There were several things going on that resulted in the banks ending up owning a lot of the debt they'd thought they were going to sell:
The banks were keeping the riskiest slices of their complex mortgage-backed securities (because those slices were harder to sell).
The banks were making assurances about the quality of the loans in the packages—and promising the buy the package back if those assurances turned out to be false.
The banks were lending money to the people buying the mortgage-backed securities—letting them use the securities as colateral. When the investors defaulted, the banks got their securities back again.
The result was that the banks hadn't unloaded nearly as much risk as they'd thought they had.
Here in the Netherlands 4 weeks vacation is the minimum, I have 5 weeks. We also have about 7 holidays, 2 days for Easter, 2 days for Christmas, Queensday etc etc. At work we don't socialize very much, our lunchbreak is half an hour and we eat our sandwiches together. Most women work parttime, I work 20 hours a week during schoolhours. There are also more & more men who work parttime, my brother-in-law doesn't work on Wednesday. The children here don't go to school on Wednesday afternoon till the age of 12.
It's true that not all expensive women's shoes will provide comfort and durability. I'm so fickle and lazy that I always buy shoes that are cheap, knowing that I won't have them for more than one season.
It would be interesting, though, to know which, if any, women's brands are known for high-quality construction. Hmm... maybe I will be writing this article over the next few days....
Ah, but that just puts the banks doubly at risk. When they sold off the bundles of mortgages, they made assurances that they were selling a valid mortgage—with all the necessary assignments and documentation to enable foreclosure.
If those assurances were false, the bank has defrauded the investors who bought those pools of mortgages. (That is, they're not only on the hook for the money, they could also go to jail.)
People buying things they couldn't afford and then defaulting is bad, but if it were just that the situation could have played out without endangering the whole financial system. (Because if housing prices hadn't been in a bubble, banks could have foreclosed and sold the house for enough to cover the debt.)
But you're right that the combination of unwise borrowing and unwise lending was what drove the bubble in the first place.
There is no way to incentivize the loan servicer to modify the loan. Only the owner of the loan has the authority to modify the loan. But with the ownership being so fractionalized and convoluted, how do you reach agreement on a particular modification? There is no way to run through that process for each of the millions of mortgages in question. How long would that take? How many months should some one be able to live in a house without making a mortgage payment before they need to leave?
Great post! I have recently "refurbished" my Birkenstock Footprints dress/work shoes for the third time, bringing my total years of wear to 7, for an initial outlay of around $100 a pair and probably $50-$75 in repair costs over those 7 years. I think it's worth it. I can buy a $20 pair of shoes that fall apart in 2-3 months, or I can buy carefully (and generally new or barely worn, on Ebay) and have my shoes for years. I gave up on fashion shoes when I gave up on frivolous spending. They're not the most sleek or stylish things but they are sturdy and do well for work in an office. Physically, I feel better in good, supportive shoes, and my conscious rests a little easier when I know I'm being a responsible and careful consumer. I am happy to see like minds in these comments!
I always see articles that say the average cost of raising a baby up until age 18 is $100-200k, but I think it can vary wildly since I see A LOT of parents overspending on non-necessities. Rapidly growing little ones who don't really care or understand what they're wearing do not need designer clothing and gold-plated strollers!
I can't give a $ amount, as I'm still paying! A better question would be when does the financial help stop?! My daughter is 19, living at college. I'm too scared to try to total the money spent so far!
I agree with Kristy. What women's shoe brands qualify as quality? I bought a pair of $300 Via Spigas that I got from a DSW clearance rack for $20, but they didn't even last a full year before the bottoms were heavily damaged and parts of the patent leather were cracked.
Yes, could somebody please run an article on which brands actually sell high-quality women's shoes? If I could buy one pair of shoes a decade, that would be great, but I can't figure out if anyone actually makes shoes that last.
More than we thought. We have two teens (15 & 17) and even though they did not get the latest & trendiest material goods, they still cost a lot of money. They're willing to work for the things they want (pay their own cellphones, saving for a used car, paying for driver's ed, etc.), which is a help to us. When a big expense is on the horizon (college is coming up in two years), we sit down to discuss finances and form a plan.
Wish we were more educated in finances earlier on. Still would have had kids, knowing they are costly, but they are worth it; just would have planned better.
I'm inclined to agree with the poster who said it's slightly different where women's shoes are concerned. Although I absolutely agree with the premise of the post, it's trickier to equate price with quality as far as women's shoes are concerned. There is a definite dropping-off point. Fashion is also more subtle for women--we have a LOT more choices than you guys! which means a lot more chances to invest in a pair of expensive boots only to realize that the legging/boots trend now looks hopelessly dated. I guess, for women, it's just a little harder to find that ideal spot where price and quality intersect.
I agree with Guest above. Women's shoes tend to be of poor quality regardless of the price. Most often you pay for brand name and style, something that's also true for clothes. Men tend to value quality higher, and therefore get higher quality garments for their money.
Also, "wearing a well-crafted shoe each day" could be interpreted as it's safe to wear even high quality shoes every day. This is not true as shoes have to rest and dry out completely between uses. It's also a must to take care of your shoes and shine them regularly if they are to last (no pun intended.)
8:54 said: "But the banks don't own the mortgages, they sold them off as slices in mortgage backed securities. Now the bank is just the servicer of the loan. The only way to punish the "bad" bank is to force it to take back, or repurchase, the faulty loan it originally made. But how do you reconstitute that loan that was sliced into a hundred different pieces and sold to a hundred different investors/institutions?"
I guess that is right but then all the banks and financial institutions (and a few regular joes) bought those mortgage-backed securities back. That is what makes it so weird, one part of the bank is thanking their lucky stars for being able to package up these risks and sell them to agents who sell the same risk back to another part of the bank (and that part of the bank thinks they are buying AAA stuff).
Maybe the bad banks will get to share the pain with other banks but in effect the pain will be felt primarily by the banks. From what I've read the few regular joes have been protected. So the banks are trying to get what they can out of these high risk mortgages because it will in the end help their own bottom lines. If it becomes better (cheaper) for them to renegotiate instead of foreclose then the price differential is the added hit that will have to be shared by the banking community.
We don't have kids yet, but we've already talked about keeping the baby purchases to an absolute minimum. I can see how easy it would be to go overboard on baby toys, clothes, and furniture, so I hope that by laying out our game plane ahead of time, I'll be able to resist the rows of adorable onesies at Target without feeling like a bad parent!
I want to think that beauty, personality, and grooming will get your foot in the door but intelligence and hard work will carry you through. How much they matter would also depend on your industry/job. For me and my work-at-home job, grooming isn't a huge issue. :p
I recently purchased a used pair of Allen Edmond shoes from eBay for $30. The retail price was $300 so I paid 10% of the retail price for shoes that I can have resoled. They were in great condition and already broken in. When I wear them, nobody knows that I am the second owner of them. They just compliment me on the shoes.
That's a very male perspective on shoe buying. While I don't necessarily disagree, often the most expensive women's shoes are (a) more expensive because of style/ branding, rather than quality (b) incredibly damaging to the feet and (c) so insanely expensive that buying moderately priced shoes would be cheaper in the long run. See, for example, Louboutins, whose more classic shoes, at $1000, are distinguishable from most others based on their extra-high wobbly heels and their trademark red sole.
There was a "Good Eats" episode about this - apparently the heat in the mustard has something to do with how long you let it sit before adding other ingredients. I can't remember the specifics, but that should bring down the heat index a fair bit.
But the banks don't own the mortgages, they sold them off as slices in mortgage backed securities. Now the bank is just the servicer of the loan. The only way to punish the "bad" bank is to force it to take back, or repurchase, the faulty loan it originally made. But how do you reconstitute that loan that was sliced into a hundred different pieces and sold to a hundred different investors/institutions?
There were several things going on that resulted in the banks ending up owning a lot of the debt they'd thought they were going to sell:
The result was that the banks hadn't unloaded nearly as much risk as they'd thought they had.
We pickled our green tomatoes, and I am totally in heaven. Mind you, I like anything that's pickled.
Here in the Netherlands 4 weeks vacation is the minimum, I have 5 weeks. We also have about 7 holidays, 2 days for Easter, 2 days for Christmas, Queensday etc etc. At work we don't socialize very much, our lunchbreak is half an hour and we eat our sandwiches together. Most women work parttime, I work 20 hours a week during schoolhours. There are also more & more men who work parttime, my brother-in-law doesn't work on Wednesday. The children here don't go to school on Wednesday afternoon till the age of 12.
It's true that not all expensive women's shoes will provide comfort and durability. I'm so fickle and lazy that I always buy shoes that are cheap, knowing that I won't have them for more than one season.
It would be interesting, though, to know which, if any, women's brands are known for high-quality construction. Hmm... maybe I will be writing this article over the next few days....
Ah, but that just puts the banks doubly at risk. When they sold off the bundles of mortgages, they made assurances that they were selling a valid mortgage—with all the necessary assignments and documentation to enable foreclosure.
If those assurances were false, the bank has defrauded the investors who bought those pools of mortgages. (That is, they're not only on the hook for the money, they could also go to jail.)
People buying things they couldn't afford and then defaulting is bad, but if it were just that the situation could have played out without endangering the whole financial system. (Because if housing prices hadn't been in a bubble, banks could have foreclosed and sold the house for enough to cover the debt.)
But you're right that the combination of unwise borrowing and unwise lending was what drove the bubble in the first place.
There is no way to incentivize the loan servicer to modify the loan. Only the owner of the loan has the authority to modify the loan. But with the ownership being so fractionalized and convoluted, how do you reach agreement on a particular modification? There is no way to run through that process for each of the millions of mortgages in question. How long would that take? How many months should some one be able to live in a house without making a mortgage payment before they need to leave?
Great post! I have recently "refurbished" my Birkenstock Footprints dress/work shoes for the third time, bringing my total years of wear to 7, for an initial outlay of around $100 a pair and probably $50-$75 in repair costs over those 7 years. I think it's worth it. I can buy a $20 pair of shoes that fall apart in 2-3 months, or I can buy carefully (and generally new or barely worn, on Ebay) and have my shoes for years. I gave up on fashion shoes when I gave up on frivolous spending. They're not the most sleek or stylish things but they are sturdy and do well for work in an office. Physically, I feel better in good, supportive shoes, and my conscious rests a little easier when I know I'm being a responsible and careful consumer. I am happy to see like minds in these comments!
I always see articles that say the average cost of raising a baby up until age 18 is $100-200k, but I think it can vary wildly since I see A LOT of parents overspending on non-necessities. Rapidly growing little ones who don't really care or understand what they're wearing do not need designer clothing and gold-plated strollers!
I can't give a $ amount, as I'm still paying! A better question would be when does the financial help stop?! My daughter is 19, living at college. I'm too scared to try to total the money spent so far!
I agree with Kristy. What women's shoe brands qualify as quality? I bought a pair of $300 Via Spigas that I got from a DSW clearance rack for $20, but they didn't even last a full year before the bottoms were heavily damaged and parts of the patent leather were cracked.
Yes, could somebody please run an article on which brands actually sell high-quality women's shoes? If I could buy one pair of shoes a decade, that would be great, but I can't figure out if anyone actually makes shoes that last.
More than we thought. We have two teens (15 & 17) and even though they did not get the latest & trendiest material goods, they still cost a lot of money. They're willing to work for the things they want (pay their own cellphones, saving for a used car, paying for driver's ed, etc.), which is a help to us. When a big expense is on the horizon (college is coming up in two years), we sit down to discuss finances and form a plan.
Wish we were more educated in finances earlier on. Still would have had kids, knowing they are costly, but they are worth it; just would have planned better.
My guess for a family of 5 is close to $800,000 (just to get them out of the house) -- not counting college.
I'm inclined to agree with the poster who said it's slightly different where women's shoes are concerned. Although I absolutely agree with the premise of the post, it's trickier to equate price with quality as far as women's shoes are concerned. There is a definite dropping-off point. Fashion is also more subtle for women--we have a LOT more choices than you guys! which means a lot more chances to invest in a pair of expensive boots only to realize that the legging/boots trend now looks hopelessly dated. I guess, for women, it's just a little harder to find that ideal spot where price and quality intersect.
I agree with Guest above. Women's shoes tend to be of poor quality regardless of the price. Most often you pay for brand name and style, something that's also true for clothes. Men tend to value quality higher, and therefore get higher quality garments for their money.
Also, "wearing a well-crafted shoe each day" could be interpreted as it's safe to wear even high quality shoes every day. This is not true as shoes have to rest and dry out completely between uses. It's also a must to take care of your shoes and shine them regularly if they are to last (no pun intended.)
8:54 said: "But the banks don't own the mortgages, they sold them off as slices in mortgage backed securities. Now the bank is just the servicer of the loan. The only way to punish the "bad" bank is to force it to take back, or repurchase, the faulty loan it originally made. But how do you reconstitute that loan that was sliced into a hundred different pieces and sold to a hundred different investors/institutions?"
I guess that is right but then all the banks and financial institutions (and a few regular joes) bought those mortgage-backed securities back. That is what makes it so weird, one part of the bank is thanking their lucky stars for being able to package up these risks and sell them to agents who sell the same risk back to another part of the bank (and that part of the bank thinks they are buying AAA stuff).
Maybe the bad banks will get to share the pain with other banks but in effect the pain will be felt primarily by the banks. From what I've read the few regular joes have been protected. So the banks are trying to get what they can out of these high risk mortgages because it will in the end help their own bottom lines. If it becomes better (cheaper) for them to renegotiate instead of foreclose then the price differential is the added hit that will have to be shared by the banking community.
We don't have kids yet, but we've already talked about keeping the baby purchases to an absolute minimum. I can see how easy it would be to go overboard on baby toys, clothes, and furniture, so I hope that by laying out our game plane ahead of time, I'll be able to resist the rows of adorable onesies at Target without feeling like a bad parent!
I want to think that beauty, personality, and grooming will get your foot in the door but intelligence and hard work will carry you through. How much they matter would also depend on your industry/job. For me and my work-at-home job, grooming isn't a huge issue. :p
I recently purchased a used pair of Allen Edmond shoes from eBay for $30. The retail price was $300 so I paid 10% of the retail price for shoes that I can have resoled. They were in great condition and already broken in. When I wear them, nobody knows that I am the second owner of them. They just compliment me on the shoes.
My best guess is $250,000 per kid, maybe less if they go to community college?
That's a very male perspective on shoe buying. While I don't necessarily disagree, often the most expensive women's shoes are (a) more expensive because of style/ branding, rather than quality (b) incredibly damaging to the feet and (c) so insanely expensive that buying moderately priced shoes would be cheaper in the long run. See, for example, Louboutins, whose more classic shoes, at $1000, are distinguishable from most others based on their extra-high wobbly heels and their trademark red sole.
There was a "Good Eats" episode about this - apparently the heat in the mustard has something to do with how long you let it sit before adding other ingredients. I can't remember the specifics, but that should bring down the heat index a fair bit.
But the banks don't own the mortgages, they sold them off as slices in mortgage backed securities. Now the bank is just the servicer of the loan. The only way to punish the "bad" bank is to force it to take back, or repurchase, the faulty loan it originally made. But how do you reconstitute that loan that was sliced into a hundred different pieces and sold to a hundred different investors/institutions?
Great post! I recently wrote about something very similar. Seems most people would prefer disposable shoes, but I see it otherwise.
http://www.organicminimalist.com/2010/09/where-did-all-cordwainers-go.html