The Geography of Debt

boiling water
Sometimes when I’m feeling impatient, I watch water as it starts to boil. Small bubbles start forming in specific locations. As the water gets hotter, the smaller areas coalesce to form larger areas producing larger bubbles.

Seems like real estate bubbles do something similar. They started out in small areas then spread to entire cities, then regions. We were told it was a tide lifting all boats.

Now they are calling it a taxpayer bailout. This is not quite correct. The treasury will sell bonds to foreign countries, many of whom have very different objectives.

Read the EULA
I usually click through a EULA. I hope congress doesn’t do this when reading through the Legislative Proposal for Treasury Authority to Purchase Mortgage-Related Assets. Especially Section 8.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

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9 comments so far

  1. Ben on

    Congress utterly lacks the power to decide what laws are reviewed by the Supreme Court and which ones are not. It is rather adorable they still attempt to put this on legislation.

    Also, the Treasury Secretary serves entirely at the will of the president and I believe he can be subject to impeachment by Congress. There are checks and balances regardless of the greater wishes of any particular branch of government.

  2. Kirk Kuykendall on

    I think congress has to approve the proposed legislation before it is enacted.

    I’d be interested in seeing a correlation showing foreclosure density vs. party affiliation (blueness/redness). I suspect blue regions have greater amounts of foreclosed property. By selling foreclosed properties too quickly, values of other properties might fall below market value, leading to yet more foreclosures, leading to more gov’t ownership of blue regions.

  3. Jim Zack on

    Kirk,

    I’m sure you’re familiar with the proverb “A watched pot never boils.” But have you considered the zen-like ambiguity embedded in it?

    Does it mean a) anticipation actually delays the desired result (akin to the quantum theorist’s assertion that there is no such thing as passive observation a la Schroedinger’s Cat experiment)? or b) that if you want to make sure a situation doesn’t get out of control (“boiling over”), you’re best bet is to keep a mindful eye on it?

    One who looks before he leaps, but realizes that s/he who hesitates is lost,
    Zack

  4. Kirk Kuykendall on

    Hey Zack –

    Maybe that explains what happened with Fannie Mae/ Freddie Mac. If we had only kept watching it, it would have never boiled.

    There is indeed a rich tradition of water boiling analogies. One of my favorites is the one describing how a frog thrown into boiling water will realize its too hot and hop out, whereas a frog slowly brought to a boil never realizes his predicament and perishes.

    Maybe we in the geospatial community should try to look on the bright side. Sophisticated spatial/economic analysis tools will be needed to prudently price all these foreclosed properties. The Treasury Secretary can buy whatever software he sees fit without going through a long procurement process. I suppose some sort of CAMA-like system would come the closest. CAMA works best when it has other sales prices. In Texas there is no law requiring the disclosure of sales prices for commercial properties. I wonder if the Feds will force this to happen.

    Kirk

  5. Bill Dollins on

    Kirk,

    The Washington Post has a link to the latest discussion draft: http://www.washingtonpost.com/wp-srv/business/documents/discussion_draft_Sept_25.pdf

    It bears little resemblance to the draft published by the times but Section 8 doesn’t exist anymore. Of course, this draft may already be obsolete with the pace at which things are changing.

    Bill

  6. Jim Zack on

    Don’t you just love the ambiguity of the term “oversight”. People clamor about the lack of oversight, but the way I see it, the whole debacle is the result of a colossal oversight. Pick your definition:

    * an unintentional omission resulting from failure to notice something
    * supervision: management by overseeing the performance or operation of a person or group
    * a mistake resulting from inattention

    Obviously, we need fewer oversights and more oversight! I pity the poor English as a Second Language students who try to decode that sentence.

  7. Kirk Kuykendall on

    @Bill – Thanks for the link. I guess this is the bill that was voted down a few minutes ago. I do see a section on Judicial Review. I wonder what the sticking point was that kept it from being passed.

    @Zack – Thanks for the oversight insight. Be careful if someone promises to pay you bimonthly. It means either twice a month or once every two months. Overseas they say “fortnightly”, but I rarely hear the term here in US.

  8. Jim Zack on

    Irregardless of what terms for payment are set, you, as a sub- of a sub- of a contractor (thanks Jimmy Buffett), are not likely to see the payment for quite a few months given the current economic climate. With hope (not “hopefully”, which is an attitude), it’ll all be downhill from here. There is a steep learning curve to this stuff. Does that mean the learning period is short but arduous? Or just a long uphill slog? And why do sportscasters have a fondness for the term “differential” as in “there is a five second differential between the shot clock and the game clock”? A differential is found in an automobile drivetrain or a calculus expression. The correct term is “difference.” How about this one: “There was no receiver remotely in the proximity of that pass!” And I’m not even starting to talk about Yogi Berra…

  9. Kirk Kuykendall on

    Watching Ford motor company’s stock chart reminds me of both kinds of differentials. Let’s hope they get traction soon. Henry Ford knew black was a good color – especially in the eyes of a creditor.


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