On Apr 24, 2009, at 3:29 PM, Michael Pollak wrote:
> Questions:
>
> 1) Are you okay with agency securitization (Fannie Mae, Sallie Mae),
> or do want to shut them down too?
They both enable too much borrowing in a sphere where there should be less. Mortgage debt went from about 60% of after-tax income in 1993 to 101% at the peak in 2007 - at the same time the homeonwership rate went from about 64% to 68%. The value of owner-occupied real estate went from about 140% of after-tax income to 230%. So, it was almost all price inflation.
Student debt is only about $80 billion, and could be forgiven by seizing the wealth of the richest 5 guys in NYC. (I'm not kidding.) College tuition should be free. Fuck Sallie Mae.
> 2) Is there any evidence that we've had this problem with credit
> card and car loan securization? Credit card companies can be justly
> accused of lots of crimes, but I thought their aggregate models of
> how likely people are to pay have held up. Similarly with auto
> loans, although auto companies have tons of other problems.
Credit cards are too expensive, and are used by people facing stagnant wages and/or serious life crises. And sure, people who can't afford an iPhone slake their thirst with the VISA, so it's not only about necessitous borrowing. But making credit card borrowing harder might be politically fruitful.
Doug