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Wednesday, Feb 21, 2007

Why is anyone surprised that substantial portions of America’s sub-prime lending market are starting to default now that interests rates have risen and the housing market has stalled? Skeptical economists who had been warning of a housing bubble had been predicting this scenario for a long time, but you don’t have to read Econometrica to know that when you give complicated loans (ARMs, Interest-onlys, etc.) to people basically on faith and allow them to pay little up front and a lot later on, many of them won’t be able to do it. As Justin Lahart put it in his WSJ column yeasterday: “Nobody seemed to realize the risks inherent in extending mortgages with loose standards that left borrowers with little skin in the game. The question worth asking now: Where else has lax lending been going on?”


This chart, from Mike Shedlock’s blog suggests that in mortgage lending lax lending was almost everywhere.


A commenter on Dean Baker’s blog explains how we reached this point:


Buying a house used to require coming up with a down payment or going to war and qualifying for a Veterans Administration loan guarantee. You had to have a certain amount of skin in the game, literally or figuratively. And in return you would get a loan with some relation to the Prime Rate. But it has always been possible to get loans with credit that is sub-Prime, in worse case scenarios you go to Tony Soprano and your collateral is your knee-caps. Now over the last decade or so the housing market has appreciated in such a way that lending to schlumps who may or may not pay off still makes you money. You get your interest money and at the end of the day can take the house back and still get your principal out. When this action was limited to the hard money guys (a technical term in my biz) this was a rough and tumble thing usually understood by both sides. But when Wells Fargo and some other big institutional players jumped in, well, Katy Bar the Door. Anybody could get a loan. You could simply state your income, you could simply state your assets. We call this stated-stated. As opposed to Full Doc where you actually have to prove that you have income. Well this is a two-edged sword. Lenders can use these programs to get good people with reasonable jobs but shaky credit into houses, and given any reasonable rate of housing appreciation have that appreciation gradually save the day. Or you can use that same lending instrument to put somebody in a house you know they can’t afford long term. It’s tough to know where to draw the line, and when it comes down to it lots of people in my industry don’t care: we collect the commission and sell off the loan. The foreclosures down the road aren’t our problem.


Naturally, lenders will tighten their standards in response to the default rate, removing prospective buyers from the market at a time when the vacancy rate is at an unprecedented high. This would seem to suggest further depreciation in housing prices, kicking off more problems.


Who you blame for all of this probably depends most of your political persuasion (perhaps since there is so much blame to go around): Greedy banks? Bubble-fueling speculators? Ignorant and overreaching borrowers? An ostrich-like Fed? A tax system skewed toward home-buying? Picking up with my middle-class hating from yesterday, I wonder if the bias toward home ownership (as a symbol of arriving in the middle class and becoming a stakeholder in society’s stability) makes us collectively tolerant of bad loans—in the grand scheme of things in America, bankruptcy seems more dignified than being a renter, even though spending more than you’ve earned seems to me a way of stealing from posterity.  We’re willing to underwrite this fantasy that everyone’s middle class with more and more exotic financial instruments, making the real extent of risk more and more obscure, as Gretchen Morgenson explains here. What happens when we can fantasize no longer?


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Wednesday, Feb 21, 2007
by PopMatters Staff

Neil Young: Live At Massey Hall (release date: March 13), produced by Young and the late David Briggs, is the second Reprise Records release in the Neil Young Archives Performance Series, following last year’s Live at the Fillmore East album. Both are in anticipation of the Archives Volume I collection, due this fall. That eight-CD, two-DVD audiobiography will include Young’s music from 1963 to 1972, and feature a treasure trove of previously unreleased recordings, both studio and live, along with concert footage and rare memorabilia from the first decade of Neil Young’s long and unequaled career.


“This is the album that should have come out between After the Gold Rush and Harvest,” Young says now. “David Briggs, my producer, was adamant that this should be the record, but I was very excited about the takes we got on Harvest, and wanted Harvest out. David disagreed. As I listen to this today, I can see why.”


Official Site
MySpace


 


Tagged as: neil young
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Tuesday, Feb 20, 2007


In much the same way he mined hip-hop culture for his acclaimed debut Hustle & Flow, writer/director Craig Brewer turns his attention to the blues for his equally musical sophomore effort Black Snake Moan. A newly slimmed down Christina Ricci plays Rae, a young, white trash tramp whose horniness possesses her like Linda Blair in The Exorcist, which leads her into the bedroom of any willing man in the county. After a particularly rough night, she is dumped on the side of a road and left for dead, only to be found and subsequently held captive by ex-bluesman and struggling Christian Lazarus (Samuel L. Jackson).


Up until this point, Black Snake Moan presents a fantastic concept; a god-fearing man looking to reform someone of their wicked ways, and by force if necessary. Wrapped up in the trappings of blues mythology, it promises some intriguing developments. But Brewer’s script never finds the right tone. Both over-the-top and deadly serious, ironic and earnest, Jackson, Ricci and the rest of the talented cast give excellent performances despite writing and situations that at times are laugh-out-loud ridiculous. Worse, Brewer seems to try and alleviate the problem with supporting characters and plotlines that enter and leave the picture on a whim. Rae’s relationship with her longtime boyfriend Ronnie (Justin Timberlake), Lazarus’ fledgling romance with local pharmacist Angela (S. Epatha Merkerson) and Reverend R.L.’s (John Cothran Jr.) efforts to bring Lazarus back to the church are largely underdeveloped and leave more questions than answers.


If there is any bright spot in this otherwise pointless exercise in Southern exploitation melodrama, it is the music. Samuel L. Jackson’s singing, particularly his stunning version of the traditional blues cut “Stagolee”, is far more evocative here than the puerile “It’s Hard Out Here For A Pimp” that became the center of Hustle & Flow. But like that film, Brewer addresses and even embraces African-American stereotypes but can’t transcend them. Black Snake Moan amounts to nothing more than another picture in which damaged white characters find healing in the ways of slightly off-the-radar African-Americans and their culture. That certainly isn’t to mention the film’s preoccupation with African-American male’s genitalia - a source of constant wonder for Rae.


I wish I could say Black Snake Moan was simply poorly made and inconsequential, but Brewer’s film goes a dangerous step further. Rather than turning stereotypes on their head, by the film’s truly cornball ending, he practically embraces them and tries to sell them as authentic drama. At least for myself, and the audience I was with, we weren’t buying it.



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Tuesday, Feb 20, 2007

Do we really have to wait That long???


 


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Tuesday, Feb 20, 2007
by Harlem Shakes

Harlem Shakes w/ Deerhoof
Diary #5


Being in a band with five go-getters means that someone always wants to show the other guys some cool new music (“dude, have you guys heard “Mental Perturbation” by Morton Feldman”), tell a joke (“how many indie rockers does it take to screw in a light bulb? What—you don’t know? Yeah… you should really go check that out”) or point out a sign that says something like “No Jesus No Peace, Know Jesus Know Peace.” Such fun can turn a good Shake bad.


To counteract all this over-stimulating, anxiety-attack-inducing fun, we’ve been taking solo walks around venue neighborhoods, putting on Jose’s gigantic, ear-enveloping headphones, and, like we did today, heading to the Gainesville public library to visit separate sections.


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