Tale from a Player
How former HUD Secretary (under Clinton, if you’re keeping score) Henry Cisneros encouraged poor people to buy housing they couldn’t afford. But his intentions were good!
The causes of the housing implosion are many: lax regulation, financial innovation gone awry, excessive debt, raw greed. The players are also varied: bankers, borrowers, developers, politicians and bureaucrats.
Mr. Cisneros, 61, had a foot in a number of those worlds. Despite his qualms, he encouraged the unprepared to buy homes — part of a broad national trend with dire economic consequences.
He reflects often on his role in the debacle, he says, which has changed homeownership from something that secured a place in the middle class to something that is ejecting people from it. “I’ve been waiting for someone to put all the blame at my doorstep,” he says lightly, but with a bit of worry, too.
Victor Ramirez and Lorraine Pulido-Ramirez bought a house in Lago Vista in 2002. “This was our first home. I had nothing to compare it to,” Mr. Ramirez says. “I was a student making $17,000 a year, my wife was between jobs. In retrospect, how in hell did we qualify?”
The majority of buyers in Lago Vista “were duped into believing it was easier than it was,” Mr. Ramirez says. “The attitude was, ‘Sign here, sign here, don’t read the fine print.’ ” He added that some fault lay with buyers: “We were definitely willing victims.” (The Ramirez family veered close to foreclosure, but the couple now have good jobs and can make their payments.)
Plenty of blame to go around, I’d say.
It’s not just Wall Street
Zillow cutting 25% of its workforce
This was an incredibly painful decision for me and the leadership team, but, in the end, we concluded that we had no choice but to securely batten down the hatches as we sail into a major economic storm. Despite having sizeable cash reserves, we deemed the responsible course was to meaningfully reduce expenses, so that Zillow emerges from the other side of the recession in a very strong position, even if the recession lasts many years.
[emphasis added, just in case your eyes had glazed over]
And they say real estate agents are Pollyanna’s!
Bloomberg: Dow sees biggest gain this week since 2003 I suppose that may be true – if you start low enough, even a dead cat bounce will lift things a bit. But the past month’s been a little … discouraging.
Thanks to a reader, here’s a link to a humorous article: Hedge Funder calls it quits (that’s not the burned – out hedge funder pictured above, by the way, it’s Gaylord Nelson founder of Earth Day, old hippy and U.S. Senator; I just thought that in light of the hedge-funder’s parting endorsement of the merits of dope, the two of them belong together). The Californian made a lot of money for a lot of people, including himself, and according to his farewell letter to investors, no longer wants to play the game:
“Recently, on the front page of Section C of the Wall Street Journal, a hedge fund manager who was also closing up shop (a $300 million fund), was quoted as saying, “What I have learned about the hedge fund business is that I hate it.” I could not agree more with that statement. I was in this game for the money. The low hanging fruit, i.e. idiots whose parents paid for prep school, Yale, and then the Harvard MBA, was there for the taking. These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government. All of this behavior supporting the Aristocracy, only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America.”
Nothing to add to that, I suppose.
Unrelated Update: According to Blogger.com, which hosts this blog, this is my 1,000 posting – I passed the 50,000 visitors mark earlier this week. I don’t know what good that knowledge will do, but it gives me a chance to go enjoy a celebratory cup of coffee – back later.
One of my guilty pleasures, I’m shamed to admit, is reading the local police blotter (a vice shared by too many people, alas – police blotters and obituaries are, I’ve read, the two most popular features of all local papers). Those pages have allowed me to follow the criminal career of one local family now since 1970, when the now-grandfather, then a local punk volunteer fireman, burned down a garage on my street, was arrested and charged with a series of arsons, including the destruction of the Riverside train station. Over the years, I’d see that he’d been caught for one transgression or another and went into and out of jail. He must have put his post-incarceration spells to good use because, after awhile I began noticing that other, much younger people with the same last name and still living in the area of their father were also running afoul of the law: breaking into the Howard Johnson’s, drug busts, domestic violence calls, the usual stuff that what some call “the misfortunate” and I call the criminal class get into. In today’s paper, a third generation appears.
My question is, why? There’s another branch of this same family that is quite respectable, runs a successful business and has done so for at least four generations. What’s up with this bunch? No answers here, I just find the phenomenon interesting. I know that alcoholism can run in families and certainly a lot of these reported crimes seem to have been fueled by that or other drugs (or, in the case of car break-ins, the need for drugs). But did some of the children escape? I can’t tell, of course, because if they did they wouldn’t appear in the police blotter. The one thing I’m pretty sure of is that it is not a case, as so many of my former clients claimed, of the police picking on them. I sometimes stir up our local force with some acerbic posts and, in the past, columns yet I’ve never been arrested or even accused of burglary, drunk driving or petty theft, no doubt because I don’t engage in those activities. Most people don’t – this family does. Why?