the rich are different

[walkitout]

http://www.nytimes.com/2010/07/09/business/economy/09rich.html

This is an article that contains some interesting information combined with either bad exposition or terrible analysis. The interesting information is that there's a higher rate of serious delinquency on mortgages with more than a million outstanding on them. Perhaps on some other occasion, someone could explain to me why anyone would ever write a mortgage for more than a million. Because I have not been happy with any explanation I've ever seen.

On what basis can one conclude that people who owe more than a million dollars on a mortgage are high net worth individuals? I think you can conclude that during the boom, they had high incomes and they convinced someone to loan them a lot of money on a house that was considered worth that much, plus or minus. But high _net_ worth? Does not follow.

Also, I don't understand using an example of dual layoffs and then talking about strategic default. If both earners lost their jobs, it probably wasn't a strategic default -- and there's no example given in the article of anyone engaging in strategic default. Even the possible ones -- the rapper and the "businessman" -- sounded more like people trying to put a positive front on a very bad situation, rather than someone making a calculated decision to not make payments when they were underwater.

And about that "businessman": given that every business critter showing up on the cable money channels is talking hugely doomy, I don't understand why he thinks he has to stay upbeat. No one else is. The fact that he thinks he has to be upbeat puts the lie to his assertion of being a business critter.

Comments

[ethelmay.livejournal.com]

Re the businessman: he just said he had to be upbeat in the sense that he had to have a good image -- after all, would *you* hire or do business with someone who had defaulted that way? It's just spin: he's protecting his reputation. I don't think he's implying that he has to be upbeat about the economy. Though I am reminded of all that power-of-positive-thinking crap -- he might be thinking something like if I do not act broke, I will get more clients, and then I will not be broke, so it's not lying, it's creating my own reality. People who buy million-dollar homes they cannot afford (as an investment in their image) probably tend toward that kind of thinking.