Slashdot Mirror

Check out Act One of this episode of This American Life.

Act One. Letter Day Saint.

Rebecca was 16 years old when her mother Elizabeth died of cancer. But before she died, she wrote letters to Rebecca, to be given to her on her birthday each year for thirteen years. At first the letters were comforting, but as time went on, they had much more complicated effects. David Segal tells the story. David is a reporter for The New York Times. (14 minutes.)

Spot on. Most people have no idea what drives medical costs, and their experiences with the legal system are as culturally foreign as IT is to the average layman (at a minimum; it's likely enough they're gratingly adversarial as well as foreign), so it's easy to make the legal system into a bugaboo. And, bonus! The cost problem becomes simple! One easy factor you can blame!

Thing is, medical malpractice is a genuine problem, and when practitioners screw up, the resulting costs to a patient can be astounding. And as adversarial as the legal system can be, dealing with medical practitioners and organizations is often just as bad. Ever tried discussing billing mistakes with a hospital or doctor's office?

If you want a good overview of the various drivers behind medical costs, take a listen to what's available here.

The root of our problem is the insurance industry.

That's an awfully simplistic explanation. I am very much against the current health care legislation for a number of reasons including the one you mentioned, but the truth is that the problem has many roots; including the insurance industry, hospitals, government, and patients themselves. NPR's This American Life did a show on it that highlights the complexity of the issues. There's plenty of blame to go around and IMO the insurance companies deserve less blame than government, which through wage freezes essentially kicked the insurance companies from a primary market of individuals to a market of corporations. Hospitals vary their charges (sometimes by a factor of 10) for identical procedures depending on how many patients use that insurance company. Doctors are afraid of liability if they don't run a requested test even if it's in the patient's best interest to remain untested.

The health insurance industry doesn't get off easy--there's a second show devoted entirely to it. It's a huge mess. But here's the thing: they're not really like the financial industry. They seek profits, like everyone else, but they have been demonized. Their hands are tied by hospitals, and they are left with the choice of raising premiums for everyone or dropping the policies of people in areas where they have little clout with hospitals. IMO their biggest failing is that they don't care about the patient: they approve lots of unnecessary procedures because much of their profit lies in the volume of claims they process.

"Clusterfuck" is an appropriate term, because it's a whole lot of things gone wrong all at once. Without having a clear understanding of the problem, you can be sold a bill of goods like the current legislation. You've seen through this bill, but enough people haven't that it's still creeping along. It's important to get the shape of the problem so that if we get rid of this bill it won't be replaced by something equally awful.

If you want to get a better understanding as to why doctors are so quick to toss you into a CT scanner, listen to the most recent episode of This American Life. It goes into the minds of doctors and why they use tools that aren't always even medically necessary and also explores the insurance industry and patients too. Very interesting stuff.

Aired September 15, 2000 on This American Life.

It's really a fascinating story. A full nine years before the film was created, Ira Glass and crew at This American Life did a podcast on the event. Have a listen. http://www.thislife.org/Radio_Episode.aspx?episode=168

There is a really great episode of This American Life here: http://www.thislife.org/Radio_Episode.aspx?sched=734 that is relevant to this story. Act 1 has Sarah Vowell (a liberal anti-gun person) whose father is a gunsmith who built his own cannon. She tells about going out with him to fire it for the first time.

Aren't these the guys who ruined the economy?

It's easy to drop the blame on MBAs. And being a software developer I don't think much of them. I would urge you to refrain from placing all the blame on them ... it would be similar to saying "Isn't it software developers fault that copyright law is violated at large today?" Listen to this recent This American Life episode on the situation that was created by rating agencies. By the way, the first two parts of that are amazing and I feel more informed just listening to those three episodes than I do listening to any news outlet.

Your blame would be more appropriately placed on the rating agencies like Standard and Poors or Moody's and Fitch. There's probably a few MBAs working there. Or maybe the people who were playing those rating agencies off each other to get their securities rated higher? Or maybe the people who knew these securities were not AAA but bought them anyways and treated them as such (and that was a worldwide problem). It was an entire environment that created a problem for the world economy.

I'm not fan of Cuban but I don't think he was a part of any link in this chain of failure.

There was a This American Life about this a few months back:

http://www.thislife.org/Radio_Episode.aspx?episode=358

Two poets 'decided' to become homless to 'focus on their poetry'. As the story goes it was really less about choosing to be free as it was about being put on the street by their substance addictions and minor mental health issues. The Parent Post sounds to be pretty stable (after all he returned to normal life). But I think a lot of people who "decide to go homeless" are really people with deeper problems who won't acknowledge them. For me my apartment is the opposite of something I need to worry about. Auto bill pay and as far as I'm concerned it's free. 0 hastle. No constant battle to survive.

Now I've certainly felt the desire to 'go free' before and just move into a tent in the wilderness with a year's worth food. And have spent a month camping for the fun of it. But I think there is a difference between that and the constant rat race in the city.

---

P.S. To all of you pro-piracy. Pro-freebie. Down with RIAA types out there. That link is to a FREE podcast. With the assumption that if you like it you will support the artists and creators. Here is an opportunity to back up your words with actual action. It's DRM free. It's free of charge. It's everything you insist would convince you to support the artists. So do it. Click that donate button if you like the podcast and want to see more.

If anyone wants to look at the facts and decide whether I'm right or gujo-odori is right, my position is supported by:

1. Israelis commit just as much terrorism as the Palestinians (and the Israelis have killed far more Palestinians than vice versa)
http://www.amnesty.org/en/library/info/MDE02/005/2002

2. The U.S. government commits entrapment by having its paid informers entice otherwise law-abiding Muslims into breaking the law.
http://www.thislife.org/Radio_Episode.aspx?sched=1088

3. Most normal people will commit war crimes just like the Nazis did if they are placed in an environment like the Nazis were in. This was proven by the social scientists Stanley Milgram http://en.wikipedia.org/wiki/Milgram_experiment and Philip Zimbardo. http://www.prisonexp.org/ . This was confirmed by the real-world experience of the U.S. military in Afghanistan and Iraq.

These government agents are professionals at manipulating people. You are an amateur at defending yourself from their manipulation. You don't know what you could be manipulated or tricked into doing.

The government informer threatened to kill John DeLorean's daughter. Would you have let them kill your family?

You can't condemn someone else by saying that you would never have done such a thing. You don't know.

Secondly, he didn't just walk up to them, open his trench coat and say "Pssst, wanna buy some C4 and a Stinger?" They were looking for stuff, so the FBI put forward a supplier.

Actually, the informant, Shahed Hussain, did go around saying things like that, in this case and another one, and federal agents have set up other people like that.

Hussain was a Pakistani immigrant who went undercover for the feds seven years ago to avoid deportation after being convicted of fraud. He was going around to mosques offering people money. http://www.nytimes.com/2009/05/23/nyregion/23informant.html And by being a government informant, (1) Hussain was getting paid a lot of money (hundreds of thousands of dollars, as I recall) (2) He got out of prosecution and possibly prison for his own crimes (3) Instead of being deported, he was allowed to stay in the country, which for a lot of immigrants is most important of all.

Hussain was responsible for a conviction in another case http://www.nytimes.com/2006/10/11/nyregion/11plot.html in which he entrapped two men who never had anything to do with terrorism before, and who never could have gotten such weapons before, by loaning them $50,000.

One of the plotters in the current case needed money because his brother was sick. http://www.nydailynews.com/news/ny_crime/2009/05/25/2009-05-25_terror_plotter_did_it_for_me_brother.html

Finally, if an FBI agent *had* walked up and said "Pssst, wanna buy some C4 and a Stinger?" and they said yes, then got busted, that'd stand up in court. Offering an illegal item for sale is not legal entrapment.

Well, depending on the circumstances it can be entrapment. If the person had no predisposition to commit a crime, and the FBI agent entices him by using an unreasonable amount of pressure, such as offering a huge amount of money, it can be entrapment. It's a jury question.

Cf. John Delorean's coke bust.

DeLorean was acquitted. http://en.wikipedia.org/wiki/John_De_Lorean That's a good example of entrapment, because DeLorean was offered an unreasonable amount of money, in desperate circumstances, to do something he would not otherwise do.

Or anybody who gets busted for soliciting prostitution when the prostitute turns out to be a police officer.

If someone solicits a prostitute, that would show predisposition to commit a crime.

In contrast, a person who has never committed an act of terrorism, and has nothing to do with terrorists, who is enticed to take a large amount of money and then informed that it is for terrorist purposes, is entrapped, under the law.

Unfortunately, it's easy to manipulate juries with prejudicial issues, such as the defendant's race and religion. Right now, many jurors will be prejudiced against Muslim Arabs, and it's relatively easy for a prosecutor to get a conviction against them by using scare tactics.

A good example was Hemant Lakhani, whose case was the subject of a good program on This American LIfe. http://www.thislife.org/Radio_Episode.aspx?sched=1088 One of the jurors agreed that he was entrapped, but she felt pressured by the other jurors to go along. Most people who listen to that broadcast would come to the same conclusion. But Lakhani is in jail for the rest of his life.

Next time around, the time will come for them to be prejudiced against another ethnic group or religion.

What was your race and religion again?

Enough with your "facts", you godless commie bastard! Anyone can prove anything they want when supported by the "facts".

You show me a person who says "Yeah, sure" to an offer of blowing up a Synagogue for cash and I'll show you a person with a predisposition to do that anyway.

If you had read psychologists like Stanley Milgram http://en.wikipedia.org/wiki/Stanley_milgram you'd know that most people could be manipulated to do exactly what the Nazis did by someone who is a skillful manipulator -- and informers are skillful manipulators. If you read testimony at these trials, you'll see that the defendants made innocent decisions that would have seemed reasonable at the time, and one thing led to another.

If you had been in that situation, an undercover agent might have manipulated you into going along with the plot.

Prejudice against Muslims? Hardly. You *have* noticed that the people going around doing this are primarily young, primarily Muslim, primarily male, right?

Prejudice unsupported by facts. The Israelis commit just as much terrorism as Arabs and Muslims. http://en.wikipedia.org/wiki/Yigal_Amir http://www.amnesty.org/en/library/info/MDE02/005/2002 And the U.S. has supported many terrorist movements against Cuba, Nicaragua, etc.

If moderate Muslims want Islam to be respected rather than suspected, they need to stand up and denounce terror and denounce terrorists. Even when those terrorists are state actors.

That is such bullshit I don't want to go through the details. You'll have to look up Gershom Gorenberg's articles yourself. Let's just say that I was working to free Muslims from jail who were imprisoned for denouncing terrorism.

What's my race and religion? You can call me Irish Catholic. In some parts of the world, that might have gotten me some extra scrutiny once upon a time and I wouldn't call it unfair. People with names like mine and a religion like mine were planting bombs in London, and some here in the US were helping to finance them. If our terrorism problems here were with people of Irish ancestry and Catholic religion, I'd be quite understanding if that got me secondary screening when I fly, and I wouldn't be whining that it's racism or prejudice.

There's at least one case that I can remember of a group of innocent Irish people who were convicted of terrorism charges in England and who served decades in jail, where one of them died, until it turned out that the scientific evidence against them, of nitrates, was faulty and they were released.

According to this article in Slate, http://www.slate.com/id/1003657/ entrapment requires 3 things:

1. The idea of committing the crime came from law enforcement officers, rather than the defendant.

2. The law enforcement officers induced the person to commit the crime.

3. The defendant was not ready and willing to commit this type of crime before being induced to do so.

Many of these terrorist cases meet all 3 requirements.

Repeatedly, an informer went to American residents who had previously had no contact with Islamic terrorism.

Repeatedly, the informer came up with the plot, and encouraged the defendant to participate by offering him substantial amounts of money.

Repeatedly, the defendant had never participated in this kind of activity before, and would never have done so if the informer hadn't suggested it and facilitated it, often by providing bogus "weapons."

The prosecutors claim that the defendants would or might have some day participated in terrorism anyway. That's speculation which would only convince jurors who are prejudiced to believe that Muslims or Arabs are terrorists.

For example, listen to the case of Hemant Lakhani on This American Life. http://www.thislife.org/Radio_Episode.aspx?sched=1088 .

Secondly, he didn't just walk up to them, open his trench coat and say "Pssst, wanna buy some C4 and a Stinger?" They were looking for stuff, so the FBI put forward a supplier.

Actually, the informant, Shahed Hussain, did go around saying things like that, in this case and another one, and federal agents have set up other people like that.

Hussain was a Pakistani immigrant who went undercover for the feds seven years ago to avoid deportation after being convicted of fraud. He was going around to mosques offering people money. http://www.nytimes.com/2009/05/23/nyregion/23informant.html And by being a government informant, (1) Hussain was getting paid a lot of money (hundreds of thousands of dollars, as I recall) (2) He got out of prosecution and possibly prison for his own crimes (3) Instead of being deported, he was allowed to stay in the country, which for a lot of immigrants is most important of all.

Hussain was responsible for a conviction in another case http://www.nytimes.com/2006/10/11/nyregion/11plot.html in which he entrapped two men who never had anything to do with terrorism before, and who never could have gotten such weapons before, by loaning them $50,000.

One of the plotters in the current case needed money because his brother was sick. http://www.nydailynews.com/news/ny_crime/2009/05/25/2009-05-25_terror_plotter_did_it_for_me_brother.html

Finally, if an FBI agent *had* walked up and said "Pssst, wanna buy some C4 and a Stinger?" and they said yes, then got busted, that'd stand up in court. Offering an illegal item for sale is not legal entrapment.

Well, depending on the circumstances it can be entrapment. If the person had no predisposition to commit a crime, and the FBI agent entices him by using an unreasonable amount of pressure, such as offering a huge amount of money, it can be entrapment. It's a jury question.

Cf. John Delorean's coke bust.

DeLorean was acquitted. http://en.wikipedia.org/wiki/John_De_Lorean That's a good example of entrapment, because DeLorean was offered an unreasonable amount of money, in desperate circumstances, to do something he would not otherwise do.

Or anybody who gets busted for soliciting prostitution when the prostitute turns out to be a police officer.

If someone solicits a prostitute, that would show predisposition to commit a crime.

In contrast, a person who has never committed an act of terrorism, and has nothing to do with terrorists, who is enticed to take a large amount of money and then informed that it is for terrorist purposes, is entrapped, under the law.

Unfortunately, it's easy to manipulate juries with prejudicial issues, such as the defendant's race and religion. Right now, many jurors will be prejudiced against Muslim Arabs, and it's relatively easy for a prosecutor to get a conviction against them by using scare tactics.

A good example was Hemant Lakhani, whose case was the subject of a good program on This American LIfe. http://www.thislife.org/Radio_Episode.aspx?sched=1088 One of the jurors agreed that he was entrapped, but she felt pressured by the other jurors to go along. Most people who listen to that broadcast would come to the same conclusion. But Lakhani is in jail for the rest of his life.

Next time around, the time will come for them to be prejudiced against another ethnic group or religion.

What was your race and religion again?

CDSs, priced with open software or not, are the ticking time bomb of the world economy. Nothing better than bookie betting they have created an inflated payout of $50 trillion dollars worldwide that only takes the fall of a few big banks to start. I highly recommend listening this episode of "This American Life" which explains this situation and how it happened in terms just about anybody can understand. http://www.thislife.org/radio_episode.aspx?sched=1263

I'm reminded of an episode of This American Life that discusses vaccines:

http://thislife.org/Radio_Episode.aspx?episode=370

"Stories of people who ruin things for everyone else...or who are accused of that. Like the San Diego parents who didn't vaccinate their child for measles (pictured at left: measles virus). When their seven-year-old caught the disease on an overseas trip, this decision became a whole community's problem. The outbreak infected 11 children and endangered many others."

This reminds me of a This American Life episode I listened to (and you can too by clicking on Full Episode here). Basically it explores a very bad chapter of early cryogenics. Before I listened to that, I thought that this was pretty cut and dried ethically (dead bodies are dead bodies, do what you want) but you see how it negatively affects other people who misplace hope in this process.

Also, isn't Ikaria the worst name to pick? "Hey, our company hopes to aim too high and fail hard." They should have gone with Promethea in my opinion.

DavidTC knows what he's talking about, though I'd through in a caveat that Fannie and Freddie bought mortgages that they knew they shouldn't have thus enabling, indirectly, the real malfeasance being perpetrated by the Investment banking industry.

Here's a link to get you started on your research: http://www.thislife.org/extras/radio/355_transcript.pdf

I'm not disagreeing with your take on the mortgage industry's "creative underwriting", but rather the blame that is placed on the CRA, in particular, as a way to shove the blame on poor people.

Banks, as supposedly respectable lending institutions, shouldn't under any circumstances make loans which would lose them money, and complaining that the government "made them" give loans to people who don't have credit coming out their ears sounds like a really lousy way to push the blame off of the real estate and mortgage business. A great piece on this was done a while back on This American Life, which gave some more background to the extreme excesses spilling from the real estate bubble.

You pointed out a quite from the Boston Fed which said that they weren't discounting low credit scores. That may be the case, but granting NINA or "No Doc" loans was just plain *greedy* by any standard.

It's also likely that bills like the Fair Housing Act and the Equal Credit Opportunity Act would not have been necessary if not for historically discriminatory lending practices.

Oh get off of it. The reason for the economic meltdown has little to do with Freddie and Fannie. It was deregulation, spearheaded by the Bush administration, which allowed financial institutions to create "mortgage-backed securities". Instead of a bank making a 30-year mortgage to someone who was a good risk, and keeping the mortgage for the life of it, now institutions could buy and trade baskets of mortgages. They could buy and sell it at any time, and therefore had little incentive to see how well any individual could pay of their personal mortgage. As the appetite for mortgage backed securities increased, lenders loosened criteria to give subprime mortgages, eventually taking people with no incomes and no assets. This had little to do with Fannie and Freddie, and much more to do with deregulation. In their greed, lenders gave loans to people who could never pay, simply because they wanted to sell another bundle of loans. If banks held individual mortgages for the life of the loan, and therefore had good lending criteria, none of this would have happened.

Here's a great "This American Life" piece on it. Banks made loans to people with no money. Banks wouldn't "regulate" themselves, the Bush administration rolled back regulation. The small way that Freddie and Fannie are related to this is because investors foolishly thought that the US gov't would prop them up. That's the investor's mistake. That's the long and short of it.

Did Fannie and Freddie give out a lot of NINA loans? Honest question. I have no idea and have no idea how to find out. Also, what regulations were proposed and what would they have done if enacted? You're implying that the regulations would have had beneficial effects and that they were rejected by people with foolish or underhanded motives, but it's hard to judge if that's the case or not without knowing what regulations were actually proposed. If you have any links or anything, I'd certainly like to take a look.

What I find disconcerting is the effort (presumably made by those on the right) to pin the blame for this crisis on fannie and freddie alone. Which is why I asked about the NINA loans. After listening to This American Life: Giant Pool of Money, I would tend to think that at least some of the blame ought to go to the system whereby mortgage brokers were looking to make as many loans as possible to sell to others, and so didn't bother to verify income or assets. After all, once they sold the loan, they got their money and didn't have to worry about whether the borrower would default.

Also, see this post by Andrew Leonard in salon, discussing Alan Greenspan's testimony:

The evidence strongly suggests that without *the excess demand from securitizers*, subprime mortgage originizations, undeniably the original source of the crisis, would have been far smaller and defaults accordingly far fewer. But subprime mortgages pooled and sold as securities became subject to explosive demand from investors around the world.

Italics mine.

That's right. Alan Greenspan went before Congress and did not, at least in his initial statement, blame Fannie Mae or Freddie Mac or the Community Reinvestment Act or stupid homeowners or fraudulent lenders for the subprime meltdown and the ensuing credit crisis. He blamed the demand for risk from both the banks who would repackage the dodgy loans as exotic securities and the investors whose taste for these hotcakes could not be satisfied.

Again, if you'd provide some links discussing the proposed regulation, I'd be able to determine whether I should have been concerned that useful regulations were being blocked, or whether these proposed regulations were, in fact, designed to stick it to the poor.

As such, though the leverage ratio was officially 12.5, somebody who held nothing but mortgages could be levered up 35:1. And if you owned some bank issues, you could get nearly infinite.

But I'm wondering... what makes you think that these limits were going to be further increased?

You obviously know more about these details than I. What I was working from was what I heard in the second program: Another Frightening Show About the Economy. You can download it for free at the moment from: here.

Here's the summary for part 2:

Act Two. Out of the Hedges and Into the Woods.

One more confusing financial product that's bringing down the global economy. And one of way to think about this product is this: If bad mortgages got the financial system sick, this next thing you're about to hear about, helped spread the sickness into an epidemic. These are "credit default swaps." Alex explains. (19 minutes)

The segment was so well done, it's hard to summarize, but I'll do my best. In essence, "Credit Default Swaps" (CDS) were presented as a form of insurance that a lender could by so as to minimize the risk that a loan would default. So far, so good. Then, somebody realized they could by a CDS for a loan they did not even own. So what? It got out of hand when someone realized they could make money by buying a CDS for something that was questionable. How so? Like buying life insurance. Like buying life insurance on somebody ELSE. Who is old and feeble. I have an opportunity to buy a policy for, say, $1M on this person. And YOU have an opportunity to buy the same kind of policy from your agent. The sicker the person, the more of an incentive there is to buy in.

Now, replace "old and feeble person" with "Lehman Brothers". And for "insurance company", try "AIG". And multiply just You and Me with hundreds or thousands of CDSs in play. With many, many other companies. As I understand it, there was no regulatory limit on how many CDSs could be purchased on the exact same debt issue. And, because there was no mandatory reporting or the like on what CDSs were out there, we really don't know just how many of these are out there. With all the repackaging of these as securities, sliced and diced and sold as yet more instruments, we don't know just how bad the situation is.

Again, I cannot do the show justice. Listen to the podcast. I'd love to hear your take on it once you have done so.

If you haven't listened to that show, I heavily recommend it (no matter where you live, if you speak English). That one episode was so insanely popular that Ira Glass was pushed to do another on the same topic and that lead to last week's This American Life. From credit default swaps to the paper market drying up to NINA loans, these two episodes gave me more information in two hours than I could gather watching every single major TV news show for weeks.

YES! I whole-heartedly agree. I do not claim to be a financial maven, but I have been following the markets for a number of years and have some familiarity with the terms that have been bandied about as of late. But, these two shows did an INCREDIBLE job of taking arcane financial products and bringing them into focus with concrete examples. They showed how this crisis built up and is now unwinding.

As painful as this is, I do take some comfort in the crisis happening now rather than a year or two from now when even more leverage would have been injected into the system. That would make things FAR WORSE. Don't believe me? Let me repeat the links that eldavojohn provided: The first episode sets the stage extremely well and explains how the mortgage crisis got going. The second episode built upon the first and so clearly explains how the leveraging of these financial instruments got us into the credit crisis we are in today.

Listen to those. If you do nothing else today, LISTEN TO THEM.

If you haven't listened to that show, I heavily recommend it (no matter where you live, if you speak English). That one episode was so insanely popular that Ira Glass was pushed to do another on the same topic and that lead to last week's This American Life. From credit default swaps to the paper market drying up to NINA loans, these two episodes gave me more information in two hours than I could gather watching every single major TV news show for weeks.

YES! I whole-heartedly agree. I do not claim to be a financial maven, but I have been following the markets for a number of years and have some familiarity with the terms that have been bandied about as of late. But, these two shows did an INCREDIBLE job of taking arcane financial products and bringing them into focus with concrete examples. They showed how this crisis built up and is now unwinding.

As painful as this is, I do take some comfort in the crisis happening now rather than a year or two from now when even more leverage would have been injected into the system. That would make things FAR WORSE. Don't believe me? Let me repeat the links that eldavojohn provided: The first episode sets the stage extremely well and explains how the mortgage crisis got going. The second episode built upon the first and so clearly explains how the leveraging of these financial instruments got us into the credit crisis we are in today.

Listen to those. If you do nothing else today, LISTEN TO THEM.

Alex Blumberg: But Glen didn't worry about whether the loans were good. That's someone else's problem. And this way of thinking thrived at every step of this mortgage security chain. A guy like Mike Francis, from Morgan Stanley, he told me he bought loans, lots of loans, from Glen's company, and he knew in his gut they were bad loans. Like these NINA loans.
Mike Francis: No income no asset loans. That's a liar's loan. We are telling you to lie to us. We're hoping you don't lie. Tell us what you make, tell us what you have in the bank, but we won't verify? Weâ(TM)re setting you up to lie. Something about that feels very wrong. It felt wrong way back when and I wish we had never done it. Unfortunately, what happened ... we did it because everyone else was doing it.
Alex Blumberg: It's easy to ignore your gut fear when you are making a fortune in commissions. But Mike had other help in rationalizing what he was doing. Technological help. Mike sat at a desk with six computer screens, connected to millions of dollars worth of fancy analytic software designed by brilliant Ivy league math geniuses hired by his firm, which analyzed all the loans in all the pools that he bought and then sold. And the software, the data ... didnâ(TM)t seem worried at all:
Mike Francis: All the data that we had to review, to look at, on loans in production that were years old, was positive. They performed very well. All those factors, when you look at the pieces and parts. A 90% NINA loan from 3 years ago is performing amazingly well. Has a little bit of risk. Instead of defaulting 1.5% of the time it defaults at 3.5% of the time. Thatâ(TM)s not so bad. If Iâ(TM)m an investor buying that, if I get a little bit of return, Iâ(TM)m fine.
Adam Davidson: Wait Alex. I want to step in for a moment because this is a very important piece of tape. A big part of this story, of this whole crisis, is that a lot of really smart people, people who knew better, fooled themselves with this data. It was the triumph of data over common sense. Can you play that tape again?
Mike Francis: All the data that we had to review to look at, on loans in production, that were years old, was positive.
Adam Davidson: As we now know, they were using the wrong data. They looked at the recent history of mortgages and saw that foreclosure rate is generally below 2 percent. So they figured, absolute worst-case scenario, the foreclosure rate may go to 8 or 10 or 12 percent. But the problem with is the

Community reinvestment act ? Oh, right.

Read the link before you post. It says some economists tried to link the CRA to the subprime collapse, but that other economists had pointed out that that particular argument is flawed for the reasons given in that section of the Wikipedia article.

[...] However, the chief executive of Countrywide Financial, the nation's largest mortgage lender, is said to have "bragged" that to approve minority applications "lenders have had to stretch the rules a bit", suggesting ...

Countrywide might not be the best source of information on that. Try The Great Pool of Money from "This American Life." The mortgage companies and brokers were attempting to provide more mortgages, and dropping requirements. I hardly think that NINA loans were required by the CRA, more that the fuckers who actually made the poor loans would like to shift the blame there.

And the final "OK" was given by ...

... Without forcing a veto vote, this bipartisan legislation was signed into law by President Bill Clinton on November 12, 1999.

I'll be the last person to deify Bill Clinton, but it does look by the voting on that bill that a veto would have simply dropped it back on his desk, since a *very* large majority of the House and more than a majority of the Senate approved it. Blaming this all on Clinton seems to be in style for the modern conservative, though.

The version that is in force now, is one with massive democrat additions.

Don't use the pejorative ("democrat" additions) if you're trying to get a point across.

The only sure thing is that the democrat-altered bill was a disaster, and was a disaster in that the democrat additions massively created something called "subprime" loans ... hmmm ...

To quote wikipedia on the origin of subprime lending: "Subprime lending evolved with the realization of a demand in the marketplace and businesses providing a supply to meet it coupled with the relaxation of usury laws." Doesn't seem to mention this bill, at all. This situation is a bit more complicated that "teh government made us loan money to poor people! give us money!"

We could also just assume common sense is correct ... lending to people without income (or far, far above their income) is ... well ... bad business (now there's a great insight ! It's bad for both the loaners, who lose their house, and for banks, who lose their money). And if this causes some population groups to get less loans ...

The issue is that lenders decided that they needed more and more loans to sell to other banks, and decided (against what you correctly refer to as "common sense") to start lowering the bar on criteria for loans all the way to the NINA loans which virtually *guaranteed* foreclosures would result.

Maybe I should repeat that ... we should MEDDLE LESS. That was equally clear before all the recessions we've ever known so this probably justifies another few repeats ...

I'm guessing right now I'll be branded racist. Oh well. I didn't cause the subprime crisis. What really caused the subprime crisis is simple :

"positive discrimiation" (specifically rubber-stamping "minority" loan applications, followed by rubber-stamping of (nearly) ALL loan applications)

Yeah, minority loans, that's the ticket. Poor *white* people didn't take out NINA loans the same way poor black and hispanic people did. We s

I don't know how to say this nicely, so I'll be blunt. You're a crackpot. Please don't take that bad, but you sound exactly like so many people who say, "I don't understand the math, but physics is wrong and I know better." Check out Act III

You obviously don't understand the first thing about the physics you claim is false. Rubber sheets? That's just a way of explaining it to children. It's not the actual model. Discs form because angular momentum is conserved and nothing sweeps thing into a larger body (moon, etc). There's no need for changing the rules of gravity, which have been verified to an insane degree within our own solar system. Sure there's potential problems with gravity on larger scales, maybe you're right for galaxies and bigger, but not for Saturn.

Borrowers were irresponsible, borrowing money they knew they would have trouble repaying, or trying to make a quick buck buying into the housing bubble. And lenders were irresponsible, lending money to people who had no income, no job, no assets. But they just sold off the mortgages, so the risk didn't affect them. And investment bankers were irresponsible. They created these crazy financial schemes to sell high-risk mortgages; in theory they were supposed to minimize financial risk but in practice they did the opposite. In short... a lot of greed, a lot of foolishness, and there's more than enough blame to go around.

Stephen Goldin's 23 rules how to act when you meet a pro at an Sci-Fi convention. Not as amusing as Heinlein's, but an interesting read.

via

No one seems to care if loans go into default for completely
avoidable reasons.

Listen to this if you want to understand what's going on with mortgage lenders.

In short, the companies that hold the mortgages don't hold the entire mortgage. Thousands of mortgages are bundled into a CDO and then companies buy shares of the CDO. Thus there is effectively no one who both (a) cares about the status of the loan and (b) has the authority to take any action to fix problems. There are plenty of people who are either (a) or (b) but just about nobody who is both (a) and (b).

It's your opinion that a spectrum free of politics would be preferable.

Hardly the central point of my argument -- it's largely a rhetorical point to underscore the fact that that it's highly unlikely TFD would be the *end* of politically oriented broadcasting. And again, there's considerable evidence to back up this assertion, given that broadcasters still covered politics while TFD was in effect.

But to some extent, I suspect you *could* fashion an objective argument stating that the current state of things may not even be marginally better than no coverage at all, if you start by considering some simple questions about values. What's the *purpose* of political programming? Is it simply entertainment? Or editorial propaganda? It's a value judgment, but I don't think it's just my "opinion" that it would be objectively better to have programming that transcends both of those functions and really educates.

And I'm not sure we've got it. Despite the "diversity" of programming, it's still apparently true that the majority of Americans don't seem to know much about policy issues underlying political decisions. If some accounts are true, a significant number still believe Iraq was involved in the 9/11 attacks, can't locate Iraq on a map, are barely aware that there are Muslim sects and how they compete and are related. You'd think that after 5 years of war, most of us would have a deeper understanding of this -- in fact, for a well-tuned representative democracy, we'd *need* to know at least a limited amount of this in order to make good judgments when it's time hold those in office accountable via elections.

If these things are true, it's hard to argue the current broadcast media is providing a useful function on this front. And if it's not, then it's essentially something else, probably either the aforementioned propaganda or entertainment.

What about those who disagree and enjoy the products available today? Would it not be "unfair" to them to lose access to programming they enjoy?

To the extent that "enjoyment" means entertainment that excludes the value I'm describing, it doesn't fare well when in contrast, except perhaps to those who value bread and circus over a functional and responsible society.

As it happens, it doesn't seem to be the case that the entire landscape of broadcast media is devoid of which meets the standards I've described. In particular, I could point to This American Life. They aren't uniformly agreeable to my thinking, but it's inarguable that some of their pieces have really transcended reporting to become real educational journalism. As an almost quintessential example, the recent episode "The Giant Pool of Money" is an excellent layman's overview of the housing bust and credit crisis. There's been similar in-depth pieces on Iraq, on the history and current status of habeas corpus, and other topics.

But it's not hard to view this as the exception that proves the rule. It's such a strange show against the landscape. More than half of the time it isn't even politics at all, just oddly individualized narrative journalism.

It's your opinion that a spectrum free of politics would be preferable.

Hardly the central point of my argument -- it's largely a rhetorical point to underscore the fact that that it's highly unlikely TFD would be the *end* of politically oriented broadcasting. And again, there's considerable evidence to back up this assertion, given that broadcasters still covered politics while TFD was in effect.

But to some extent, I suspect you *could* fashion an objective argument stating that the current state of things may not even be marginally better than no coverage at all, if you start by considering some simple questions about values. What's the *purpose* of political programming? Is it simply entertainment? Or editorial propaganda? It's a value judgment, but I don't think it's just my "opinion" that it would be objectively better to have programming that transcends both of those functions and really educates.

And I'm not sure we've got it. Despite the "diversity" of programming, it's still apparently true that the majority of Americans don't seem to know much about policy issues underlying political decisions. If some accounts are true, a significant number still believe Iraq was involved in the 9/11 attacks, can't locate Iraq on a map, are barely aware that there are Muslim sects and how they compete and are related. You'd think that after 5 years of war, most of us would have a deeper understanding of this -- in fact, for a well-tuned representative democracy, we'd *need* to know at least a limited amount of this in order to make good judgments when it's time hold those in office accountable via elections.

If these things are true, it's hard to argue the current broadcast media is providing a useful function on this front. And if it's not, then it's essentially something else, probably either the aforementioned propaganda or entertainment.

What about those who disagree and enjoy the products available today? Would it not be "unfair" to them to lose access to programming they enjoy?

To the extent that "enjoyment" means entertainment that excludes the value I'm describing, it doesn't fare well when in contrast, except perhaps to those who value bread and circus over a functional and responsible society.

As it happens, it doesn't seem to be the case that the entire landscape of broadcast media is devoid of which meets the standards I've described. In particular, I could point to This American Life. They aren't uniformly agreeable to my thinking, but it's inarguable that some of their pieces have really transcended reporting to become real educational journalism. As an almost quintessential example, the recent episode "The Giant Pool of Money" is an excellent layman's overview of the housing bust and credit crisis. There's been similar in-depth pieces on Iraq, on the history and current status of habeas corpus, and other topics.

But it's not hard to view this as the exception that proves the rule. It's such a strange show against the landscape. More than half of the time it isn't even politics at all, just oddly individualized narrative journalism.

Maybe you're not aware of it, but from the mid 90s to 2006, there's all kinds of shut-out stories of precisely the kind you're talking about -- the Republican party didn't episodically decide to shut the Dems out, there was a concerted effort and plan for marginalizing them as fully as possible. Take a listen to Act III of This American Life's Houses of Ill Repute episode if you're interested in some perspective.

Personally, I don't recall stories during that time period about how the Republicans were censoring the Democrats, but perhaps, since you have *guaranteed* that it would be covered in that manner, you can put up some examples.

After having listened to this:
    http://www.thislife.org/Radio_Episode.aspx?sched=1242

I have to agree with geekoid, at least on the mortgage/credit crisis part. It's a lot more complicated than you're making it out to be. A lot of those people who were behind pushing these products also lost their shirts. The main driving factor behind the credit crisis is that developing countries like China suddenly had way more money to invest and were demanding things to invest in, even though the number of things to invest in weren't growing at the same rate. So they were flashing around wads of cash saying "sell me something, ANYTHING!" and the market complied.

The one actual thing that all these have in common is people investing money in things that either a) they didn't understand well enough to figure out that it was a bad deal or b) they did understand it and should have known better but did it because everyone else was doing it. If you give your money to someone and blindly trust them, then you will most likely get ripped off.

In short, the collapse of the housing market destroyed trillions of dollars. Nobody knows how much was destroyed, exactly. And nobody is entirely sure what the long-term effect is going to be, but the short-term effect has been that people are becoming afraid to lend money, and if you can't borrow money, then our economic system doesn't work so well.

Sounds like your friend doesn't want to take blame for what he and his coworkers did. If you really want to understand what your friend doesn't want to tell you, listen to this show. There's plenty of blame to spread around without slipping into racism.

The NPR radio show "This American Life" had an excellent story about the credit crisis and went in depth on the use of past data that didn't really apply to the current scenario. Here's the link if you want to listen:
http://www.thislife.org/Radio_Episode.aspx?sched=1242

It's probably the most complete report on the roots of the crisis and how it developed over time that I've heard thus far.

Habeas refers to the _defendant's_ body. You have bring the person to court, demonstrate that he hasn't been killed or tortured, and publicly announce the charges. Habeas corpus does not refer to victim's bodies. For a nice history of Habeas, see Habeas Schmabeas.

On a related note, even This American Life is getting political. The most recent episode is about the Bush administration's strategy of pushing for absolute power on even the smallest issues. It is actually really disturbing, particularly for a show that generally focuses on quaint tales from grandmas and do-gooders. http://www.thislife.org/Radio_Episode.aspx?sched=1236

If you doubt any of parent's statement, listen to this. This American Life interviewed some real professional poker players, who play nightly and keep their lives financed by milking the out-of-town businessmen who think they can play poker.

When I first started writing news, for alternative newspapers, I thought it was easy. I knew who the good guys were, and who the bad guys were, and all I had to do was expose them. Just try it. If only it were that easy.

The most important lesson I learned as a real journalist, as distinct from a hippie journalist, is that whenever you attack the bastards, always call them up and give them a chance to respond. Let them defend themselves, and then show how they're lying. Just try it. Every real journalist (Molly Ivins, for one) will tell you all the times they thought they had the guy nailed, but when they called him up, it turned the story completely around.

There was a story on This American Life http://www.thislife.org/ about a kid who was in Europe, and talked his way into a press conference with George H.W. Bush (the father, not the stupid one). Good work so far. Then he got a chance to ask the President of the United States a question on the environment. Bush said that he supported nuclear power because it would do, overall, less harm to the environment. He actually made some good points.

The kid hadn't done his homework. He didn't know how to frame a good question that would pin the bastard down, and he didn't know how to follow it up. He didn't know shit about the environment. Bush had probably answered the same question a dozen times before, knew more about the environment than the kid did, and knew how to give a good answer. TAL played a tape of the press conference, and it was painful for me to listen, because I'd been in that same situation so many times before. (If you want to become a citizen journalist, you can practice getting prepared by looking up that story on the TAL web site. This will give you an idea of how hard it is to do research.)

Look at what I think is one of the best news sources in English: Democracy Now http://www.democracynow.org/ Take a look at this: http://www.democracynow.org/2008/1/28/the_democrats_suharto_bill_clinton_richard There is no way that any citizen journalist is going to be able to question Richard Holbrooke or Bill Clinton about human rights the way Alan Nairn and Amy Goodman did. Or this http://www.democracynow.org/features They know their facts thorougly.

Who do you want grilling your so-called elected leaders -- Amy Goodman, or some well-intentioned "activist" who doesn't know his facts (like those ringers they have in the audience during the presidential debates)?

I'm not defending the White House press corps either. Sure, the average stoned activist could do a better job than Judy Miller, but that's a pretty low bar.

There is one case where citizen journalists can do a good job, and that's as first-hand eyewitnesses. I remember going to an anti-war demonstration during the '60s, and having the New York City police viciously attack non-violent demonstrators (including me), some of whom had brought their children, and put some of them in the hospital with permanent injuries, for no reason that I could see (or that the City's lawyers could come up with in subsequent lawsuits). Running for safety, I came across a bunch of guys with press badges, huddled safely away from the scene where they couldn't witness the police brutality. On WBAI-FM radio, we heard first-hand accounts of what happened on the scene, which was consistent with what I saw.

Next morning, I picked up the New York Times, and saw a complete propaganda job, quoting only the police and City officials, claiming that the demonstrators had started it, it was the demonstrators' fault, and the cops had behaved with proper restraint. The Times didn'

There was the editor of a parody magazine (The Pakistani version of The Onion) who was locked up at GitMo as a "terrorist" (His jokes weren't even very good). Check out the Habeus Schmabeus program from This American Life for more interesting examples.

Well, it used to be in their archives. Does anyone have a copy? Just a sec I have to answer the door, someone's pounding on it with the but of an AR-15.

That's a nice story, but experience disagrees with you. Quadrupeds move much more efficiently than we do. We're smarter than they are, so we take advantage of their behaviors to kill and eat them. Driving herds off cliffs, e.g. However, the experience of the Plains Indians with horses pretty clearly shows that people will take any advantage they get and use it to master their surroundings. If people on horses were inferior to people on foot, they wouldn't have bothered to become expert horsemen.

While you do need to pay someone to do painful/disgusting/dangerous tasks, it's probably less than you think.

I'm a garbage man: if you wanna hire me away, you gotta beat $15.94 per hour. The private haulers (Waste Management and Rabanco) pay less than that, supposedly.

I guess $32K/year might be a decent enough wage for a no-brainer job, but think about how many medical wastes, rancid foodstuffs, and asbestos (and everything else) you gotta handle for that money. I'd rather work where the most dangerous thing there is the coffee I'm drinking...

The "Garbage" episode of "This American Life" is kinda interesting: http://www.thislife.org/Radio_Episode.aspx?episode=249

My point was not to deny anything that has or has not happened, but to say that I trust their judgment. If agents charged and sworn with protecting the good people of the USA deem it appropriate to detain foreigners without charge, then I'm not going to question it. Intelligence is a dirty business. War is even dirtier. Good will is not what these people understand. Action needs no translation.

If nobody gave me any clues as to when this was written, I could very easily be convinced that it was written about the internment of the Japanese. The people in charge back then were no different than the people in charge now: hardworking Americans with families and the security of their country at heart. Unfortunately, as you point out, war is a dirty business and fear can cause those people to make extraordinarily poor decisions.

Now when citizens start disappearing or the government starts to raid and burn down towns, then you'll have a point.

Well, for starters, Donald Vance "disappeared" for two weeks--long enough for his fiancee to contact her congressperson. Even after he was able to contact her, he was denied trial and representation for another 80+ days. I don't see any particular reason to think that his case is the worst that could possibly happen, given that the government is essentially claiming that they didn't have to let him go at all. Ever.

But for detaining 500 people, who are treated quite well, btw, at a military base in Cuba is no cause for alarm.

This made me pause. I don't know about your lifestyle, but I have a job, a wife, and a ~75 year life expectancy. If you kidnapped me in the middle of the night and swept me off to a hotel where I was massaged daily and fed foie gras but I could never get in touch with my family or leave the facility, I'd strongly consider murdering you and trying to escape after a few years. In fact, I probably wouldn't even feel bad about it. Being held incommunicado and without charge for years at a time under the best conditions isn't even a distant cousin of being treated quite well. If you haven't heard it, I strongly recommend listening to the This American Life program on the topic. It's an hour long, but it's free and it's really worth thinking about. Yes, there are bad people at Guantanamo. But our government's judgment about who to scoop up and what to do with them isn't nearly as good as you seem to think it is.

Agreed. However, I don't think our government has the ability to do anything without oversight, even if that oversight is the press.

There are a couple of problems with that. First, it's not clear to me that the press has always done a good job or is capable of doing that job under all circumstances. There's a difference between having a law that requires that information be turned over to an arbiter and having the arbiter legally locked out but given incentive to sleuth out the truth. What goes on in Guantanamo, specifically? The press doesn't know for sure. Who, specifically, was wiretapped and why? The press doesn't really know. In fact, even if they did, people would dismiss them because they're not really on the inside, so how can they be sure? Further, the press shouldn't necessarily know those things. Given the choice between having a judge take a look and give it the nod quietly and having to wait for the New York Times to plaster potentially sensitive information all over the front page, I'd choose the former.

Second, the oversight of the press is only good enough if the people in charge actually change their behavior when exposed. It appears to be getting harder and harder to shame our leaders into doing the right thing even after they're caught with their hands in the cookie jar.

If this came out of the blue, I'd see your point and agree. However,

Yes, nothing has made me want to buy guns more than the Bush administration's wanton disregard for the rule of law. George Bush is a criminal, has repeatedly, intentionally violated the law of the land, and he belongs in jail.

Things in Iraq are much, much worse for the average person than before our invasion. And that's those that have survived - nearly an entire generation of Iraqis has been wiped out. See http://www.thislife.org/Radio_Episode.aspx?sched=1 104 And it's going to get worse. I agree that Saddam was a Bad Guy(tm), but the cold reality is that military force is simply incapable of changing a society for the better. Why the hell didn't we just buy Iraq instead of bomb it to smithereens? That would have been cheaper, and more effective.

I have a neighbor, who works for Boeing, who claimed that the loss of life in Iraq was an acceptable consequence of our need to support his company and the military-industrial complex as a whole. That, my friend, equates to killing people for money, which I equate to mass murder, not war. It's one of the most despicably immoral things I've ever heard.

So are we really such cowards that we have to abandon our most sacred principles in the name of our fear of terrorism? I, for one, am not afraid of "terrorists". What I am afraid of is the effect that this fear is having on our society.

Our cowardice makes me ashamed to be an American. Because being an American is supposed to be about having courage, and standing up for justice - the only way to create real freedom.

Oh, and you think it's a joke...

An episode of "This American Life" provides a recorded version of an excrutiating series of phone calls between a hapless radio producer and MCI reps who did not understand the difference between .01 dollars and .01 cents and why his being quoted cents and being charged dollars made him upset.

Lovely.

There was a recent podcast from This American Life (hardly the bastion of conservative thought) where a (former) teenager whose job it was to spread propaganda from Saddam's government said he was afraid about what would happen when the war started because he wasn't sure whether or not his government had chemical weapons, etc. Yes, there's a difference between some teenager (even if he and his father worked for the government) and our intelligence community. Yes, fundamental flaws exist/existed in our intelligence community, partly no doubt due to our administration's tendencies to promote "yes men". Yes, there's a difference between thinking they're there and declaring that you know exactly where they are. However, I'm still going with Hanlon's razor on this one.

That said, most (quite possibly almost all) of the people in Gitmo were captured by Coalition forces while conducting acts of war, not just rounded up on tips from the locals.

If someone is an illegal enemy combatant, under the laws of war that have been established over the centuries of conflict in Europe and most of Asia, the on-scene commander has the right and duty to execute that person, without benefit of a trial. Would you rather we do that, instead of trying to ascertain who these people are?