Underwater Mortgages and You

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Homeowners who are underwater on their mortgages are a drain on the economy because high mortgage payments reduce their demand for other goods and services. So how do we fix this? Mike Konczal reviews a couple of proposals to help out distressed homeowners and doesn’t like them:

These two plans sound like really complicated programs, large-enough in scale to be inefficient. Which is a waste, since we already have this great system for writing down and managing burdensome debt, and it’s this marvelous thing called our bankruptcy laws. Sadly there’s a defect in it that prevents bankruptcy courts from writing down single-family principle residence mortgage….[But] we could easily pass a streamlined, modified version of bankruptcy just for this crisis.

I think bankruptcy “cramdown” is a good idea, but there’s a problem with it: lots of homeowners who are stuck with mortgages they can’t afford — mortgages that, in aggregate, are a massive drag on the economy — nonetheless aren’t in such desperate straits that they can declare bankruptcy. In addition, there are others who could, but don’t want to. Bankruptcy is a big deal, after all.

So I’m a little more sympathetic toward those broader plans than Mike is, because they might help a broader swath of homeowners and get the economy moving more quickly. Unfortunately, as much as people hate bailing out banks, they hate bailing out their profligate neighbors even more. I think we can safely expect nothing to happen on this front, and that means the economy will continue to underperform and unemployment will stay high. Thanks, tea partiers!

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Truth #1: The chaos is the point.

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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