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Monday, Dec 3, 2007

This should come as a shock to no absolutely no one: The Wall Street Journal had a research firm crunch the numbers and determined that many subprime loans were issued to borrowers who likely would have qualified for better rates and fewer fees. In 2005, people with credit scores that would have qualified them for conventional loans


got more than half—55%—of all subprime mortgages that were ultimately packaged into securities for sale to investors, as most subprime loans are. The study by First American LoanPerformance, a San Francisco research firm, says the proportion rose even higher by the end of 2006, to 61%. The figure was just 41% in 2000, according to the study. Even a significant number of borrowers with top-notch credit signed up for expensive subprime loans, the firm’s analysis found.


How could this have happened? The ever-rational consumer would have shopped around for the best deal, right?


Hardly. The brokers closing mortgages were given lucrative incentives for writing subprime loans and ARMs and the other now notorious credit products, so they had every reason to preserve the ignorance that all of us generally have when it comes to the credit market and to exploit our vulnerability in a time when we are making one of the most significant decisions of our lives, purchasing property.


Many borrowers whose credit scores might have qualified them for more conventional loans say they were pushed into risky subprime loans. They say lenders or brokers aggressively marketed the loans, offering easier and faster approvals—and playing down or hiding the onerous price paid over the long haul in higher interest rates or stricter repayment terms.
The subprime sales pitch sometimes was fueled with faxes and emails from lenders to brokers touting easier qualification for borrowers and attractive payouts for mortgage brokers who brought in business. One of the biggest weapons: a compensation structure that rewarded brokers for persuading borrowers to take a loan with an interest rate higher than the borrower might have qualified for.


This handy interactive graphic shows a lenders rate sheet and the yield spread premiums agents could earn by bullying or tricking borrowers into loans at terms worse than they theoretically qualified for. Basically, lenders use financial incentives to prompt agents to put people into shitty loans, with bad rates and prepayment penalties and unwieldy fees. Who’s on the side of the borrower? Basically, no one. It was pretty much caveat emptor in the midst of a real-estate-buying frenzy when everyone was telling everyone else how they had to act fast and buy something, anything, before all the deals were gone and how housing prices were never going to go down again, since after all, they’re not making any more land.


It’s almost unreasonable to fault mortgage brokers for being negligent and unethical. They are in the real estate racket; that’s what it’s all about. You don’t get into real estate out of a love for human kind and a dream of a better world. You do it because it seems like a good way to make a lot of money. And when greed is what gets you through your work day, why wouldn’t you prey on the ignorance of your clientele? It’s nothing personal, after all, just business. So one could argue that unscrupulous lending practices should be restrained by law—to a larger degree than they are already. In other words, the set of what counts as unscrupulous needs to be expanded to encompass what lenders likely consider to be standard operating procedures—it would be legislating away their right to whatever profit they can grab, and once you’ve done that, what stops the state from interceding in the economy with all sorts of price controls: rent control, caps on food prices, medical expenses, and legal fees, and so on. Ethical cases could be made for any of these kinds of intervention, but capitalism, when it comes down to it, isn’t arranged to be ethical and doesn’t function with elastic definitions of fairness.


 


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Monday, Dec 3, 2007
Amazon's Jeff Bezos with the Kindle.

Amazon’s Jeff Bezos with the Kindle.


Download current bestsellers as well as the latest release of your favorite not-so-mainstream author. Plus everything ever published, ever. Coming soon.


Last week’s cover of Newsweek magazine (11.26.07 issue) displays a nearly life size photo of the device Amazon.com is betting will finally offer a serviceable alternative to that bastion of civilization, the book. The ‘Kindle’, as it’s called, is a far more exciting product than electronic readers I’ve seen so far, and halfway through Steven Levy’s feature article I found myself enthusiastically describing the benefits to anyone who would listen.


Not only can the Kindle hold a library-worth of books (200 or so) at any given time in the palm of your hand, but it has a screen you can actually read them on without inducing migraines, and additional books are accessible at any time without hooking up to a computer. Using cell phone type broadband technology, the Kindle exists independently of your computer, which makes it even cooler than an iPod for bookish types. There are no connectivity fees.


Forget packing a carry on full of books for your beach vacation, you can decide what you feel like reading when you get there.

Your grandmother wants to know what you’re reading about? Instantly change the font size of the text. Plus get the daily paper and top bloglines instantly without carting along your wi-fi ready laptop.


Imagine having mobile access to your favorite blogs, newspapers (hot off the press), magazines (latest issues before they hit newsstands) and even being able to read freshly released chapters of that new crime novel as the author finishes writing them. Errata can be corrected instantly—because the Kindle remains accessible to publishers even after your download is finished. Rather than a static printed page, the book becomes a link that connects the reader with the entire publishing community.


All using a device that has been designed to look and feel like a book, with a six inch screen and about 10 ounces of heft in your hand. Can readers move both forward and backward at the same time, reading serialized fiction in the manner of Dickens on a device that can also access his entire oeuvre at any given moment?


The larger goal, as Amazon adds to its offerings (currently approaching the 100,000 mark, including books, blogs, magazines and newspapers) is to make instantly available everything ever published. Say what? Get in line if you want to talk about copyright infringement, but the potential is exciting. Texts are totally searchable, which has great implications for scholarship. Nothing ever goes out of print. First chapters are free, so you can try before you buy.


No wonder it costs the same as an iPhone currently does.


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Sunday, Dec 2, 2007

For the musician or hard core music fan with a shelf or desk to decorate, come these amazingly realistic mini Fender guitars. About one-third the size of the real thing, they can also be wall-mounted to show the works of art they truly are. The guitars come in a multitude of colors and you can also pick up a display case for six of the nine models if you’re a serious Fender aficionado. Oh, and they only look playable with their genuine wood necks, steel strings, and movable switches, so don’t drive yourself nuts trying.


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Sunday, Dec 2, 2007

Encased in a miniaturized replica of the famous boy wizard’s traveling trunk, this delightful DVD set should make any movie loving muggle more than happy. J.K Rowling’s hugely successful literary series is one of the few franchises to be carefully reconfigured to film (the author oversees all cinematic decisions). After the first two Chris Columbus helmed efforts, a real sense of artistry and depth has since been achieved. Half of the fun here is watching stars Daniel Radcliff, Rupert Grint, and Emma Watson grow up right before your eyes. It adds a melancholy realism to all the flights of fancy.


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Sunday, Dec 2, 2007

Most of the things that some people find utterly annoying about Naruto are things that his fans tend to like: he’s loud, he’s motivated, and he’s also loud. Did I mention loud? Even so, his latest PSP outing Naruto: Ultimate Ninja Heroes manages to quiet him down a bit while offering a surprisingly entertaining fighting experience on Sony’s little machine. The team-based aspects of the game are solid, and if you have PSP-owning friends around, you could have fun with this thing for hours—even the download mode is solid fun. The addiction, however, will hit as you try to ascend through the ranks of ninja prowess, collecting scrolls and completing tests to try and attain the title of hokage. For a game that’s ostensibly based on a chidren’s television program, completing these tasks is incredibly difficult, and if you don’t throw your PSP clear across the room at least once before you do (hint: aim for the sofa), more power to you. Much like he of last year’s underrated Uzumaki Chronicles, the Naruto of Ultimate Ninja Heroes is one you can get behind, in a game you’re bound to enjoy.


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