Krugman Versus Reality (Ongoing...)

Paul Krugman, the Princeton Populist, takes up the cause of the Little Guy beleagured by the Big Banks in the latest plot twist of the "Mortgage Morass":

The story so far: An epic housing bust and sustained high unemployment have led to an epidemic of default, with millions of homeowners falling behind on mortgage payments. So servicers — the companies that collect payments on behalf of mortgage owners — have been foreclosing on many mortgages, seizing many homes.

There is no question that banks have done a miserable job of documenting the title trail as mortgages were sold and securitized.  But do you expect a Nobel Laureate to provide economic analysis or hyperventilating hyperbole? 

But do they actually have the right to seize these homes? Horror stories have been proliferating, like the case of the Florida man whose home was taken even though he had no mortgage.

Hmm, I guess it depends on the meaning of "taken".  Also of "horror".  The man in question, Jason Grodensky, paid cash for a house after the bank had begun foreclosing against the previous owner.  However, in all the excitment of the mortgage meltdown (and the acquisition of the original lender by Bank of America), news of the transfer was not properly disseminated and the forclosing proceeded apace. 

Mr. Grodensy was never served with eviction papers or put out on the street - his home was "taken" in the sense that he received a notice that a FNMA had taken over the title.  He squawked and eventually everything was straightened out, with BofA agreeing to pick up his legal tab.

As to Krugman's assertion that "Horror stories have been proliferating", let's turn to the Times:

“It’s inexcusable that the banks didn’t staff up to meet the surge in foreclosures,” said Christopher Kotowski, an analyst with Oppenheimer. “On the other hand, we need to look at whether they are filing foreclosures on a massive basis against people who are not delinquent. So far, I haven’t seen any evidence that they are.”

Well, that is the Wall Street defense:

Those on Wall Street, however, are largely unsympathetic, insisting that possible errors in the foreclosure process are beside the point, that the process begins only when a borrower starts missing mortgage payments.

"If you didn't pay your mortgage, you shouldn't be in your house. Period. People are getting upset about something that's just procedural," said Walter Todd, portfolio manager at Greenwood Capital Associates.

Obviously, it doesn't follow that the courts should tolerate random foreclosures by non-mortgage holders.  But Krugman concludes with a feel-good non sequiteur:

What should be happening? The excesses of the bubble years have created a legal morass, in which property rights are ill defined because nobody has proper documentation. And where no clear property rights exist, it’s the government’s job to create them.

That won’t be easy, but there are good ideas out there. For example, the Center for American Progress has proposed giving mortgage counselors and other public entities the power to modify troubled loans directly, with their judgment standing unless appealed by the mortgage servicer [link]. This would do a lot to clarify matters and help extract us from the morass.

Huh?  That would expedite negotiations of mortgage relief, since the homeowner wouldn't have to track down the current holder of the mortgage and could just negotiate directly with his Congressman's precinct captain or whoever Krugman and the progressives endorsed.  But lowering the payments on a mortgage with no clear owner would hardly "clarify" the matter of ownership (well, unless the payments were reduced to zero, which I guess Krugman would endorse).

MOREZ: James Joyner provides a brutal beat-down of Krugman's column and suggests the peril of reasoning from extreme cases.

Comments

[bgates]

The man who's oh-so-reluctant ever to admit that he might have inherited any problem from his predecessor.

You have to admit, he'd have an easier job if Bush hadn't screwed up the partition of India so badly.

[jorod]

It's always the same...creditors vs. debtors...It's been that way for over 200 hundred years.

[Pops]

I was just thinking, since the Congress has spent the SociaL sECURITY TRUST FUND AND PROVIDED IT IOUs, doesn't that mean that Social security taxes have essentially, actually been income taxes.

[jorod]

And the politicians try to ride the fence and make hay from both ends.

[Sue]

The only time you here about the jobs goving overseas is during an election year.

Josh Hamilton just hit a home run. 3 to zip Rangers. Bottom of 1st. I promise not to do a play by play all night, but this is a first for me.

Go Rangers Go!

[Danube of Thought]

"It's always the same...creditors vs. debtors...It's been that way for over 200 hundred years."

A hell of a lot longer than that.

[Ignatz]

Hey, I don't care about people who are upside down on their mortgage. If they were responsible citizens they would keep paying their mortgage even after they've been tossed out of the house.

The Theocratic Tea-Party is the party of
responsibility and integrity.

[PD]

And McDonnell if you watch the whole debate held her own and pretty much won on issues but lost on the typical gotchas from the biggest loser ever on Jeopardy.

Heh. I also started reading "Hostile Intent" today (Michael Walsh) and had to chuckle as I read this "fictional but accurate" passage:

At that moment, her cell phone rang. It was Jack. "Hope, what the heck's happening?" His tone was anxious, urgent.

"I don't know Jack. I'm at the school now. The place is crawling with cops. Where are you?" She could hear crowd noises in the background, and the sound of Wolf Blitzer's voice yipping like a small puppy in his excitement over a big story.

[it's a cause, not a symptom]

"And McDonnell if you watch the whole debate held her own and pretty much won on issues"

I, er, uh can't think of an issue she won. Can you, you know, kinda, um, uh, give me a hint. I promise to think about it tonight and post it on my website, when I can clear the pudding in my head.

[it's a cause, not a symptom]

Bush was a genius compared to these people.

[narciso]

You know I found out Michael Walsh, is also
"David Kahane" that writer in the National REview, that really understood the Alinsky
method, and did it with great humor

[Porchlight]

New Rangers thread up for Sue!

[PD]

Not answering a gotcha question is a win in my book.

[Charlie (Colorado)]

Okay, just skimming the thread, I gather Hickenlooper is onanising with Cooter?

I'm pretty sure that's definitionally impossible.

Actually, the Tancredo thing is kind of a shame; Tom is one of the few Republicans who I find just unacceptable,m while Hick is about the only Democrat here I find marginally acceptable.

Not coincidentally, Tom has never held a private-sector job of any significance, while Hick has been both a professional geologist and a successful restauranteur and brewer.

[it's a cause, not a symptom]

"Not answering a gotcha question is a win in my book."

In that case, you will, no doubt take a loss in Delaware, as a win, based on your version of the Socratic method.

[Porchlight]

Charlie, with redistricting coming up, we need every GOP governor we can get.

[PD]

Socrates would say it depends on who loses.

[Rick Ballard]

Porchlight,

A new piece by Cook. He's encouraging the DCCC to finish bayoneting Blue Dogs ASAP in order to protect Blue Hellers. I believe that the urban deep Blue Hells are probably safe but there are plenty of suburban areas that will be very hard to defend. The wide open space light Blue Hells (AZ-07, AZ-08, CO-03 and TX-23) look like they're gone.

[Stephanie]

Iowahawk has a new piece up and it's a keeper.

I'M SORRY, THERE IS NO ESCAPE KEY. WHAT DO YOU WANT TO DO?

LUN

[Charlie (Colorado)]

Porch, that argument would almost convince me; would convince me if I didn't know Tom and his positions going back a long time. If it were merely that I din['t think he was competent I might buy it.

But if he pushes his English-only, anti-immigration stuff in Colorado, he'll almost certainly lose badly, and very possibly could turn Colorado into a Democrat state for a generation. Colorado is, and has always been, a heavily Spanish-speaking state, with about the same proportion of native Spanish-speakers as New Mexico.

If the state tries to tell old Mr Lucero that he can't talk to his neighbor Mrs Trujillo, who works in the County Clerk's office in Conejos County, in Español, it ain't gonna be pretty.

[Porchlight]

Thanks, Rick. I think this is rather delicious from Cook:

But with some incumbents who were previously thought to be safe suddenly finding themselves with narrow and precarious leads, it's a matter of ascertaining who can be saved with just money and who would need an entire infrastructure and operation to be set up -- it's certainly too late for that.

Also found this for you on Roll Call from back in March:

In October 2006, it already looked pretty likely that Democrats were going to grab control of the House. But the Senate still appeared to be up in the air. Yet one by one, all the pieces fell into place. It really seemed like a game of dominoes. We knew on election night that Democrats had won the House; we didn’t know for sure about the Senate until two days later, when then-Sen. George Allen (R) conceded in Virginia.

The article also notes that last time the House flipped without the Senate flipping too, it was 1930.

[Porchlight]

Well, Charlie, I don't know that Hick will be any better. Didn't he not even want the job until he was cajoled into running? That doesn't bode well.

[Janet...off the couch & sportin Tea Party chic]

Yet one by one, all the pieces fell into place.

One of those pieces was the unknown word macaca...& the trumpeting of super conservative Democrat Jim Webb. Well, old Jim Webb has voted with the liberal Dem. agenda on everything. He wrings his hands & pretends like the agenda is really troubling him.....but he always comes through with the lib. vote.

[bgates]

A hell of a lot longer than that.

I dunno - I don't think there have been creditors and debtors for more than 50 or 60 hundred years.

[maryrose]

I'm still angry about George Allen and the macaca non-story and the way Ted Stepens was run outof office on trumped up charges.
I agree with Rick-Kirk and Dino Rossi need to win big otherwise the dems will steal it again.

[PD]

bgates is one careful reader!

[Jim Rhoads a/k/a vnjagvet]

The Iowahawk link is a classic. And accurate as well.

[Clarice]

Iowahawk is fantastic!

[Clarice]

When you multiply 200 by 200 years, is that a negative or a positive number?

[Ignatz]

That of course is cleo at 8:44 soiling his diaper.

[PD]

Ignatz: Yes, it was pretty obvious. No worries.

When you multiply 200 by 200 years, is that a negative or a positive number?

Depends on the register size and how overflow is handled.

[Pofarmer]

"That won’t be easy, but there are good ideas out there. For example, the Center for American Progress has proposed giving mortgage counselors and other public entities the power to modify troubled loans directly, with their judgment standing unless appealed by the mortgage servicer"

This numb nuts won a Nobel prize? Really? My border collie is smarter than that.

[Ann]

Just an observation of faces in the crowd today:

Find a smile or a sign of hope. Funny, Janet, I think they all smell caca.

[Clarice]

Ann, Brack doesn't look too jolly either--do you suppose he is catching on that a Republican Congress will not be crossing over the aisle to compromise with him after all?

[PD]

a Republican Congress will not be crossing over the aisle to compromise with him

Unfortunately, I don't think we can take this for granted. The ability of Republicans in Congress to be cowed by screeching Democrats is seemingly limitless.

I remember when the Republicans won Congress earlier in the decade and the Democrats set up a cacophany that "checks and balances" meant that WITHIN CONGRESS the majority party needed to grant committee seats to the minority party. The response should have been to excoriate the Democrats for their shameless and willful misinterpretation of the structure of our government. I don't remember that anything of the kind happened.

[Clarice]

It's a new world,PD. For the moment anyway.

[PD]

I hope so. I hope the about-to-be-newly-elected Republicans realize they're not being elected to "get along."

[Frau Feuerzangenbowle]

I think Barry is asking himself where TOTUS was. The Omann gets nervous when he has to perform alone.

[Threadkiller]

--"I hope the about-to-be-newly-elected Republicans realize they're not being elected to "get along.""--

ChaCo would destroy me if I said that. :-)

I hope so too.

[Pops]

Angle is clearly an extremist. She actually believes Social Security, as an insurance policy, should be an account that actually has your money in it. If that had occurred, Harry Reid and his pals would not have had that 2 trillion dollars to spend on their pet projects.

[Pops]

While the Obama adminstration pushes the idea that our Democracy is being stolen by lawbreakers and we aren't eating healthy fruits and vegetables, it was nice to see Michelle Obama standing at a voting booth telling people how to vote and noshing on a greasey cheeseburger and fries.

Passive agressive??

[sbw]

-- they're not being elected to "get along."

No. They are being elected to explain to the rest of us why they think a particular path is worth following. Along the way they should address reasonable objections raised.

They are not elected to think so little of us that they believe good government means blowing smoke, like this administration does.

[Janet...off the couch & sportin Tea Party chic]

Speaking of blowing smoke...If NYC passes an outdoor smoking ban will Obama have to stop going there? persona non grata?

[Extraneus]

They're talking about their democracy, Pops.

[Janet...off the couch & sportin Tea Party chic]

and via Instapundit - THE COMING MIDDLE-CLASS ANARCHY: ““We follow the rules, and look where that’s gotten us?”

It links to this article.

[Jane]

The ability of Republicans in Congress to be cowed by screeching Democrats is seemingly limitless.

This is why the Tea party's biggest job begins Nov 3rd.

[PD]

begins Nov 3rd

Exactly. Our own Long March.

[PD]

Through the institutions, I mean. Not the other one.

[PD]

Janet, re: the middle-class anarchy article. Someone called in to Rush yesterday about this issue. They'd tried to apply for HAMP, met all the qualifications down the line, but could not get approved. Rush was unsurprised, as his take is that this is a program designed to sound good, not to actually help anyone.