Re: A Thesis That Might Be Banal

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"Basic animating principle" of what?


Posted by: Flippanter | Link to this comment | 01- 3-08 2:58 PM
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Maybe delete and try this one again?


Posted by: NCProsecutor | Link to this comment | 01- 3-08 2:59 PM
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Amerikkka.


Posted by: ogged | Link to this comment | 01- 3-08 3:00 PM
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Maybe delete and try this one again?


Posted by: NCProsecutor | Link to this comment | 01- 3-08 3:00 PM
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Tempting as it is to ridicule you, I'll instead ask about what you mean when you say that this principle's content and force have not changed. Certainly the percentage of the population that endorses it has. Or is this epiphenomenal because there's some back room where these things are decided, just off the lab where AIDS and crack were invented? Forgive me, I've been watching Chapelle.


Posted by: FL | Link to this comment | 01- 3-08 3:00 PM
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See if you can spot the false dichotomy in 5.

This is remarkably similar to another post from ogged for which I will now commence to look.


Posted by: ben w-lfs-n | Link to this comment | 01- 3-08 3:01 PM
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I'm not really following either. While it's clearly still a fundamentally racist culture, I'm not sure that you can claim the nature of the racism is unchanged over time, or uniformly targetted.


Posted by: soup biscuit | Link to this comment | 01- 3-08 3:02 PM
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Here it is, Ben.


Posted by: FL | Link to this comment | 01- 3-08 3:02 PM
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The more things change, the more they stay the same, is I think the deep thought behind this.


Posted by: Sifu Tweety | Link to this comment | 01- 3-08 3:03 PM
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Amerikkka.

Aren't abolitionism, the election of the Railsplitter, the Civil War, the postbellum amendments, the Voting Rights Act, affirmative action, etc., etc., evidence to the contrary? Are they unnatural detours from Amerikkka's naturally racist course?


Posted by: Flippanter | Link to this comment | 01- 3-08 3:05 PM
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9: Or maybe like that civil rights board game Peter, Lois, Cleveland, and Loretta play on Family Guy? No one ever wins, you just do a little bit better each time.


Posted by: oudemia | Link to this comment | 01- 3-08 3:06 PM
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this principle's content and force have not changed.

This struck me too. I would have said that the content and force of racist/segregationist thought has changed enormously, even if we believe that the same malign motivations are prominent.


Posted by: baa | Link to this comment | 01- 3-08 3:07 PM
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Ok, this is banal,

Or asinine. It's a mistake to think of America as having a single (or two, or three, etc.) unconscious policy as regards African-Americans.


Posted by: SomeCallMeTim | Link to this comment | 01- 3-08 3:07 PM
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11: Giggity.


Posted by: Flippanter | Link to this comment | 01- 3-08 3:08 PM
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I'm not getting the second paragraph. Wouldn't the generous thought be, "Five generations, hmm, that's a pretty short time to recovery from slavery."


Posted by: destroyer | Link to this comment | 01- 3-08 3:08 PM
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Huh. It's not that everyone nitpicking isn't right (yes, things change, yes, racism isn't universal), but there is something valid about Ogged's post. The example I notice is that public goods that were perfectly practical to provide in the Jim Crow era when few blacks could take advantage of them are now obviously impossible -- my parents went to well respected colleges in NYC that were pretty much free (NYC, so not Jim Crow, and I'm sure they had black classmates but not as many as there would have been a decade later), but now that sort of thing would be absolutely impossible to fund. (Neither one of my parents actually managed to complete their gov't funded degree, so there is an argument that it encouraged shiftlessness.)


Posted by: LizardBreath | Link to this comment | 01- 3-08 3:10 PM
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15: Is it? And when would you project recovery to actually happen?


Posted by: soup biscuit | Link to this comment | 01- 3-08 3:18 PM
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Well, obviously the details have changed, but I don't understand what's confusing about saying that the principle that blacks need to be segregated and controlled hasn't.


Posted by: ogged | Link to this comment | 01- 3-08 3:19 PM
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The example I notice is that public goods that were perfectly practical to provide in the Jim Crow era when few blacks could take advantage of them are now obviously impossible

There have been other changes in American society since the passage of the Civil Rights Act, so blaming the absence of well-respected free colleges on the possibility that blacks might attend seems like a bit of a stretch.


Posted by: water moccasin | Link to this comment | 01- 3-08 3:19 PM
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17, I don't think that thought is correct. It just seems to be the one generous to Amerikkka.


Posted by: destroyer | Link to this comment | 01- 3-08 3:20 PM
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16: I do actually wonder what the gentrification of urban areas will mean as far as de facto segregation. All black suburbs?


Posted by: Sifu Tweety | Link to this comment | 01- 3-08 3:20 PM
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my parents went to well respected colleges in NYC that were pretty much free...but now that sort of thing would be absolutely impossible to fund.

Is this due to racism, though, or is it analogous to the point that it takes the same number of musicians the same amount of time to play Beethoven's Fifth Symphony as it did 200 years ago? There are only so many efficiency gains you can make in an English Lit class, yet NYC real estate is much pricier than it was in the 60's.


Posted by: Matt F | Link to this comment | 01- 3-08 3:21 PM
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Hm. I've thought of generations about about twenty years, which makes it two generations since the Civil Rights movement, and we haven't come far enough yet.

Next iterations of control:
Sabotage their bodies so they can't spend time on (slightly) more abstract problems?
Dedicate all our collective money to the really pressing problems of fire, drought, famine and flood. Those will need to be solved, as they threaten white women.
Edge them out of the knowledge economy.

It is hard to think what the next version will be. All I can come up with is extensions of what we do now.


Posted by: Megan | Link to this comment | 01- 3-08 3:22 PM
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19: By itself, obviously not proof of anything.

21: I had lunch with Emerson and IA yesterday, and Emerson commented about how white NY is. And it is, in downtown Manhattan and big chunks of Brooklyn (and of Queens and the Bronx. I don't know from SI). So, segregation by neighborhood seems likely to continue?


Posted by: LizardBreath | Link to this comment | 01- 3-08 3:23 PM
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Harvard is free for students from families earning less than $60,000 a year.

Just sayin.


Posted by: NCProsecutor | Link to this comment | 01- 3-08 3:23 PM
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And as I was writing in a thread below about how I didn't want even an additional 10-20% of black voters to go Republican, I thought about how limited in choices, and powerless in many ways that makes black voters.

The policy polarizations of the two parties have sorta trapped blacks.

There is also the redistricting in the South, the one-black seat, two white seat thing. One effect I have never seen mentioned is that for a white Mississippian, for instance, the Democratic Congressperson from his state, the Democrat he is most aware of and dependent on for state pork is a very liberal black.

But Tom DeLay was not at all unhappy in the Texas redistricting to give blacks & hispanics safe seats. He loved it, and I presume because he knew those black congresspersons would need him on just a couple pork votes, and he could get a couple votes in return. Or something. DeLay thought them manageable.


Posted by: bob mcmanus | Link to this comment | 01- 3-08 3:24 PM
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20: Ah, right. Well I suppose if you coupled it with evidence of trying really hard, you'd have something. Doesn't look that way from here.

21: No worries ---there's still ots of swamp and scrubland nobody really wants --- benefit of a low people:geographical area.


Posted by: soup biscuit | Link to this comment | 01- 3-08 3:24 PM
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On the other hand, people, how many of us whiteys have seen House Party, Perfect Holiday, This Christmas, Beauty Shop, Love Jones, anything Eddie Murphy's been in since Beverly Hills Cop, or any of the Tyler Perry Madea movies? Hmm?


Posted by: bitchphd | Link to this comment | 01- 3-08 3:26 PM
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Well, wait. If the main purpose of petroleum is to substitute for human labor and petroleum is about to be pricey and rare, then we're going to have new needs for labor. Relegating a group of people to the labor class would be a new/old form of subjugation.


Posted by: Megan | Link to this comment | 01- 3-08 3:26 PM
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28: Look, lady, white guilt goes only so far.


Posted by: Flippanter | Link to this comment | 01- 3-08 3:28 PM
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25: The path there from most places with family incomes under $60,000 is anything but.

I suspect the most likely recipients of this largess are the children of lowly paid professionals, teachers, etc.


Posted by: soup biscuit | Link to this comment | 01- 3-08 3:28 PM
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blacks need to be segregated and controlled

Yeah, we call it "prison".


Posted by: m. leblanc | Link to this comment | 01- 3-08 3:31 PM
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but I don't understand what's confusing about saying that the principle that blacks need to be segregated and controlled hasn't.

It's not confusing. It's wrong, and worse, it's romantically wrong.


Posted by: SomeCallMeTim | Link to this comment | 01- 3-08 3:32 PM
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Right, ever since the Keep America White act of 2004, signed into law by President Abraham Lincoln, we just automatically put black people in jail. Honkies, please.


Posted by: FL | Link to this comment | 01- 3-08 3:34 PM
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B., nobody should be subjected to recent eddie murphy movies. Life is too short.


Posted by: soup biscuit | Link to this comment | 01- 3-08 3:35 PM
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Honkies Caucasians, please.


Posted by: Flippanter | Link to this comment | 01- 3-08 3:36 PM
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we just automatically put black people in jail.

Hardly. Disproportionately and often unjustly? Sure.


Posted by: soup biscuit | Link to this comment | 01- 3-08 3:37 PM
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33: Would you take 'policies resulting in the wholesale incarceration of young black men are probably in some way causally related to the same principle underlying Jim Crow' as possibly having something to it? That same sense of a minimally socially deviant black man (refusing to step off the sidewalk for a white man in the Jim Crow era/ using moderate amounts of illegal drugs now) as a social emergency that needs to be dealt with by (lynching or threats thereof/incarceration) seems to be continuous through both regimes.


Posted by: LizardBreath | Link to this comment | 01- 3-08 3:37 PM
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The fact that there isn't an automatic "jail blackie" law doesn't mean that all the Tough on Crime/Tough on Immigrants/Criminals are Bad People rhetoric isn't about exactly that, folks. Come on, at least *try* to work with the argument here.


Posted by: bitchphd | Link to this comment | 01- 3-08 3:38 PM
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Criminals are good people?


Posted by: Flippanter | Link to this comment | 01- 3-08 3:40 PM
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40: Ever exceeded the speed limit? Are you a good person?


Posted by: bitchphd | Link to this comment | 01- 3-08 3:41 PM
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what the next iteration of control is going to be, lest we think that liberation is happening.

I like to start my comments with a casual:"Look, y'all know I'm crazy." For noobs.

But I have noticed that a disproportionate amount of the subprime, no-down, no-collateral mortgages granted in the last couple of years went to minorities. Who may get foreclosed and credit killed or debt peonage (bankruptcy bill), discouraged & hopeless, dependent on the Democratic Party for health care, etc etc.

Not that I am saying the housing bubble was only another plot to keep blacks down. I'm not saying that.


Posted by: bob mcmanus | Link to this comment | 01- 3-08 3:41 PM
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Some of them are. I've mentioned the brother of a friend who was a pot dealer at MIT. Lovely guy, wasn't hurting anyone. And his odds of incarceration were a lot lower than if he'd been black and doing exactly the same thing in a project somewhere.


Posted by: LizardBreath | Link to this comment | 01- 3-08 3:42 PM
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After the first several comments, I thought I'd written a bad post. Now I see that that wasn't the case.


Posted by: ogged | Link to this comment | 01- 3-08 3:43 PM
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40: Nearly all good people are criminals by strict definition.

But this misses the point. The expected outcomes of both essentially (crack vs cocain) and *exactly* the same actions differ with race and socio-economic status (which correlates to race). If that isn't discriminatory, what the hell is?


Posted by: soup biscuit | Link to this comment | 01- 3-08 3:45 PM
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44: Once again, the feminazis save the day.


Posted by: bitchphd | Link to this comment | 01- 3-08 3:46 PM
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we just automatically put black people in jail

Sometimes, for variety, we trap them in terrible neighborhoods where they can't get to the resources that would let them change social class.


Posted by: | Link to this comment | 01- 3-08 3:46 PM
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I wrote 47.


Posted by: Megan | Link to this comment | 01- 3-08 3:47 PM
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42: Bob, is it not arguable that the extension of mortgage financing to minority and low-income first-time purchasers resulted, on a net basis, in the admission of many people to the property-owning class who would previously have been excluded? Even taking into account the higher default and foreclosure rates that one might expect of higher-risk borrowers?


Posted by: Flippanter | Link to this comment | 01- 3-08 3:47 PM
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46: You're behind the times, it's femifascists now. I understand though; it really doesn't roll off the tongue so well.


Posted by: soup biscuit | Link to this comment | 01- 3-08 3:47 PM
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We just automatically put black people in jail.


Posted by: ben w-lfs-n | Link to this comment | 01- 3-08 3:48 PM
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50: Shit. That's what happens when you miss a rally.


Posted by: bitchphd | Link to this comment | 01- 3-08 3:48 PM
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49: You only own it once you can pay it off. If this is unlikely by design, is it really `entry to the property-owning class' (if that's even a sensible concept these days)?


Posted by: soup biscuit | Link to this comment | 01- 3-08 3:50 PM
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On a related topic, can any one steer me to some sociological work on differences between anti-black and anti-other-ethnic-group racism in the US? I've been batting around a theory in my head that a big difference is that racism against other ethnic groups (Asians, Latinos) is very strongly affected by class and native v. immigrant status, but that class doesn't have nearly as strong an effect for blacks. (Or to put it another way, for a Latino who's a native speaker of English and from a middle class family, racial/ethnic prejudice is a minimal factor in their lives. For a black person from a middle class family, racial prejudice is still important, even if it's less important than it would be for a poor kid.)

I'm not sure that this holds up, but someone's got to have written a book on it one way or the other.


Posted by: LizardBreath | Link to this comment | 01- 3-08 3:51 PM
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The link in 51 is fucking awesome. I recently heard that statistic about whites actually using illegal drugs more than blacks, and was surprised. Nothing like realizing once again how much racist bullshit one believes.


Posted by: bitchphd | Link to this comment | 01- 3-08 3:52 PM
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38: There is no doubt that problems remain, but the massive change in both attitudes and expectations over the last forty to fifty years is extraordinary, and there are, I think, not insignificant costs to ignoring or eliding that.

51: Plumer links should be tagged as such. I don't want to be a better person.


Posted by: SomeCallMeTim | Link to this comment | 01- 3-08 3:54 PM
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49:Wel, they don't have wealth if they get foreclosed, or walk away from a declining value asset. And in most of those cases it isn't like they have any equity in the house, or will have for quite a while. So right now they just have a roof & a debt, not wealth

ARM's are resetting in the fall, and balloons come due in a couple years. This show ain't near over yet, and we won't know for a few years.

But I do think this tragedy will hit the second quintile the worst, and hit them very hard.


Posted by: bob mcmanus | Link to this comment | 01- 3-08 3:54 PM
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54: I really noticed this in `silicon valley' culture. If you were a young asian guy, regardless of how you dressed, people would assume you were some start up hot-shot. If you were a young black guy who wasn't wearing a suit or otherwise strongly signaling corporate involvement, you'd be met with distrust.


Posted by: soup biscuit | Link to this comment | 01- 3-08 3:55 PM
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I don't know anything about Plumer. I got the link from not-bald lurker Chris's sidebar.


Posted by: ben w-lfs-n | Link to this comment | 01- 3-08 3:55 PM
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But I have noticed that a disproportionate amount of the subprime, no-down, no-collateral mortgages granted in the last couple of years went to minorities. Who may get foreclosed and credit killed or debt peonage (bankruptcy bill), discouraged & hopeless, dependent on the Democratic Party for health care, etc etc.

In the world of no-money-down mortgages that people can't afford to pay, the person who takes the mortgage gets somewhere to live for a while and their credit screwed and has to go back to renting, but the person who made and/or bought the mortgage loses hundreds of thousands of dollars. It's the slow realization of this that is behind the current scrambling by the federal government to "do something".

Also, disproportionate to what? Representation in the population?


Posted by: water moccasin | Link to this comment | 01- 3-08 3:56 PM
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57c addendum:assuming all else equal etc


Posted by: bob mcmanus | Link to this comment | 01- 3-08 3:57 PM
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The link in 51 is fucking awesome.

Seconded.


Posted by: NickS | Link to this comment | 01- 3-08 3:57 PM
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Come on, FL. You don't think the fact that the number of Black People in prison VASTLY outweighs the number of white people has anything to do with racism? Or is it just because black people commit more crimes? Those criminal motherfuckers.

You see it even worse at the juvenile level. The residents of the Cook County Juvenile Temporary Detention Center are 1% white. Because if white kids do bad shit, we call their parents/suspend them from school/tell them to lay off/recommend military school. When black kids do bad shit, we lock them up to teach them a lesson, because we firmly believe that they are well on their way to becoming a criminal. Because hey, they're black and poor. While white kids are just "going through a phase."

Give me a fucking break.


Posted by: m. leblanc | Link to this comment | 01- 3-08 3:57 PM
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there are, I think, not insignificant costs to ignoring or eliding that.

Sigh. Honestly, do people generally ignore the effects of the civil rights movement? Or do we, in fact, much more commonly talk about them as some great leap forward (or backwards, if you're an asshole), much like feminism, to the point where if someone points out that we haven't come as far as we'd like to think, everyone and their dog has to bark about how unfair/dangerous/wrong it is to say that?


Posted by: bitchphd | Link to this comment | 01- 3-08 3:58 PM
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change in both attitudes and expectations over the last forty to fifty years is extraordinary, and there are, I think, not insignificant costs to ignoring or eliding that

But the point of the post is precisely to look past that, or to look at it a different way: for all the changes, the basic principle is the same and still in effect.


Posted by: ogged | Link to this comment | 01- 3-08 3:58 PM
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native v. immigrant status

Isn't there a huge difference in attitudes toward recent immigrants from Africa or the Caribbean vs. African-Americans? Not sure how this falls into your definition of "race"...


Posted by: water moccasin | Link to this comment | 01- 3-08 3:58 PM
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63: I never said any of those things, m. I'm making fun of you for the rhetoric.


Posted by: FL | Link to this comment | 01- 3-08 4:00 PM
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63: Self fulfilling, that. Nothing better than a stint in a juvie to get you on your way to a real criminal future.


Posted by: soup biscuit | Link to this comment | 01- 3-08 4:01 PM
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53: "Unlikely [to repay] by design" seems tendentious, given the tendency of financial institution credit committees to demand some expectation of repayment and the costly and cumbersome process of foreclosure.


Posted by: Flippanter | Link to this comment | 01- 3-08 4:01 PM
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Don't make fun of M., Labs, or she will cut you.


Posted by: bitchphd | Link to this comment | 01- 3-08 4:02 PM
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: for all the changes, the basic principle is the same and still in effect.

This is Rasheed's point that NBA players are just house slaves dancing for master, right? I don't buy it. (More willing to buy if for college ball, though.) Fuck basic principles: specifics matter.


Posted by: SomeCallMeTim | Link to this comment | 01- 3-08 4:03 PM
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66: I'm pulling this out of my ass, but I'd say yes for the first generation, no for their kids. That is, Colin Powell's family is from the islands, and while that may have had an effect on his internal family environment/expectations, I'd guess that his experiences, racism-wise, with other people weren't very different from those of the descendant-of-Mississippi-slaves down the block.


Posted by: LizardBreath | Link to this comment | 01- 3-08 4:03 PM
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I think you mean she'll shiv me, b.


Posted by: FL | Link to this comment | 01- 3-08 4:03 PM
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66: I have nothing but anecdata here, but it is certainly the case that many African Americans feel that African and West Indian immigrants are given a much fairer shake by white America and believe that they (the immigrants) think they are "better" than they (the born Americans) are.


Posted by: oudemia | Link to this comment | 01- 3-08 4:03 PM
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63: Sorry. I'm a tad sensitive about these things, given that my work is prison shit and people are always like "but most people in jail are guilty" (which is true), meaning that there's no problem with the fact that our jails and prisons are so overwhelmingly black.

I actually did hear a talk from someone who maintained that the expansion of the prison system, starting in the 70s, was a conspiracy to incarcerate and control black men, in the aftermath of the civil rights movement. I'm skeptical now, but it was pretty convincing at the time.


Posted by: m. leblanc | Link to this comment | 01- 3-08 4:05 PM
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Also, disproportionate to what? Representation in the population?

I guess so. like 30% or more of subprime or very risky mortgages or the last two years of max bubbliciousness went to minorities by color or minority communities.

"...but the person who made and/or bought the mortgage loses hundreds of thousands of dollars."

Bubble dollars. The guy who bought Pet.com a $5 watched it rise to $100 and then go under may or may not have lost $95, depending on your perspective.

Unfortunately, a lot of those bubble dollars are in pension funds. And a lot of people are going to get hurt. But I ain't crying for fucking Mozilla or Citigroup management.


Posted by: bob mcmanus | Link to this comment | 01- 3-08 4:05 PM
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69: Oh, they don't want foreclosure. It's a bit like like credit card debt --- they don't want you to pay it off, just to be able to keep making payments. It doesn't require an expectation on their part of you ever actually getting out of debt .

Still, I don't really believe the sub-prime market had anything to do with race; race just correlates well with not qualifying for a traditional mortgage. I'm reasonably happy with the explaination that the financial people were being so clever (+ greedy) they were being stupid.


Posted by: soup biscuit | Link to this comment | 01- 3-08 4:06 PM
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73: *She's* not in jail. Yet.

the expansion of the prison system, starting in the 70s, was a conspiracy to incarcerate and control black men, in the aftermath of the civil rights movement.

I am actually quite willing to believe that in an indirect, not-quite-a-conscious-conspiracy way, this is true.


Posted by: bitchphd | Link to this comment | 01- 3-08 4:07 PM
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The only evidence of racism left in America is Wes Welker failing to make the pro bowl.


Posted by: baa | Link to this comment | 01- 3-08 4:09 PM
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That's retributive justice, baa.


Posted by: ogged | Link to this comment | 01- 3-08 4:10 PM
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Bubble dollars. The guy who bought Pet.com a $5 watched it rise to $100 and then go under may or may not have lost $95, depending on your perspective.

The person who made the mortgage wrote a big check to the homebuilder, some of which went to his personal jet, and the rest of which went to subcontractors and carpenters and such. When the homeowner can't pay and the house gets sold for half the value of the mortgage, the lender gets back half the money he put in.

For a refinance, replace "homebuilder" and "subcontractor" with "SUV, plasma TV, and vacation to Europe." It's real money being lost.

Some guy posted locally trying to sell the $70k motorcycle he signed up to buy last year. Seems that the business of making prefab wood trusses isn't doing so hot any more. But the guy has certainly been living large until now.


Posted by: water moccasin | Link to this comment | 01- 3-08 4:11 PM
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race just correlates well with not qualifying for a traditional mortgage.

The "just" is doing some work here, I think. Like the crack cocaine differential applies to whites as well as blacks, and Paris Hilton can sleep under the overpass if she wants to.


Posted by: | Link to this comment | 01- 3-08 4:12 PM
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75: I think-- without having heard the talk-- that you don't *need* a conspiracy to explain it, just (as I said in a deleted comment, I think) more ordinary fear of/failure of empathy for black americans on the part of white americans. That's why the sinister talk of The Principle irritates me so much: it shifts attention away from the way in which the problem is far simpler (in one way) and far more complex (in another way) than this sort of thinking would have it.


Posted by: FL | Link to this comment | 01- 3-08 4:12 PM
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77: "They"?


Posted by: Flippanter | Link to this comment | 01- 3-08 4:12 PM
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81: There is a real question about how much of the losses stayed with the original decision-makers. Not one I have data to answer, but I have the impression that most subprime mortgages get flipped a bunch -- whoever made the loan may not have lost a dime based on a foreclosure.


Posted by: LizardBreath | Link to this comment | 01- 3-08 4:13 PM
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75: There's a real asymmetry at work there, which many people don't get at a gut level --- most people in jail are guilty (of something) doesn't mean most guilty people are in jail. Penance is not meted out with an even hand.

Worse, some of the worst criminals in terms of real social damage are as a class (certain types of so-called white collar crime) ignored or given a soft ride, while some of the most begnign (personal drug use, eg) are often subject to draconian minimum sentencing and extremely uneven conviction rates (based on access to decent counsel).


Posted by: soup biscuit | Link to this comment | 01- 3-08 4:13 PM
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82: Plus keep in mind the fact that red-lining meant that black families were not given the same opportunities for moving into homeownership (and thus acquiring capital that would make a difference for future generations) that white families were back in the day.


Posted by: bitchphd | Link to this comment | 01- 3-08 4:15 PM
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85: I read somewhere that most of them were flipped within 3 days. It seems to me it pretty much has to be that way --- the whole scheme didn't make any sense unless you aggregate a large number of them and then tranche those piles, but most (all?) of the sub-prime lenders weren't nearly big enough to do that on their own.

I could be really mistaken though, this isn't something I know much about.


Posted by: soup biscuit | Link to this comment | 01- 3-08 4:16 PM
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81: There is a real question about how much of the losses stayed with the original decision-makers. Not one I have data to answer, but I have the impression that most subprime mortgages get flipped a bunch -- whoever made the loan may not have lost a dime based on a foreclosure.

Depending on how you define "made the loan." If you consider funding the loan to be more important than selling the loan, I think my statement stands. Someone put up real money for the mortgage, and is not getting it back, in a way fundamentally different than someone who bought PETS for $5, watched it go up to $100, and then back down.


Posted by: water moccasin | Link to this comment | 01- 3-08 4:16 PM
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83: But why call it a conspiracy? It doesn't have to be a conspiracy for, say, selective enforcement of drug laws to be viscerally appealling to white voters as part of a Get Tough On Crime strategy, because they've got this 'once a black man steps even a little out of line, someone's got to get him under control' thing rattling around their heads at an unconscious level. And the same for expanding prisons: "There's lots of misbehaving black teens out there -- we've got to have someplace to lock them up!" It doesn't mean that the voter in question would endorse the same proposition stated baldly, it's just an argument that the feelings that made the Willie Horton ad an effective one are continuous with the feeling that led to Jim Crow.


Posted by: LizardBreath | Link to this comment | 01- 3-08 4:18 PM
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Here, then, are the two competing ideas about racism side by side: the manager issues a blanket condemnation of American blacks even as he holds West Indians up as a cultural ideal. The example of West Indians as "good" blacks makes the old blanket prejudice against American blacks all the easier to express. The manager can tell black Americans to get off their butts without fear of sounding, in his own ears, like a racist, because he has simultaneously celebrated island blacks for their work ethic. The success of West Indians is not proof that discrimination against American blacks does not exist. Rather, it is the means by which discrimination against American blacks is given one last, vicious twist: I am not so shallow as to despise you for the color of your skin, because I have found people your color that I like. Now I can despise you for who you are.

from http://www.malcolmgladwell.com/1996/1996_04_29_a_black.htm


Posted by: I don't pay | Link to this comment | 01- 3-08 4:18 PM
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more ordinary fear of/failure of empathy for black americans on the part of white americans. That's why the sinister talk of The Principle irritates me so much

The problem with putting the problem in terms of personal psychology is that it becomes very difficult to convince people that it's still an issue. "I don't feel racist and [grope grope] neither do any of the people I know." Great, maybe even true, but ultimately irrelevant, because the society is designed to keep blacks separate and controlled and nothing that doesn't depart radically from the status quo is going to change that.


Posted by: ogged | Link to this comment | 01- 3-08 4:18 PM
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90: I use "conspiracy" in 83 only because I'm responding to 75, which mentions a claim about a conspiracy.


Posted by: FL | Link to this comment | 01- 3-08 4:19 PM
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89: Depending on how you define "made the loan."

If we're talking about the possibility that lending decisions were shaped by discrimination (which I don't have a strong position on) surely the only relevant sense of "made the loan" is the organization that made the call as to who to lend money to on what terms. If that decision was shaped by discrimination, and then the loans were successfully flipped, the discrimination would be cost-free.


Posted by: LizardBreath | Link to this comment | 01- 3-08 4:20 PM
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93: Fair enough -- I missed that.


Posted by: LizardBreath | Link to this comment | 01- 3-08 4:21 PM
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Mighty white of you, LB.


Posted by: FL | Link to this comment | 01- 3-08 4:22 PM
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I do think the word "conspiracy" isn't helpful.


Posted by: ogged | Link to this comment | 01- 3-08 4:22 PM
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82: I don't mean it isn't a real effect, I mean that you don't have to be targeting anything by race --- anything strictly determined on income lines targeting lower quintile incomes, say, will automatically be involving a lot of minorities unless you explicitly avoid it.

The `just' isn't really doing any work; it's pointing out that you don't need a racially targeted premise to end up with a racially correlated outcome.

In the case of sub-prime loans, as far as I can see this is the sort of thing dreamed up by finance geeks and pushed by big finance players. I don't see any reason to believe these people are primarily motivated by anything except wealth. They don't care one way or another the color of the skin of the people they can leverage to get at it, really. So long as they exist.


Posted by: soup biscuit | Link to this comment | 01- 3-08 4:23 PM
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98: I'd suspect that to the extent there was racial discrimination of the kind Bob describes in the subprime market, it was made at the salesman level rather than at the big finance level. Again, pulled out of my ass, but I'd surmise that unethical salespeople are more likely to see blacks as easy marks for cheating; such a salesperson might, say, try to sign up a black family for a mortgage at an unconscionable rate where they'd be worried about doing the same thing to a white family.


Posted by: LizardBreath | Link to this comment | 01- 3-08 4:26 PM
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Kobe isn't black.


Posted by: ogged | Link to this comment | 01- 3-08 4:27 PM
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If we're talking about the possibility that lending decisions were shaped by discrimination (which I don't have a strong position on) surely the only relevant sense of "made the loan" is the organization that made the call as to who to lend money to on what terms. If that decision was shaped by discrimination, and then the loans were successfully flipped, the discrimination would be cost-free.

Possibly, but I was talking about the mortgage crisis not actually having a disproportionate impact on minorities because the people who got a zero-money-down loan on a house they can't afford and lose to foreclosure get to live somewhere they couldn't afford for a while in exchange for having their credit screwed; people who worked in home construction and related businesses made more money than they otherwise would have, and the people who financed the mortgages paid for all of it.


Posted by: water moccasin | Link to this comment | 01- 3-08 4:29 PM
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He's black where it counts, Ogged.


Posted by: FL | Link to this comment | 01- 3-08 4:30 PM
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Great, maybe even true, but ultimately irrelevant, because the society is designed to keep blacks separate and controlled and nothing that doesn't depart radically from the status quo is going to change that.

Except that there are real limits to the effort people are going to expend to change that insofar as they aren't directly affected, so the magnitude of what you worry about losing is not clear. And portraying problems as the current instantiation of some permanent principle may make it less likely that the subject class will make efforts that will ameliorate some circumstances. We're living through an example of this: tell black people that white people won't vote for Obama, and they won't either. Who wants to waste the vote?


Posted by: SomeCallMeTim | Link to this comment | 01- 3-08 4:30 PM
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Harvard is free for students from families earning less than $60,000 a year.

Worth pointing out that this is something like 10% of Harvard students, tops. Also worth pointing out that there's only a handful of universities that have anything close to the endowment to pull this off.

Isn't there a huge difference in attitudes toward recent immigrants from Africa or the Caribbean vs. African-Americans?

Yes, but not necessarily in a good way. One of my students described it as being subject to all the same prejudices day-to-day, but then being held out as an example of What's Wrong With American Blacks.

I am under the impression that ogged's post makes more sense as a description of the U.S. outside of the South, where there's a stronger black middle class. Whence comes this impression, and how wrong is it?

I have to think about ogged's principle, but my gut says it's way too simplistic.


Posted by: Cala | Link to this comment | 01- 3-08 4:31 PM
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99: But I don't think that anyone was looking for easy marks, in that sense.

I may be wrong, but my entire sense of the subprime market was that it was an attempt to make unmanageable variability in high-foreclosure rate loans manageable by aggregating them.

Foreclosure rates aren't really the problem. Predictability is the problem. If you know what is likely to happen, you just bump the rates up high enough to cover yourself and your golden.
Essentially this is a variance reduction scheme, based on the idea that piling enough of them together (and worse, the banks did the same thing at a meta-level) and you get a predictable population, with low variance. Tranches allow you to slices and dice a big pile in ways that lots of people/orgs will buy.

The failure is because a) the prediction wasn't as good as they thought (unsurprisign) and b) if it gets big enough, it starts to economically effect the things you were assuming in a)

As I noted though, I might be out to lunch about all this.


Posted by: soup biscuit | Link to this comment | 01- 3-08 4:34 PM
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101:Look, we are talking mostly about a family with decent jobs, making 30k, and getting 3000 sq ft or Valley of some other $300k-750k house virtually thrown at them. Instead of a $50-150k house. People were sold a lot more house than they can realistically afford, people who might have been able to afford a cheaper house.

And after it all shakes out and that 500k house goes back down to 300k, those people who left their mortgage are not going to get another chance for a long while.


Posted by: bob mcmanus | Link to this comment | 01- 3-08 4:37 PM
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A. [All] blacks in America need to be segregated & controlled
B. [The bad] blacks in America need to be segregated & controlled
C. [Dangerous criminals, regardless of race,] need to be segregated & controlled

A isn't the same as B but B isn't the same as C, either.


Posted by: Katherine | Link to this comment | 01- 3-08 4:37 PM
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If a) 101 is correct and b) my understanding of the sub-prime market is correct then this:

and the people who financed the mortgages paid for all of it

is just as it should be.

But note that this same organizations made a fair whack of the same market for a while.


Posted by: soup biscuit | Link to this comment | 01- 3-08 4:37 PM
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re 108: I don't actually believe 101 is correct, for reasons related to 106, etc.


Posted by: soup biscuit | Link to this comment | 01- 3-08 4:38 PM
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105: I'm pointing at arguments that I don't really have the information to believe or disbelieve. But isn't the idea that the financial shenanigans made it acceptably risky to lend under circumstances including a much higher foreclosure rate, and the consequential savings-stripping effect thereof? (That is, having your house foreclosed on doesn't just ruin your credit. It means that any wealth you've built up before buying the house is gone.)


Posted by: LizardBreath | Link to this comment | 01- 3-08 4:38 PM
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110: Sure, but the finance people don't care if you lose your wealth, they care if they lose theirs. If they can accurately predict the likelyhood of you failing to repay, they can make money either way. More accurately, they can make you an offer such that they can't lose on average. You don't have to accept it. The more and more people who did accept it, the more likely it was that you would think it was an ok thing to do, absent better advice.

The problem for you is the same any time you foreclose. It only becomes a problem for them, though, if they predicted badly (i.e. the foreclosure rate is even higher than expected)


Posted by: soup biscuit | Link to this comment | 01- 3-08 4:42 PM
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Sweet Jesus, I agree with McManus. Regardless of what was happening upstream, CDO bundling made mortgage sales into a predatory business which -- since it was the only thing keeping the economy afloat -- the big money types had every interest in preserving through the rain-making Bush era. Keeping the boom going required marketing sketchy products to low-information buyers, which was inevitably going to hit first time homebuyers in isolated communities relying on word of mouth to figure out likely outcomes.


Posted by: Sifu Tweety | Link to this comment | 01- 3-08 4:42 PM
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I'm pretty sure 99 is true - there was a statistic rattling around recently about the remarkably large percentage of people who (a) qualified, on paper, for a prime-rate loan but (b) got a subprime loan instead. No cites handy, but I think a lot of that is explained by selling worse mortgages to relatively unsophisticated first-time homeowners, which of course gets more minorities with less social capital around this kind of thing.


Posted by: Nathan Williams | Link to this comment | 01- 3-08 4:43 PM
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I have to think about ogged's principle, but my gut says it's way too simplistic.

Well, of course it's simplistic, but I think it gets at something, even if that something is, admittedly, banal.


Posted by: mrh | Link to this comment | 01- 3-08 4:43 PM
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101:In any case, minority homeownership is a number that is tracked, and I will predict that the percentage will decline over the next generation rather than increase. We can separate it among blacks & Hispanics.

You can come spit on my grave if I'm wrong.


Posted by: bob mcmanus | Link to this comment | 01- 3-08 4:43 PM
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Sifu, get out of my head.


Posted by: Nathan Williams | Link to this comment | 01- 3-08 4:44 PM
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You can come spit on my grave if I'm wrong.

This is so much better then "IIRC."


Posted by: mrh | Link to this comment | 01- 3-08 4:45 PM
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(That is, having your house foreclosed on doesn't just ruin your credit. It means that any wealth you've built up before buying the house is gone.)

But if you got a zero-money-down loan, the odds are you didn't have any wealth accumulated to begin with, otherwise you would have put it down and gotten a lower interest rate. Or alternatively, if you did a cash-out-refinancing, you took the wealth you had accumulated and bought a plasma TV and an Escalade and a trip to Vegas.

And after it all shakes out and that 500k house goes back down to 300k, those people who left their mortgage are not going to get another chance for a long while.

The homeownership rate spiked up dramatically in the last few years. If that increase was composed of people who couldn't afford a house under traditionally strict lending standards but could under the new sketchier regime, and then once the new sketchier regime goes away they can't afford it again, that's not so much of a change.


Posted by: water moccasin | Link to this comment | 01- 3-08 4:48 PM
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115: even that has problems with confounding factors ... we mights assume home-ownership stays a priority, but under certain economic situations, avoiding it may be quite rational, particularly in urban areas. It doesn't always make the best financial sense to buy a house even if you can afford it.


Posted by: soup biscuit | Link to this comment | 01- 3-08 4:49 PM
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If that increase was composed of people who couldn't afford a house under traditionally strict lending standards but could under the new sketchier regime, and then once the new sketchier regime goes away they can't afford it again, that's not so much of a change.

Alternately, if that increase inflated housing prices so that people who could afford houses that were realistically priced were forced into shitty loans, that's a pretty big fucking deal.


Posted by: bitchphd | Link to this comment | 01- 3-08 4:51 PM
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113: There are stories about this that read more like straight-up extortion. There was a couple interviewed on NPR who, due -- surprise! -- to huge medical debts needed to take out a second mortgage. They inform the folks to whom they owe scads of cash that they are signing the mortgage on, say, Tuesday, and thus will be mailing checks Wednesday. Arriving at the mortgage signing, they are informed, oooooh, we made a mistake, you don't qualify for the fixed-rate mortgage we told you you were getting. Here! Sign this ARM right now! Besides the bait and switch, the couple had promised their many creditors payment. And so they signed. And so they are losing (have lost?) their home.


Posted by: oudemia | Link to this comment | 01- 3-08 4:52 PM
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121: I had friends who had a similar bait-and-switch pulled with one of those eHomeLoanForYouCheapie sites, but were luckily able to refi out of it a couple of years ago.


Posted by: Sifu Tweety | Link to this comment | 01- 3-08 4:54 PM
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I found that a really creepy part of closing on our co-op. Nothing bad happened, but I hadn't quite realized that the bank wouldn't be committed to the precise terms of the loan until the day of -- that there was nothing (I may not be remembering this exactly correctly) keeping them from showing up with something at a different interest rate or more fees, and there was some potential for having to make an on-the-fly decision about what a deal-breaker would be.


Posted by: LizardBreath | Link to this comment | 01- 3-08 4:55 PM
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maybe not bad to think about insofar as it helps keep alert for what the next iteration of control is going to be, lest we think that liberation is happening

You guys aren't really considering the next way The Man is going to keep The People down, but that is OK, because I addressed it in my answer and I will get an A+ and you won't.


Posted by: Megan | Link to this comment | 01- 3-08 4:56 PM
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Looking for a copy of Rass Kass's "Nature of the Threat", I found both the MP3 and lyrics on a site called Maniac Muslim—whic elegantly collapses a few recent Unfogged threads.


Posted by: Armsmasher | Link to this comment | 01- 3-08 4:57 PM
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Jeez I go away for the day and half you forget all the sociology I ever taught you.


Posted by: Gonerill | Link to this comment | 01- 3-08 5:21 PM
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Yeah, people! Remember your sociology!


Posted by: ogged | Link to this comment | 01- 3-08 5:22 PM
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I'm trying to figure out a way we can make this thread as annoying for Gonerill as the utilitarianism thread was for Labs.


Posted by: Sifu Tweety | Link to this comment | 01- 3-08 5:24 PM
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128: Unfortunately, I don't even know enough sociology to annoy sociologists with my pedestrian attempts at it. I've pretty much gone pro on annoying philosophers (hey! and I mean that both ways!).


Posted by: oudemia | Link to this comment | 01- 3-08 5:27 PM
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If somebody has already said something along these lines, please forgive me. I tried to make my way through the whole thread while also helping my son get ready for bed. And please don't call social services. I told myself that I was looking for helpsful parenting advice.

Anyway, what follows paraphrases something I just read:

Because of mandatory minimums, crack dealers caught selling 5 grams of that drug received the same sentence as powder cocaine dealers who sold 500 grams. As a result, African American drug offenders on average received sentences that were 93 percent higher than whites. Before the mandatory minimum sentences for crack dealers took effect, the racial disparity in sentencing was just 6 percent.

Back to me now. I don't know if that last statistic refers only to drug offenses or sentences across the board. But I think, given the source, the answer is drug offences. All of this was offered as evidence for the root of some conspiracies in the African-American community. Regardless, if nobody has mentioned mandatory minimums until now -- which would really shock me -- this is perhaps pertinent.


Posted by: Ari | Link to this comment | 01- 3-08 5:27 PM
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"Helpful" spelling advice would also help. Now I have to get the boy to bed.


Posted by: Ari | Link to this comment | 01- 3-08 5:28 PM
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Here is a very good book about the role of the U.S. prison system in American social stratification. Fun fact contained therein: 59 percent of black high school dropouts born from 1965 through 1969 had served time in state or federal prison by their early 30s. And here is a book about the black-white wealth gap. Fun fact therein: white households have a median net worth of $120,900. Black households have a median net worth of $17,000.


Posted by: Gonerill | Link to this comment | 01- 3-08 5:28 PM
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The latter statistic, Gonerill, is that for now? Or the period covered in the first statistic? Really, now, to bed with the boy.


Posted by: Ari | Link to this comment | 01- 3-08 5:30 PM
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Over the years, I've been involved in some litigation over subprime loans. Interesting stories, although, not surprisingly, sometimes people tell a different story under oath at a deposition with the documents in front of them than they tell a reporter looking for a story to fit a narrative.

In one case, a guy talked his elderly parents into refinancing the house they'd paid for, to buy bonds from Nevis, the income from which was supposed to pay down the loan all by itself. Hell, there was even money left over for the son to get a big (for him) check. Guess what? Ponzi scheme. Which got shut down by the SEC, leaving the elderly folks nothing to do but sue the bank. Which they couldn't tie to the con men. They were however able to void the loan on a ridiculous (and quite possibly contrived) technicality: the bank could prove that it had given the borrowers 2 identical pieces of paper in their stack of closing documents, but could not prove that it had given them 4 identical pieces of paper.

I had one in Providence, a great city for litigation. The borrower had a habit of refinancing every year or so, cashing out on her appreciation. She'd submitted income statements -- she was self-employed -- which were exaggerated (it turns out) but only by a factor of 3 or 5, while she was telling the IRS that her income was only about 5% of that amount. The mortgage broker who'd sold the last loan took the Fifth in his deposition -- wouldn't even confirm his identity -- and then, inexplicably, the borrower fired her lawyer (one of the premier consumer guys in RI) hiring instead a blind semi-retired lawyer who didn't understand any of the claims. (He, representing the plaintiff, offered money to my client, a defendant, to settle the case). When he figured out that it was a document-heavy case, he asked permission to withdraw, but the judge wouldn't let him out. It soon got wilder; when we had a hearing on my motion for summary judgment on some but not all of the borrower's claims, before I could get to the podium, the blind (and dumb!) lawyer got there first and announced that in his view there was no merit whatsoever in any of the plaintiff's claims. The judge recessed the hearing, and it ended up settling afterall.


Posted by: Nápi | Link to this comment | 01- 3-08 5:30 PM
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The latter statistic, Gonerill, is that for now? Or the period covered in the first statistic?

It's accurate for the late 1990s/early 2000s. The nominal figures will have moved since then but the gap won't have changed for the better.


Posted by: Gonerill | Link to this comment | 01- 3-08 5:32 PM
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What would liberalism do without blacks? Everyone's favorite racial group. Oh, so many crocodile tears spilled for the blacks.


Posted by: bjk | Link to this comment | 01- 3-08 5:38 PM
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Thank you. That's stunning.


Posted by: Ari | Link to this comment | 01- 3-08 5:38 PM
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I was talking to Gonerill, by the way. Which isn't to say that I'm not stunned by bjk's offering.


Posted by: Ari | Link to this comment | 01- 3-08 5:39 PM
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bjk has a lot of stamina for an unfogged troll. I imagine he was bred that way.


Posted by: Sifu Tweety | Link to this comment | 01- 3-08 5:42 PM
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Remarkable, isn't it. He seems to be Turkish, from the linked blog -- are there any interesting Turkish pastries?


Posted by: LizardBreath | Link to this comment | 01- 3-08 5:42 PM
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If white people *really* cared about the blacks....


Posted by: bitchphd | Link to this comment | 01- 3-08 5:43 PM
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What would liberalism do without blacks?

We'd have to rape your daughters ourselves.


Posted by: ogged | Link to this comment | 01- 3-08 5:43 PM
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Turkish delight? Don't the Turks also do baklava? I like baklava.


Posted by: bitchphd | Link to this comment | 01- 3-08 5:43 PM
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Racist. Speaking of, I heard my first example of breathtaking racism about Obama from an unexpected source tonight.


Posted by: Sifu Tweety | Link to this comment | 01- 3-08 5:45 PM
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143: Well, you know, it should really be called Greek Delight. And baklava is of course truly Armenian.


Posted by: oudemia | Link to this comment | 01- 3-08 5:46 PM
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They want anything with curds in it.


Posted by: Gonerill | Link to this comment | 01- 3-08 5:46 PM
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144: What and who?


Posted by: destroyer | Link to this comment | 01- 3-08 5:48 PM
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Turkish Delight always tastes like soap to me. C.S. Lewis painted a much more appealing picture.


Posted by: Flippanter | Link to this comment | 01- 3-08 5:49 PM
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Guys! Speaking of pastries! Eggnog cupcakes! So good!


Posted by: mrh | Link to this comment | 01- 3-08 5:49 PM
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Everyone's favorite racial group.

Except here. We're all about the Mexicans.


Posted by: apostropher | Link to this comment | 01- 3-08 5:50 PM
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Results of the physical show that I am not to have any more pastries.


Posted by: Cala | Link to this comment | 01- 3-08 5:50 PM
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127: M & E are all the sociology I need. And all the economics, meta-history, epistemology, physics, astronomy, fashion guidance, recipes, and sex advice.


Posted by: bob mcmanus | Link to this comment | 01- 3-08 5:51 PM
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147: "well, I just can't keep him separate from [prominent young black politician who isn't doing a great job] in my head" from a prominent jurist in a liberal state.


Posted by: Sifu Tweety | Link to this comment | 01- 3-08 5:52 PM
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Indirectly from the NYT, this is fun.


Posted by: Nápi | Link to this comment | 01- 3-08 5:53 PM
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21:
I do actually wonder what the gentrification of urban areas will mean as far as de facto segregation. All black suburbs?

Ford Heights, Illinois

I'm sure it'd be easy to find more.


Posted by: BrianZ | Link to this comment | 01- 3-08 5:53 PM
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Thanks for the links in 132, Gonerill.


Posted by: parsimon | Link to this comment | 01- 3-08 6:13 PM
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155- Prince Georges County, Maryland.

Sub-prime mortgages aren't strong support for Ogged's assertion, but drug policy sure is. After 30+ years of the 'drug wars', no one can say supply-side programs have worked. Demand-side programs, designed to reduce the market, have been successful.

A Rand mathematically-modeled study in the 90's (Everingham) found that thirteen percent of heavy cocaine users receiving treatment reduced their use or kicked their habit completely. And found that this was much more cost-effective than either South American programs or incarceration. In fact, during Bush's first presidential campaign, his platform recognized this with a platform that included demand-side programs. After the election, the platform was dropped for more-of-the-same.

Hence, we have a majority-white class having access to treatment centers without repercussion, sometimes even with employer support, while incarceration is the solution for largely black areas. We have an existing policy that is indisputably failed; positive findings for alternate solutions that aren't widely disputed; and those alternate solutions are much more cost-effective.


Posted by: asl | Link to this comment | 01- 3-08 6:25 PM
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Speaking of, I heard my first example of breathtaking racism about Obama from an unexpected source tonight.

hanging out with your erstwhile coblogger?


Posted by: Cryptic Ned | Link to this comment | 01- 3-08 6:27 PM
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157- "his platform recognized this" should be "he responded to such"


Posted by: asl | Link to this comment | 01- 3-08 6:31 PM
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158: he's only racist about your people.


Posted by: Sifu Tweety | Link to this comment | 01- 3-08 6:34 PM
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Pwned by parsimon, but thanks, Gonerill, for 132.


Posted by: Invisible Adjunct | Link to this comment | 01- 3-08 6:55 PM
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Re: PG County in 155, it's fascinating to me that America's richest county controlled by African-American politicians has, no doubt, the most brutal and corrupt police force in the state. I don't quite know what to make of it, other than to note that "politician" is clearly a dominant gene.


Posted by: snarkout | Link to this comment | 01- 3-08 7:06 PM
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Dammit, I knew this would be an interesting thread, but I had to go get child/eat dinner/bathe child.

Anyway, too late, quick correction of some misconceptions above:

There is no doubt whatsoever in the actual numbers that the subprime loans were disproportionately to poor/minorities/women. I have no links handy, but something like 55% of subprime loans were made to people who could have qualified for regular loans. BS Point 1 ("people who otherwise couldn't afford homes"), knocked down.

Women were more likely than men to be offered loans on terms worse than they qualified for; same deal with minorities. IOW, a white male would pretty much be offered the loan his finances would suggest. A black female, not at all. It was an out-and-out scam. BS Point 2 ("no discrimination in subprime market"), knocked down.

Since banks and mortgage companies (all released from most regulation in mortgages over the last decade or two) weren't keeping the loans - they were being sliced and diced and entranched - the "loan origination committee" basically ceased to exist or perform oversight. BS Point 3 ("No one would make a loan they expected to tank"), knocked down.

Due to a combination of bubble mentality and delusional ideas about the CDOs, there was not an expectation on the part of the lenders that they would be left holding properties worth less than the note. IOW, lenders didn't think for a moment that they would lose money if these loans went bad, because there would always be another buyer at a higher price. BS Point 4 ("Lenders had more to lose, so they were careful"), knocked down.

Last, new houses in the real bubble markets were selling for 2-3X building costs. The builders were financing construction on margin, and the lenders were paying on margin. McMansion Builders, Inc. wasn't getting a cashier's check for $450k, $400k of which went to subs. They borrow $200k, pay it to subs, then get $450k from the bank for the house; only $250k of that was real money, the rest was just being shuffled around among lenders. BS Point 5 ("Someone got $450k in cash for that house"), knocked down.

Please, people, it's dull, but this is the most important economic story of the decade, if not of our lives (if it turns into Depression II). Try to pay attention and keep track of the facts as they come out, and don't just rely on platitudes or Econ 101.


Posted by: JRoth | Link to this comment | 01- 3-08 8:08 PM
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163 is great and deserves more attention.

Point 2 is further complicated by the bonus of historical racism: people were likely to trust the deal provided by a buddy or fellow churchgoer who was one small step ahead of them on the lender's pyramid, precisely because they didn't have good experience of shopping around in the conventional fashion.


Posted by: Witt | Link to this comment | 01- 3-08 8:47 PM
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Last, new houses in the real bubble markets were selling for 2-3X building costs. The builders were financing construction on margin, and the lenders were paying on margin. McMansion Builders, Inc. wasn't getting a cashier's check for $450k, $400k of which went to subs. They borrow $200k, pay it to subs, then get $450k from the bank for the house; only $250k of that was real money, the rest was just being shuffled around among lenders. BS Point 5 ("Someone got $450k in cash for that house"), knocked down.

How did someone not get $450k for the house? McMBI borrowed $200k from Bank A, paid it to the subs, got a check for $450k from Bank B, paid $200k back to Bank A and kept $250k. That's $200k cash to the subs so they can buy a bigger pickup and a plasma TV, and $250k cash to the homebuilder so the CEO can take the company jet to Vegas.


Posted by: water moccasin | Link to this comment | 01- 3-08 9:06 PM
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165: Because he didn't really build just one house. The $250k goes to service the next house, which hasn't sold yet, or the development after that, which isn't built yet. Also, construction loans are something like twice the interest rate of mortgages - another $25-50k goes to Bank A. Furthermore, Bank B is also owed $200k by some other builder. A lot of that money is just going from one side of the bank to the other.

I should add that Point 5 is oversimplified, and I shouldn't have put it quite that strongly. But, in an inflated market, the builder isn't actually reaping all that rent (in the economic sense of the term). Think in terms of farmers who aren't any richer in a bumper year than they were in a lean year. Since no one builds/develops with his own $$, banks are essentially self-dealing in real estate.


Posted by: JRoth | Link to this comment | 01- 3-08 9:31 PM
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LB @ 59: the work of John Ogbu comes to mind.

I think the hard kernel of truth in Ogged's post is obvious to the culture people here -- who study stuff like literature or history -- and is less convincing to people who seem to understand the world in terms of economics or institutions or current law. Don't you know those things are mere surface ephemera, and that cultural tradition runs deep and changes slowly, and that we humanities types have our eyes on the Real Thing while you lawyers and social scientists just track shadows on the cave wall? I mean. Really.*

I shared a panel at a literature conference once with a guy who traced the cultural history of Angola Prison in Louisiana. It began as a slave plantation . . . then a sharecropping plantation . . . then a prison plantation, but through it all there was always a white family in the big house, house servants, and field hands, and nothing really changed except that the farmer was replaced by a warden.

Do you folks not hang out with white Americans? Do you not remember the media images of Katrina? Fear of the black mob is a bedrock aspect of American character. It began with the Horrors of Santo Domingo, and it is still there, as New Orleans showed us. You white f)^&ers.

*No, I'm not really being ironic, just pretending to.


Posted by: rm | Link to this comment | 01- 3-08 10:56 PM
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JRoth, thanks for the summary -- I'll have to read a bit . I think I basically had the shell game and fantasies about CDO's aspect roughly correct, but didn't see a reason to assume systematic abuse/bias from lenders. Seems that wasn't the case (your 1/2). So that just makes it all worse. I hadn't thought about the banks role in leveraging to supply bubble building markets, but that's an obvious feedback issue, too.


Posted by: soup biscuit | Link to this comment | 01- 3-08 11:41 PM
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rm: I don't, actually (hang out with white americans, particularly). Academia is a strange place that way (and not only that way)


Posted by: soup biscuit | Link to this comment | 01- 3-08 11:44 PM
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not that I'm a lawyer or a social scientist either; but I don't believe that racism remains unchanges in this country. It obviously remains.


Posted by: soup biscuit | Link to this comment | 01- 3-08 11:46 PM
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we humanities types have our eyes on the Real Thing while you lawyers and social scientists just track shadows on the cave wall?

What is with the "x professions rule, y professions drool" today on this blog?


Posted by: m. leblanc | Link to this comment | 01- 3-08 11:50 PM
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Lawyer, social scientist, or humanities type are the three available categories? Well, crap.


Posted by: Sifu Tweety | Link to this comment | 01- 3-08 11:50 PM
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I otherwise agree with the content of 167.


Posted by: m. leblanc | Link to this comment | 01- 3-08 11:51 PM
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172: I guess a lot of us are sol.

173: really? no change?


Posted by: soup biscuit | Link to this comment | 01- 3-08 11:56 PM
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It's 2008 people. A black man named BARACK HUSSEIN OBAMA just won the IOWA caucus.


Posted by: bjk | Link to this comment | 01- 4-08 6:23 AM
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Sorry about my problems of tone. I meant to imply -- without getting in the way of my point, such as it may have been -- that it seems subjectively obvious to me, alone, that I rule and others drool, no matter how much the world and other people show me hard evidence that sometimes -- nay, often -- I drool. But though I may drool, I may also have some bit of value to add to the conversation. Isn't that what this hobby is all about?


Posted by: rm | Link to this comment | 01- 4-08 12:13 PM
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