma
    Die Cheeseburger
    25 Jan '10 04:10
    Originally posted by zeeblebot
    i guess it is not fraud to walk away from a loan if you're underwater, otherwise the walkers would be arrested.
    I would say to make an agreement with someone to pay them a certain amount of money then walk away is a type of fraud. If a condition of the agreement was that if you get yourself so deep in the hole they will let you do just that - it is not fraud.
  10. 25 Jan '10 04:14
    There is more to this story than simply the bottom line. A persons home is a very personal thing. They try and afford the best standard of living possible, the investment aspect is secondary. So to give that up is a hard thing to do. Walking away from their home would almost insure a lower standard of living. Conversly, a business is ONLY concerned with the bottom line. Whatever the numbers indicate is what should be done.
  11. 25 Jan '10 11:31
    Originally posted by zeeblebot
    i guess it is not fraud to walk away from a loan if you're underwater, otherwise the walkers would be arrested.
    But it should be. One of the causes of the collapse of the housing market in the U.S. and several other places is the fact that you can simply walk out of your mortgage and hand in the key. If you do that here, your house is sold at auction and the difference between your mortgage and the amount of money made from the auction becomes a debt (or a profit of course, if your house was worth more than your mortgage). The housing market here is far less volatile as a result.
  12. 25 Jan '10 18:18
    Originally posted by KazetNagorra
    But it should be. One of the causes of the collapse of the housing market in the U.S. and several other places is the fact that you can simply walk out of your mortgage and hand in the key. If you do that here, your house is sold at auction and the difference between your mortgage and the amount of money made from the auction becomes a debt (or a profit ...[text shortened]... se was worth more than your mortgage). The housing market here is far less volatile as a result.
    do they have debtors' prisons there?
  13. 25 Jan '10 18:41 / 1 edit
    Originally posted by zeeblebot
    http://www.nytimes.com/2010/01/24/business/economy/24view.html

    Underwater, but Will They Leave the Pool?

    By RICHARD H. THALER
    Published: January 23, 2010

    MUCH has been said about the high rate of home foreclosures, but the most interesting question may be this: Why is the mortgage default rate so low?

    After all, millions of American homeowners ...[text shortened]... playing in a poker game in which they are the only ones who think bluffing is unethical.

    ...
    What would happen if the Tea Party Movement was to start a populist "stick it to the banks movement" where they encouraged people with "underwater mortgages" to just walk away en masse?
  14. 25 Jan '10 23:18
    house prices would probly drop a lot more.
  15. Subscriber AThousandYoung
    It's only business
    25 Jan '10 23:22
    Originally posted by Wajoma
    Compare the two posts:

    The first, unambiguous, diamond clear, to the point.

    The second, full of exaggeration, faulty logic, collectivism, wild assumption, nightmare chiropractic contortions.

    I'll stick with English, thanks.
    Your English is TERRIBLE. I said "my people" and you thought I meant slaves.