GI Jane Finances

May 24, 2009

Don’t believe the hype

Filed under: Uncategorized — gijanefinances @ 7:19 am

Last night, I stumbled upon a discussion that was posted on about NYT reporter Edmund Andrews.  He wrote an article promoting his book on how he was a victim of unregulated lending practices.  The Atlantic blogger, Megan McArdle, discovered that his wife had a couple of bankruptcies not disclosed in his article or book.  Frankly, even without that information, I was disturbed by his story.  He definitely used wishful thinking by buying his house with help from his mortgage broker, “Bob.”  I also listened to an NPR story where Bob chimed in saying,”he is not a financial planner.”  I agree.  Buying a $460,000 on a $120,000 salary with a wife who hadn’t worked for 20 yrs expecting her to be a lucrative partner, was foolhardy at best.

As a person who was caught up in the housing craze in 2004 and lost thousands getting rid of the thing and knowing the perils of selling in a down market, his story did not make sense to me.  I certainly didn’t blame Quicken loans for helping me get a mortgage.  I knew it was a risk in buying and selling.  It was a gamble that worked until 2007, when I had to move out of the country.  I didn’t bank on my neighbor foreclosing nor the depreciation of property values.  I did curse Alan Greenspan for encouraging people to use ARMs since houseowners usually stay in their homes for 5-7 yrs.  Apart from that, I had no one to blame but myself.   If Greenspan can get it wrong, what about an average Jane like me?

Nevertheless, Andrews wife’s past history should have been included in his story.  As many commenters noted, bankruptcies are a matter of public record.  Now knowing this, both Andrews are not the gullible victims of predatory lending.  Mrs Andrews seems very savvy on avoiding paying her debts–to the IRS, her sister, driving without a sticker–will not get paid.  Even in Andrews response to McArdle, it seems like he is whitewashing the truth.  If you are going put your family out for display to play the angle on subprime lending for a buck, people will sleuth what was left out.  The story was amazing from the outset due to Andrews being a business reporter who should have known better.  That goes to show, many of the business/financial experts who contributed to the bubble, also fell for the okey doke.  MSM was part of the equation that led to the hype.  If they asked the tough questions, instead of participating in the bubble, it could have staved off some of the overinflated values.  Andrews is not the victim, we are.

GI Jane


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