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November 14, 2008

Fact for the Day

Michael Blowhard writes:

Dear Blowhards --

In 2000, there was $130 billion in subprime mortgage lending, with $55 billion of that repackaged as mortgage bonds. But in 2005, there was $625 billion in subprime mortgage loans, $507 billion of which found its way into mortgage bonds.

The source is a Michael Lewis piece in Portfolio. (Link thanks to Steve Sailer.)

I found Lewis very helpful. He brings a lot of perspective to bear, as well as a personal touch and a vivid writing style. Those with an aversion to math and technical language -- and who understand the world primarily via stories and people (that would include me) -- should enjoy his piece, even if Lewis does show a little too much fondness for the word "tranche." My grasp on details slipped away pretty quickly, but for a few seconds I really did have the impression that I understood what it means to short subprime mortgage-backed bonds.

Lewis' main claim is that today's Wall Street culture is a continuation of what began in the leveraged-buyout '80s, and that the phenomenon is now cycling to its demise. Is he right, do you suppose? It has certainly been a weird stretch.

Semi-related: A new report concludes that mass immigration has delivered no economic benefits for Britain, and has been hard on the working poor. Kneejerk immigration supporters respond with name-calling. Wow: doesn't that all come as a surprise.

Semi-related 2: The Washington Post's ombudsman looks at the newspaper's campaign coverage and concludes that, yes, the WP did indeed show a marked pro-Obama bias. "Obama deserved tougher scrutiny than he got," she writes, "especially of his undergraduate years, his start in Chicago and his relationship with Antoin 'Tony' Rezko, who was convicted this year of influence-peddling in Chicago. The Post did nothing on Obama's acknowledged drug use as a teenager."



UPDATE: Ron Paul takes questions from readers of the NYTimes' Freakonomics blog.

posted by Michael at November 14, 2008


I read that Lewis article and highly recommend it. You get a visceral sense of being in the trenches with those guys. This is not a pretty picture, almost like a brutalized take on the film "Wall Street", except you're going to have a LOT more trouble figuring out the plot in this one.

Posted by: Charlton Griffin on November 14, 2008 9:37 PM

There was a very good story on Friday's edition of This American Life, told by a mortgage broker. He made it clear that the incentive for mortgage lenders to approve what he called "no asset, no income" mortgages was that the lenders were going to resell the mortgage within 30 days to someone else anyway.

Posted by: Peter L. Winkler on November 15, 2008 3:40 AM

i like ron paul and voted for him in the virginia primary but i just couldn't vote for chuck baldwin in the general (he endorsed the constition party candidate) even though i didn't much care bob barr i voted for him. i've had this arguement with a friend who's a much more hardcore ron paul conservative then me about his loopy religous beliefs and he thinks as long as he's serious about small government it doesn't matter what he thinks about social issues. baldwin is basically if you combined pat roberston and a 9/11 truther, you'd have chuck baldwin and i just don't think guys who think they way he does can resist imposing their views on others.

Posted by: t. j. on November 15, 2008 11:16 AM

i don't think there can be any debate over how barack obama has got a free ride to the white house. with a democratic majority and complete media bias behind, it's pretty scary how much power they're about to give a really inexperience man of little accomplishment just for being an ok speech giver.

Posted by: t. j. on November 15, 2008 11:20 AM

OT: At Trollblog I have collected links to obsolete praise for pre-bankruptcy Iceland’s financial deregulation and economic miracle.

Posted by: John Emerson on November 15, 2008 1:37 PM

Cool article.

Oh, and Mike: nothing wrong with understanding the world through stories and people. At least you don't have to constantly wonder what unwritten social rule you've blown this time.

Posted by: SFG on November 15, 2008 10:22 PM

i also differ with ron paul (and my friend) on the possibility of libertarianism coming back to the republican party. ain't gonna happen...EVER.

Posted by: t. j. on November 16, 2008 10:45 AM

Who CARES about his drug use as a teenager? How about the shady characters and mysterious deals that have accompanied him throughout his adult life?

Posted by: thaprof on November 17, 2008 9:05 AM

Washington Post today had another "second thoughts" column about the media coverage of Obama by Howard Kurtz:


Posted by: T. AKA Ricky Raw on November 17, 2008 12:16 PM

The WP ombudsman's article was unconvincing. Obama got better coverage than McCain because he ran a much better campaign and didn't pick a loon for VP. As for not covering crap like his drug use or Rezko--the Post also didn't cover McCain's shitty treatment of his first wife or his using his political clout to cover up his current wife's drug use or his association with crooks like G. Gordon Liddy and the right-wing militias. Frankly, there was a *lot* more dirt that the MSM could have dug on McCain--he's gotten pretty much a free ride his entire life from the press.

But in the end he got worse press anyway because his campaign and his policy ideas were so terrible. To give both candidates an equal number of positive and negative stories in this context would have been a phony balance.

Posted by: Steve on November 17, 2008 2:39 PM


If Obama ran a better campaign or had better policy ideas, that shouldn't warrant more glowing or less scrupulous coverage. It's the newpaper's job to report and the reader's job to draw the conclusions. At least that's the way it's supposed to work.

And as for the WP, now that their mission in getting their guy elected is accomplished, it's mea culpa time in an effort to restore their lost credibility.

Posted by: Bill on November 17, 2008 5:55 PM

Bill, who said anything about more glowing coverage? Not the Post ombudsman. She did say that Obama received more laudatory op-ed pieces--but that's not "coverage" in the reporting sense, that's just bloviating on the opinion pages. In fact, the Post op-ed page has a bias towards conservative voices, but conservatives like George Will and Kathleen Parker jumped ship on McCain (whereas ones like Krauthammer stuck with him to the bitter end and others like Gerson were ambivalent).

In terms of actual news coverage, Howell just plays a numbers game. Obama had more pictures and more campaign stories. But that doesn't tell us anything about the content of those stories or photographs, or anything about whether they had a pro-Obama or anti-Obama bias. His was a historical candidacy, so it stands to reason that he would get more coverage. Also, she doesn't tell us anything about her counting methods. Does a story about McCain's latest attack on Obama count as a story about Obama or McCain or both? (An important point, because McCain's ads and campaign were virtually all about attacking Obama.)

Notice too how she changes tack partway through the article: She compares the numbers of stories and pictures when it comes to McCain and Obama, implying a pro-Obama news slant, but stops counting when it comes to Palin and Biden. Obviously, the coverage of Palin far outstripped that of Biden. So was the greater coverage an example of pro-Palin bias? Again, it all depends on the tone of the stories. She says that Biden was underscrutinized--but by her own logic (fewer stories) wouldn't that mean that McCain was also underscrutinized?

Bottom line, this was a typically half-baked jumble of a column by Howell, and doesn't come close to supporting yours and Michael's contention that the media coverage was biased in favor of Obama.

Posted by: Steve on November 17, 2008 7:18 PM

" It's the newpaper's job to report and the reader's job to draw the conclusions."

It's actually the newspaper's job to sell newspapers.

Isn't that what the capitalist right's all about?

Posted by: i, squub on November 17, 2008 9:59 PM

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