Blame California!

A new study points out that 62% of 2008 foreclosures occurred in four states (Arizona, California, Florida, and Nevada).  Here's a brief summary of the California data:

California in particular was responsible for a disproportionately high number of foreclosures. The state may have had only 10 percent of the nation’s housing units, but it had 34 percent of the nation’s foreclosures in 2008. (Nevada, however, had the highest foreclosure rate, as you’ll see in the map below.)

California was especially vulnerable, the authors wrote, because the homes that its residents bought were quite expensive compared with their incomes.

(See the link for the referenced map.)

So on behalf of all Californians: sorry for submarining the U.S. economy, thereby devastating the world economy, thereby vastly reducing the chance that we'll do anything serious to stop global warming, thereby all but guaranteeing a Mad Max future for the human race, everyone.  What can we say?  Buying that $850,000 condo just seemed like a can't-lose proposition at the time.

Comments

[SteveB]

I wonder: to what extent would these foreclosures be threatening the entire world economy if some Wall Street genius hadn't come up with the bright idea of bundling them together into mortgage-backed securities? We've had foreclosures before, and housing bubbles before, but I think what's new about the current meltdown is that "we" decided to build an entire economy based on speculation on other people's mortgages.

A related question: how much would the bankruptcy of a firm like Lehman Brothers threaten the world economy if some other Wall Street genius hadn't invented the Credit Default Swap?

[LA Confidential Pantload]

So everybody buying a house in California is a minority who got a subprime loan? 'Cause that's what I've heard created all the problems.

[John Caruso]

LACP: Yes, there are plenty of just-so stories out there to explain the economic meltdown, with the villains already chosen and the interpretations molded around those choices. The flip side of the one you mention is that the mortgage companies created all the problems by preying on minorities, forcing them to buy houses they couldn't afford.

But in reality it's neither either-or nor zero sum, and there's more than enough blame to go around. I'd say the only candidate for a single, overarching villain in this case is unrestrained capitalism.

[SteveB]

I think a good analogy is the salmonella-tainted spinach scare we had a while back. Because our food systems have become so centralized, during certain times of the year, all the spinach in the U.S. can be traced to a single processing plant. So if there's a problem with that one plant, the whole system goes down.

Blaming irresponsible homeowners (and I'm not saying you're doing that, just that some people are) is a little like blaming the spinach-plant employee who didn't wash his hands. Yes, people will sometimes fail to practice proper hygiene - just like they'll sometimes buy houses they can't afford - but small disasters don't become huge disasters unless you've built food systems and economic systems that are so brittle and unstable that they can't tolerate anything going wrong.

There's a lot of good ecological writing about why natural systems are resilient while the systems of modern hyper-capitalism are not. Basically, under our current form of capitalism, any redundancy (like having many small banks rather than ONE BIG BANK) is seen as "inefficient", but it's redundancy that makes a system able to withstand small (or large) shocks.

Oh, what a wonderful world this would be if Americans could be trained to see issues like this in systemic terms rather than as an individualistic morality play (e.g. irresponsible homeowners vs. evil bankers.)

[John Caruso]

You can accidentally forget to wash your hands, but you can't accidentally sign a mortgage agreement. But setting that aside: just as it's neither either-or nor zero sum, there's no contradiction between looking at systemic factors and calling out personal (or organizational) responsibility. Timothy McVeigh was a victim of dehumanizing military training and his ideology was in many ways a product of extreme anti-government propaganda that went into overdrive in the Reagan years, but he was still a mass-murdering scumbag who couldn't possibly have been punished enough for his crimes.

People don't need to see issues in systemic terms rather than in terms of the responsibility of individual agents, but in addition to.