"Strategic default" involves homeowners deciding to walk away from their homes and mortgages, not because they cannot afford to pay, but because they owe more than their homes are worth.  Read the news, and you'll see that a lot of experts and pundits believe this is unethical.

Look again.  Investors routinely "strategically" default on agreements — major pension funds ... commercial-property owners ... bond issuers ... and real estate developers ...The list goes on and on.  The very real possibility of default is why banks have — or should have had — underwriting standards and loan covenants.

First American CoreLogic has issued a study which highlights the pressures on homeowners with negative equity:

Shame, guilt and fear stop many homeowners from reneging on their mortgages.... The government and big banks actively cultivate those emotional constraints because the economic consequences of a large-scale walkaway phenomenon could be dire...

Strategic defaults have widespread repercussions. Ongoing foreclosures destabilize the housing market because the homes are sold at bargain prices. They also undermine the entire economy because banks must eat huge losses and homeowners rein in spending as their own homes lose value. Empty homes hurt neighborhoods and attract blight. And walkaways may inspire copycats - people who've seen their neighbors deliberately default feel more emboldened to do so themselves.

... Studies estimate about one-quarter of all defaults are voluntary "walkaways," also known as strategic defaults and jingle mail (for the sound the abandoned keys make in a mailbox).... 

Of all U.S. mortgage holders, about one quarter, or 11.3 million households, are underwater, according to First American CoreLogic, which collects and analyzes mortgage data. In California, 35 percent of mortgage holders are underwater. ,,,,

First American said a tipping point seems to come when homeowners have negative equity of 25 percent or more - owing $500,000 on a $400,000 house, for instance. At that point, owner-occupants default as frequently as investors. [Emphasis mine].

Mark Gimein, blogger and columnist, argues that while there are many good reasons to keep paying your mortgage to avoid the black mark of foreclosure, "the immorality of sticking the bank with a loss isn't one of them."

It's banks, not home buyers, that are in the better position to judge the real estate market and how much their collateral is really worth. The bank approves the assessment and decides how much equity a home buyer will be required to put up. All the mechanics of mortgages are designed to let a lender avoid the situation in which it is owed more on a house than it is worth. The limits on banks' ability to collect on badly underwritten mortgages places the responsibility for judging the sanity of real estate loans in the hands of lenders.

Clearly in the last few years all these mechanisms failed utterly. They failed, not because of morally bankrupt borrowers who go back on their "promises," but because bankers decided to count on a perpetually rising real estate market to absolve them of the necessity of responsible lending. Far from misusing the lending laws, borrowers who use the rights the law gives them to walk away from mortgages merely place the risks of insane lending where the law intends them to lie. What they do is not dishonest; on the contrary, a key reason we give borrowers the ability to do that is to keep bankers honest and responsible.

In periods of market insanity, this doesn't work. But don't blame the walkaways for exercising their rights. Blame the bankers who didn't worry about lending a whole lot more than they could get back in a foreclosure. The lesson of watching debtors walk away is a harsh one (not least for the taxpayers, who now effectively guarantee most mortgages), but the more bankers pay attention to it now, the better their chances of steering clear of the next bubble.

To truly appreciate the unusual nature of this exposure, KROQ trumpets some of the newest music available: young bands, and those that cater to the young. They were the only commercial station to play punk during its time; they broke New Wave before anyone else dared to. They are not the home of old-time country-rock heroes.

The song was written and originally performed by the band Nine Inch Nails. But this 2002 version of it is pure Johnny Cash. If you haven't heard it, please do.

"The blanket statement that America is the "most free, most democratic" country on earth strikes the serious comparativist as what it is: not an empirical fact but as an article of faith, one that needs to be accepted before a true patriot can go on to make minor, qualified criticism. [But it is not] real patriotism: a real patriot is an honest critic."

• Social Security $727 billion.
  
• The Department of Defense $637 billion.
• Medicare $504 billion
  
• Interest on the National Debt $383 billion.
• The bailout $249 billion

"U.S. banks posted last year their sharpest decline in lending since 1942..."

•  "Conservatives like endless war. Keeps the serfs down."

• "The problem [with conservatives] is that it’s often not that they’re willing to jump on a band wagon, but that they’re too mentally inept or lazy to think for themselves."

• "Why is that the left wing moonbats (but I repeat myself) fear people who are so totally fed up, they are staging a protest?"

• "Liberalism is a mental disorder."

• A war is never about what the combatants say it's about.
• In war, there's almost always someone on all sides who benefits.
• Identifying an outside enemy gives leaders the ability to control inside events.
• A militant group uses war to gain power unavailable through democratic means.
• A militant group and the state can have very different goals in a conflict; thus at he same time, both may believe they are winning.
• These observations suggest that a militant vs. state conflict tends to make the leaders on both sides stronger— giving both leaderships a vested interest in continuing the fight.

• Most of us believe in representative democracy.
• Most of us believe in capitalism with some level of regulation.
• Most of us believe that corporations have too much influence in Washington.
• Most of us don't want other people telling us how to live.

(Bird Eye photo.)

“It’s still morning in America.  It happens to be a kind of a head-pounding, vomiting, hangover kind of morning in America.” —Glenn Beck.

"Progressivism is a cancer in America and it’s eating our Constitution — and it was meant to eat our Constitution.” 

"I love helping our citizens make the most of their lives, but I do not love Congress." —Sen. Evan Bayh (D-IN), announcing he will not seek reelection.

"We must plan for a world in which oil prices are likely to be both higher and more volatile and where oil prices have the potential to destabilize economic, political and social activity."

Here [in the U.S.] you make a lot of money.  You don't have time to think of anything else.  But at the end of the month, all the money is gone.  If you lose your job, you lose everything: house, car, health insurance, family.

In Sri Lanka, they make very little money, but they still put a little aside.  In my village, we have [rice] paddy fields, jack fruit trees, chillies, fruits— we have everything.  Even with no money, we are okay.

My brother has a small house and a wife and family,  He has a small job.  I won't bring him here because he is okay where he is.

And when I turn 50, I will go back to Sri Lanka, because here I have no health insurance and no support.

Would I rather live in Sri Lanka? No way. But his answer does point out some shortcomings in our way of life. We have given up the idea of self sufficiency. As a culture, we have become dependent on large corporations for our well-being— and if they falter, we fail. We have given up most of our energy and outside interests to the quest for money— usually just the money to maintain the lifestyle we are accustomed to.  In large part, we have sacrificed happiness in favor of status and convenience.

There are exceptions, of course.  I have friends who are ranchers, farriers, and builders.  And my wife and I are slowly transitioning away from peripheral reliance on the corporate world, to a place of reliance on ourselves and our community. 

I think it's a better life.  Some people think it's unpatriotic.

"There are … 13 bills that I know of in our Legislature that address our state's sovereign right to make decisions in our own state, … and to say to the federal government, 'What part of shall not infringe do they not understand?' "

"The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."

"We must do what we can to stop this avalanche of federal intrusion.”

Hard as it may be to believe, it was only 18 months ago that House Speaker Nancy Pelosi accused President George W. Bush of having "mortgaged our future" because the federal budget deficit had reached $490 billion. That seems sort of quaint now."

The truth is, President Obama has continued his predecessor's fiscal policies, spending far more money than the government has (or can reasonably expect to collect).  Naturally both parties accuse the other of making things worse, but both parties use the same approach.  This is perhaps the most insidious fiscal policy because there is only one practical future response: inflation.

Here's an example: from 2000 to 2008, the national debt rose from $5.7 trillion to 10.0 trillion, a 75% increase.  Over the same period, the money supply also increased:  M2 went from $4.8 trillion to $7.9 trillion, an increase of 65%.  In other words, as debt goes up, more dollars go into circulation, and that means (all things being equal) every dollar is worth less than it was before.  According to the site Measuring Worth, based on current price GDP, a dollar in 2008 was worth only 69 cents of a 2000 dollar.  Every dollar you had in 2000 lost 31 cents during W's presidency— almost 1/3 of its value.

Yet Obama has embarked the same fiscal path.  Deseret News comments:

Obama spoke eloquently last week about the need to become fiscally responsible. So far, we haven't seen any actions to back up those words. His plan to freeze budgets in all but national security, Medicaid, Medicare and Social Security was a joke.

If the government continues to inflate our currency at the rate it did in the Bush years, a dollar at the end of O's presidency will be worth only 48 cents compared to what it was worth in 2000.  That's right: it will have lost more than half its value.  

Just to stay even, you would need to make twice as much money as you did in 2000.  How's that going for you so far?

I understand that there are a lot of people who think the government should do certain things, be it national health insurance or protecting our oil supply.  But what we don't seem to realize is that we pay for these services, one way or another.  We squawk about paying taxes, but do we care that we've lost 1/3 of our wealth in ten years— and that the bill will get bigger before it gets smaller?

God is the 'Owner of All the Silver and Gold,' and with enough faith, any believer can access the inheritance.  Money is not the dull stuff of hourly wages and bank-account statements, but a magical substance that comes as a gift from above. ... 'Instead of saying "I'm poor," say "I'm rich" ... The word of God will manifest itself in reality.'

In his book Something for Nothing, Jackson Lears describes two starkly different manifestations of the American dream, each intertwined with religious faith. 

The traditional Protestant hero is a self-made man.  He is disciplined and hardworking, and believes that his "success comes through careful cultivation of (implicitly Protestant) virtues in cooperation with a Providential plan."

The hero of the second American narrative is a kind of gambling man - a "speculative confidence man," Lears calls him, who prefers "risky ventures in real estate," and a more "fluid, mobile democracy." 

The self-made man imagines a coherent universe where earthly rewards match merits.  The confidence man lives in a culture of chance, with "grace as a kind of spiritual luck, a free gift from God."  The Gilded Age launched the myth of the self-made man, as the Rockefellers and other powerful men in the pews connected their wealth to their own virtue.  In these boom-and-crash years, the more reckless alter ego dominates.

"Do we start disassembling Wal-Mart because they don't have unions?"

Not a bad idea. Unions or no, Wal-Mart funnels the wealth of our communities into corporate coffers, adding little as they remove much.