Friday, November 27, 2009

Dude, Where's My Ambien?

Two weeks ago Harvard professor Elizabeth Warren, who's been heading up the congressional panel overseeing bailout money spending was interviewed on PBS. In her answer to the first question, Warren pointed out that while the catastrophe was stopped, the underlying Wall Street regulations aren't changing. In her words,
"nobody goes to bed now and worried that, when we wake up tomorrow morning—that—that markets will have disappeared"
This was aired on Friday, Nov. 13. Two weeks later we had the Dubai scare. The timing, the geo-location (western banks financing the middle east) and market segment (commercial real estate) of the Dubai event match the coordinates in recent warnings by Roubini and Prechter. Also, as one commentator has mentioned, large construction projects are where economies go to die. Commentators were enlisted to scribe duty out of their holiday vacations. Can you blame anyone for losing sleep?

No, markets have not disappeared. But two weeks after her worthy interview aired, I'll bet an Emirate Dinar Ms. Warren would have rephrased her "Not Losing Sleep Over Disappearing Markets" if she was to be interviewed today.

This is how much things have shifted in two weeks.

Sunday, November 22, 2009

Upadana's Role in the Mortgage Crisis

An article in LA Times covers research on the effect of moral beliefs and emotional background on defaulting on a home loan.
"When push comes to shoving your loved ones out the door, Bob Hunt of Keller Williams O.C. Coastal Realty in San Clemente says the moral duty to protect your family outweighs the moral duty to repay the loan.

'Promise keeping is not the highest moral value,' said Hunt, who before his real estate career taught ethics and logic at the University of Redlands. 'If I promised to lend you my gun and you are now in a clearly dangerous psychotic stage, breaking my promise would be the right thing to do, not the wrong thing.'"
Another interesting aspect that comes up is the opportunity to measure attachment, a loaded term in the Hindu tradition and one of the causes of human suffering in Buddhism (Wikipedia on Upadana):
There are some interesting variables. For example, although the biggest determinant is equity shortfall, another major consideration is people's attachment to their homes, with folks who bought more than five years ago far less likely to default.
Interesting hat, thanks to the housing crisis, attachment and the suffering it causes can be so scientifically measured.