The press pity-party on housing is taking the form of a steady drip-drip-drip of tear jerking anecdotes. These stories fit the press consultants' mantra of emotionally engaging readers, while at the same time providing a steady stream of material for agrarian reformist pundits, legislators, and regulators.

The New York Times provides, as it so often does, a classic of the genre:

In the last two years more than 600 houses in Euclid [Ohio] have gone through foreclosure or started the process, many of them the homes of elderly people who refinanced with low two-year teaser rates, then saw their payments grow by 50 percent or more.

Playing the elderly exploitation card is always a winning meme for the agrarians. That said, I do feel that anyone who pushed clearly inappropriate obligations on folks who neither needed nor comprehended the contracts should be spending some quality time face-down in the day room at Leavenworth.

I pulled up the demographic and economic footprint of the town chosen by the Times for their implicit lesson in the evils of capitalism. It's a part of the Cleveland metro area, north and east along the lakefront. The link above features slightly dated histograms of income and property values there. Hint: It ain't New Canaan, CT.

My point? The folks whose purchasing power seems most at risk are precisely the folks who didn't have much purchasing power to start with. While, again, this is a tragedy at the micro level, it really doesn't strike me, green eye shades and all, as something that is likely to crater the overall economy.

Modest folks on fixed incomes who thought they were going to turn their homes into cash cows will now have to live yet more modestly than their starting point.

Another way to think of this: Folks playing this mortgage game were engaging in amateur financial engineering, with scant ability to model the downside. It's like granny watching a few cablecasts of Texas Hold'em and then taking her life savings to a table in Vegas.





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