Evolution is a systems phenomenon that applies to more than mere biology. Noted evolutionary biologist E. O. Wilson postulated that it even applies to culture. Last week I noticed that it applies to the media as well. I’m talking about my (formally) favorite newspaper, USA Today.
The Way The Font Used To Look
Thanks probably to founder Al Neuharth the USA Today paper has always given me the feeling that its staff values quality over quantity. Like Al’s own short editorials the content was boiled down to the essentials, verbiage trimmed, fat cut. But now they have this new format and the whole thing makes me a little nauseous. It’s not friendly anymore. The editorial page is crowded, even the political cartoon is smaller. The crossword is strangely large but the Sudoku is now cramped and tiny, hard to work. In the Friday edition I looked for Al’s usual editorial and felt a frisson of panic when I didn’t see it. Oops, there it is – they moved it. Are they in the process of moving Al out too? He is, like me, long in the tooth. Am I just being a curmudgeon, stuck in the past?
I actually complained to the paper’s consumer email address and got back a reply from a human, or at least an android. (He assured me they value my opinion – how nice.) The email was a little redolent of pasted boilerplate but it did claim the font was just different, not smaller, and that they had thoroughly tested it on actual readers before changing it. So I got a copy of one of last week’s editions out of the trash pile and compared the fonts side by side, cutting out similar letters. The new font was definitely smaller – I estimate 20% smaller. Aha! Why the &*!#@ would they do this? A moment’s reflection sired this thought: the same content squeezed 20% makes room for 20% more advertising! Big bucks! Doh! Damn.
The USA Today web site underwent a similar and simultaneous change. It’s front page is glossier, more arty, emphasis on visuals, but most importantly a lot more distracting ads. And now my Safari browser “reader” function won’t work on USA Today so I am forced to endure the jiggly ads as I read the articles. I won’t look, I won’t! Hmm. Sexy girl beckons. Damn.
Time for a confession. I’ve been living a clandestine television life for the past some years now. Dish Network supplies me with a Digital Video Recorder and I routinely record most of what we watch. With a DVR you can lag behind real time by a few minutes and skip the commercials, thumbing through, 30-seconds ahead, 10-seconds back. It’s worth the effort. I feel like I’m getting away with something, and I guess I am. Should I feel guilty? After all, it’s the commercials that pay for the programming. No guilt. Advertising is a game, eyes wide open, them against me. “They” want me to buy stuff I don’t want or need and I want to pick and choose when I do want or need something. It’s just business and in that sense it’s similar to house foreclosures if you think about it. Huh?
Under Water
I was talking with my oldest son in Virginia about that – he is underwater on his house mortgage and was feeling moral about it. “Walk away? I wasn’t raised that way,” he said. After doing a little research I suggested he consider doing just that – send the mortgage company a “jingle” letter, which is what they call it now when you mail them the keys. Who knew? They even have a respectable name for doing it now – “strategic default”. Some states, including his, even have laws sympathetic to the process. After all, the mortgage was a business deal. The mortgage exec’s knew their risk going into it, which is why they accepted the house itself as collateral. I argued it makes no sense to feel sorry for these guys, especially since they were the same kind who bundled mortgage loans that should never have been made into risky equity trades that eventually sank both the housing industry and the economy.
Son is still pondering it, thinking “a deal is a deal”. He’s thinking like I used to think but a mortgage is not the same as a promise to your family to keep them safe. It’s different, just like government finances are different from family finances. I mean, suppose son lost his job and through no fault of his own, couldn’t keep up the payments? (He didn’t, but he could have.) They would have foreclosed on him faster than Mitt Romney closes factories. I hope son comes to his senses. It’s just “biddness”. Wink, wink, and back atch’ya, mortgage guys.
When I first heard of DVR’s I had the thought that they were going to sink the industry. Why would anyone watch commercials if they didn’t have to? Then, I speculated that perhaps, a la the Super Bowl ads, commercials would have to become so entertaining that people would want to watch them. I think that’s happening too, the more expensive ones anyway, but the DVR thing is a real threat to the industry. It turns out that the big four networks sued Dish Network over the issue because Dish was planning software (called “Hopper”) that skipped the commercials for you – finger calluses begone! Dish won the first round last spring, but so far as I can tell the matter is still in the courts. The battle for survival continues and only the fittest . . .
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Still Skeptical After All These Years 
Your son needs to research what that’s going to do to his credit rating. I suppose I am in his camp. Regardless of the deal that the bank made, a loan includes a promise to repay regardless of the collateral offered or accepted. A strategic default is still a broken promise.
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Ah, John, ever the moralist. What about their morals?
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JIm, I worked for EDS (a computer company) for 15 years where my customers were banks. I came away from that experience with a pretty low opinion of how big banks treated their customers. I have no love for morals for leaders of the big banks, or for that matter most large businesses (can anyone say “Jack Welch”?) But as the adage goes, two wrongs do not make a right. Now I am not wagging my finger at people who have made the decision to walk away from their home mortgage. I am really trying to remind those like your son that compromising one’s principles as a response to someone else’s compromised principles against you does not lead to peace within one’s heart.
I believe default is a last resort. It should not be a strategic decision embraced over other viable alternatives. Now, I will confess, I have not done the research you have about this problem, so I might be wrong, but truly my comments are meant to serve the interests of your son to the best of my knowledge and experience. If I am missing something here, I am open to changing my mind.
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Well, first of all, John, you are right about the effect on one’s credit rating, and if that’s a serious concern then it needs to be considered. However, Son is 51 now, has a good job and a pension, so it’s possible he won’t need loans any time soon. But credit rating aside, I see his mortgage loan not as a moral commitment but rather a business investment, and that’s surely the way the mortgage company sees it.
In any market, some investments are going to turn up sour and statistics for that are built into the calculations. It’s part of business risk. Ironically, the mortgage companies were complicit in this mess by abandoning reasonable qualification standards in granting loans, and then they compounded their culpability by quickly selling the substandard loans by bundling them into equities that appeared to have federal underwriting (Freddie Mac). They planned to do it the way they did it, and in fact they were so blatant about ignoring contractual obligations that many of them hired people to forge loan-officer signatures to speed the dumping process, completely ignoring contractual requirements. Only a few people have been held accountable for this. In the ’90’s, my mortgage was sold so casually that I had trouble finding where to send my payments!
Here’s the bottom line the way I see it, John. If the loan had been between individuals and not tied to collateral of variable and speculative market value, then I can see a moral obligation for repayment. However, in this case the mortgage companies gambled that the house’s market value would be sufficient collateral and they lost that bet because of their own industry’s malfeasance and greed. If anything, walking away smells like justice to me. Check out the links – a lot of people in government are sympathetic to people in this mess.
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Jim, you and I don’t always agree, but I have a great deal of respect for you. I am blessed not to have a close family member in the situation of your son. This means: a) it is more of a theoretical problem to me than you, and b) because you are closer to it, you have a better sense of what is really going on. For these reasons, I yield to you on this. And I am saying a prayer that God will guide your son to a decision that gives him peace.
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Why thank you, John. Your sympathy and compassion illuminate you.
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Hmm, “strategic default”, eh? I thought it was called “cutting my losses” when I walked away from my house after my health crash. You say po-TAY-to, and I say “Get the Hell outta Dodge (or WoodDale, in my case)”. 😉
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@ All,
FYI, this from this morning’s Joplin Globe newspaper:
FORECLOSED: Beautiful setting on Spring River. One of a kind property. Like new inside and out. 8,000 sq. ft., 6 bedrooms, 6 baths, 31 ft. great room. Formal dining area, outstanding kitchen, 24 ft. family room, 35 ft. bonus room, full basement. Too many amenities to mention. Incredible views throughout. 1 1/2 manicured acres, smokehouse, decks, 3 car attached garage. Webb City schools. PRICE: $439,900
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I sympathize with USA Today, having once been in cost cutting mode with a publication I ran. Yes, they need to increase their advertising space as much as possible (assuming they have advertisers wanting to buy. Smaller, more tightly spaced type, less white space around design elements, fewer or no filler or public service ads, lighter-weight cheaper stock (to reduce shipping and handling costs). The letter you got was no doubt computer-generated boilerplate based on key words in your letter (perhaps “new design,” “font,” etc.), just like the stuff I get when I write to my congressman. I don’t envy anyone working in print these days and although I loved it, I’m truly glad to be out of it.
So sorry to hear about your son’s predicament. Bad things sometimes happen to good people no matter how hard they try to avoid them. We just have to keep on keepin’ on.
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Thanks for your insights, PT, and your sympathies. I appreciate the view of one who has been on the inside of the publishing business, and it is just that, as you say, a business. But unlike many other businesses it is I hope one with a moral and idealistic core – because of its crucial role in making freedom of speech function properly for both government and commerce.
I am not holding USA Today to be morally bad in this post, I’m just expressing my disappointment at their changes. Hmm. Maybe I should reexamine the Wall Street Journal’s offers – they’ll deliver 6 days a week for about the cost of delivery. Hmm.
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Jim,
Couldn’t agree with you more about your son’s potential decision.
Guilt is a great manipulator, and in order for banks to get away with the (moral) crimes they have committed, they have to convince us that the moral obligation is on our side, in this case to “honor” a promise to pay.
But contracting with a bank to purchase a house is not the same as, say, a marriage vow, which often is done before and in the name of God, and half the time ends up in, uh, a divorce. In other words, surely no one would argue that mortgage contracts are more morally binding than “till death do us part” marriage pledges, right?
And as you suggested, if a bank were in a position to foreclose on a defaulter who was struggling with the mortgage payments—particularly if it meant a windfall for the bank—there would be no hesitation, moral or otherwise, on the part of the bank. That right to foreclose is written into the contract, which is based on the assumption that a borrower may default. In other words, legal provision is made for defaulting on a loan.
Speaking of morality in this context, let’s say that a homeowner has had a run of bad luck, a health problem that causes him to lose his job and thus his income. And let’s say that the health problem is such that he will likely be back on his feet and able to pay the loan again in a year, but until then will be in default. Who among us believes that Bank of America would say to him, “It’s okay. You can just keep the house until you are well because it’s the moral thing to do?” No one believes that.
The moral pressure in these transactions is designed to go one way. The homeowner is supposed to sacrifice all in order to make the payments, even if such an obligation jeopardizes his or her family’s well-being by sucking up all of the disposable income. Under the “moral” theory advanced by some, I suppose it could be argued that in order to make that payment one is expected to get two, maybe three, jobs and ruin one’s health because “a deal is a deal.”
Or in the instant case with your son, the homeowner is not supposed to make a rational financial decision that it would be better, even if he can make the payment, to let the house go because it is not worth nearly as much as it was when he contracted to purchase it. He is not supposed to reason that his mortgage payment would be better spent elsewhere, even considering the consequences of default. No,no, no, he is not allowed to make such decisions because he has a moral “promise” to pay.
As for the “two wrongs don’t make a right” argument, that assumes a priori that a wrong is being committed by the homeowner. A wrong is not committed by simply exercising one’s contractual right not to make the payments on the loan, a right the exercise of which has consequences that are specified in the contract itself, as I noted earlier. Thus, because the contract provides for a default, it cannot be immoral to exercise that right.
So one must import the judgment of wrongdoing from outside the contract by, say, an appeal to an extra-legal notion of morality, which, as I have suggested, is how many of us are manipulated by powerful interests. No mortgage contract would have a provision in it that stated, “You have a moral obligation to pay or you will be judged by God or ostracized by your friends and neighbors.” Or, “Any default constitutes a broken promise that will have metaphysical consequences.” Why not? Because such provisions, besides being silly, could only hope to be enforced by social pressure and the guilt attached to it.
Finally, none of the above even considers the morality surrounding the notion that you correctly advanced:
Like a lot of people, I wish that a definite social ethic obtained in a lot of transactions in a capitalist society. I wish that Bank of America would do the morally responsible thing and adjust a mortgage for someone who got sick or lost a job and so on. I wish that cash-rich corporations would invest some of that cash in more workers or in boosting the benefits of the workers they have. I wish that Walmart would pay its employees more money and provide them with better benefits because it is the morally right thing to do, even if it would cost the Walton family a few dollars of wealth and raise the cost of milk by a dime or two.
Then, maybe then, we could talk about the morality of paying one’s mortgage.
Duane
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To all,
As a result of my study of economics right now one thing is evident to me. Economics is a study of “trade”, exchanging one thing for another. As such that study does not take into consideration morality or “fairness” or equality at a philosophical level. ANY trade is inherently EQUAL when it takes place unless force is applied.
Early man shared his hunting results with only his immediate family to sustain that family. Later that same “man” shared his hunting or gathering results with others as a matter of economics, to improve his and his family’s life. In any “trade”, economically, I get something in return for “paying” for it, and it is always FAIR, in that I willinginly give something in return for getting something, unless of course force is used, at “spearpoint or gunpoint” being “not allowed” in almost any society then or now. That is called stealing in all societies.
BUT, economics, to work in any society, implies an obligation. The seller MUST give me something and I MUST “pay” for it at the time of the exchange or later on. Without both sides meeting their obligations, “paying and selling”, economics of any sort falls apart and anarchy prevails. One side simply TAKES things while the other side PROTECTS. whatever he has.
At the moment of exchange, say for a mortgage loan, the buyer AGREES to pay, over time, a lender in order for the buyer to receive a home. Up front, fair and square, one side agrees to pay over time and the other side delivers a product (money, etc.) at the moment of exchange.
When LOTS of such buyers then later on default on their payment, well the larger system of lending falls apart. Lot’s of buyers are still around but lenders simply go away from such business. No morality involved, just the “laws” of economics, or so it seems to me.
Economics, particularly when defered payments are involved rely on the basic fact that a “deal is a deal”. You can bet if I receive a “haircut”, telling the barber that I will get a chicken out of my truck as soon as he cuts my hair, that the barber will NEVER give me another haircut if I don’t pay him the promised “chicken”. Whether I “cry about” the terms of the agreement after receiving the haircut, in that a haircut is really only worth one leg of my chicken and not the whole “bird” is beside the point.
Want to be able to borrow money in the future, well you better pay for what you borrown today as a matter of practical economics, morality aside, in my view.
Yes it will be perfectly legal for your son to “walk away” from his mortage. But for sure he better plan on only renting for a long time in the future and probably with a sizable up front deposit as well, to hell with the demands for such a deposit being “fair” or not.
Given the determination of your father, Jim, I wonder how HE would counsel your son, today? You seem to agree that it is perfectly “OK” to “walk away” from a “trade” in the modern world when only half of the trade is executed, fully.
Anson
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I didn’t know that “Early man shared his hunting results with only his immediate family to sustain that family.” My understanding of the literature is that Homo sapiens as well as our species’ progenitors, like the apes, evolved as social species in tribes and that altruism was characteristic of such cultures because tribes were more survivable than individuals. I know from E. O. Wilson’s book that he thinks that.
In lecturing me about how capitalism and laws work I believe you are missing a central point that I made in the post, i.e., the one about collateral. As Duane pointed out in his comment, the mortgage contract is based on the assumption that default is a possibility and that it’s part of the risk the company undertook, eyes wide open. Yes, walking away will damage Son’s credit score, but from what I’m reading in the press these days, not that badly. As I said, state laws are sympathetic to the victims of the housing debacle. And it’s not as if the mortgage company is out their whole investment. In fact, by taking and re-selling the house there’s still a possibility they’ll still make money on the deal.
But you’re right about how my Dad would feel about the issue. He also thought it was OK that his numerous jobs came with zero benefits. I don’t agree with that either, but I guess you do. If he wanted to be more successful he should have gone to Harvard, right?
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Sounds like you gave him the right basis to make these difficult decisions. I wish him the best.
Helen
PS – had you installed adblocker? I never see ads on computer, and as far as I know, adblocker hasn’t interfered with anything I want to see.
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No, Helen, I don’t have ad-blocker. I do see that it’s available for Mac, but it doesn’t sound like it would help. USA Today’s mechanism seems to be that it presents headlines that are amenable to the Reader, but each headline opens in a new mini-window. If you get a chance to check it, go to USATODAY.COM. I would be interested to know if your ad-blocker allows you to use “Reader” on individual news items you’ve opened. – Jim
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I went to USATODAY.COM (had never been there before) and I see the picture of Romney top story, I see the categories (money, sports, etc.) which I can click and open.
I see no ads. I don’t see anything called Reader but I can read the stories.
I use Linux operating system, but I don’t know whether that is relevant here or not.
I’d be glad to send you a screen shot of what it looks like for me, if you’d like.
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“Reader” seems to be a function of my Safari browser – its button appears in the right hand corner of the address block and when you click on it you get a text-only version of whatever article you’re viewing, sans ads. The ads on the new version of USA Today however only appear when you select an article to read – it then appears as a kind of popup window, with ads and with an “X” to close it when through. This defeats my Reader. Thanks anyway for trying to help. 😦
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“Reader” seems to be a function of my Safari browser – its button appears in the right hand corner of the address block and when you click on it you get a text-only version of whatever article you’re viewing, sans ads. The ads on the new version of USA Today however only appear when you select an article to read – it then appears as a kind of popup window, with ads and with an “X” to close it when through. This defeats my Reader. Thanks anyway for trying to help. 😦
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OK, let’s talk about collateral. I essentially paid for the college education of two kids using the rising value of homes. In 1973 I purchased a home in San Diego and 3 1/2 years later sold it for twice the amount of money that I paid for it. I was in no way unique of “wise” in such an investment however. I did what many did during that time and “went with the flow” of rapidly rising real estate values.
As well it was in fact MY HOME, not some scheme of investment to increase my wealth. I was not buying in San Diego, moving in 3 years but keeping the property and renting it out. I knew some in the military that did exactly that however and they made lots of money doing so over time. But not today, for sure!
I don’t recall anyone complaining about greedy lenders, etc. during that period either.
Since around 2006-2007 the reverse is happening and lots of people are screaming their heads off over “fairness”, etc. “Fat cats”, meaning greedy financial organizations taking advantage of “poor” folks is claimed to be rampant as well coming directly from the President himself, and progressives as well.
From 1970 until 1995 every home that I purchased (as I moved around the country due to professional demands) I made a large profit on every home that I sold. In 1994 I lost money, not a lot percentage wise, but still a loss, on the sale of a home in Las Vegas, a booming new construction real estate market. New homes were going up fast and pre-owned homes were not selling well as people flocked to Vegas out of California to retire. I saw, in hindsight, the beginning of the housing market bubble bursting, in 1994.
Today I cannot sell my home in Joplin without a huge loss of money invested in that home. Considering that “paper loss” I see at least a 40% (or more) reduction in my middle class “net worth”. And that ignores the beating taken by my 401K in 2008-2009 that has never recovered as well.
NOW, given my “lucky” rise in wealth due to home purchases long ago and the plummetting value of such “wealth” today, do I complain about the government causing it or “greedy lenders”. For sure I do not complain about lenders today. I signed the same type of contracts “back then” as I have in place today.
As for government, I blame it only as far as government “get’s in the way” of such transactions, using government force to change market conditions, or trying to do so. No government agency was trying to “protect the poor” in 1977 when I sold my San Diego home. But now so much “regulation” is being put in place that money remains very “tight” to borrow now despite historically low (and false in my view) interest rates and printing TONS of money by the Fed..
Go back and listen again to Romney’s critique of Dodd-Frank in last week’s debate. Sure regulations are required but…….! Read the EC blog on rising gasoline prices and see the same effect as well. Then listen to business leaders asking for government to “get out of the way” of such FREE enterprise.
Keep in mind that such free enterprise relies on the simple idea that a “deal is a deal” when struck between two parties, absent force or illegal activity. Is it “illegal” that my current home value has plummetted today? Same for your son. I don’t even call it “unfair”. Remember, a deal is a deal, in 1973 or 2012!!
Oh yes, I have a son in a similar situation today. He was asked to move two years ago by his company and did so. He lost money on his home transactions in that move. Then about three weeks ago he moved to his new home in Dallas and got “killed” on his real estate, a private real estate, transaction in this last move as well.
Now whose fault is that? Try blaming that on “greedy lenders”! In the last case, his recent move, my son has been “helped” by his corporation, not the government. He will not be made “whole” for sure, but some rescue funding was made available to him from company profits. But how long can “companies” do such things?
Solution? Companies had better figure out a way for people to remain geographically stable but still engage in “business” world wide or country wide with technology is my view. That for sure is possible to do today with “executives”. But what about the manual laborer that must go to a work place to actually build things today? How do you solve that problem?
I frankly don’t know how to solve the “blue collar worker” problem today in demanding mobility from such workers. But I do know this. Government does not have a clue either how to solve it any more than government knows how to solve the problems of replacing “men with machines” in manufacturing. Go back and read the ten plus year old book “The Flat World”. And those conditions existed long before Bush II took office!!
Anson
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Jim ,
” I argued it makes no sense to feel sorry for these guys, especially since they were the same kind who bundled mortgage loans that should never have been made into risky equity trades that eventually sank both the housing industry and the economy. ”
That is some serious rationalizing . I’ve done it myself, so I know it when I see it .
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What I said is not rationalizing, it is reasoning. In order to rationalize, Alan, the reasoning must be untrue or inappropriate. It isn’t in this case because the mortgage industry is guilty as charged. And not only that, compassion for mortgage holders is not part of the equation for loan companies, so why should the reverse be true?
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Jim,
You ‘ are ‘ rationalizing . Because some Mortgage companies are scum, you reason that every single one is scum . As if being scum is a requirement . Like being rich or an oil company requires being scum . You rationalize that it is okay to intentionally screw this particular company . To you it is impossible that this company may just be the only one in the country to be run by honest people .
I can rationalize using your reasoning to hate any group of people I find convenient . I have been guilty of it many times, so I am not unfairly singleing you out .
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I’m not rationalizing here Alan, I’m reasoning. I do realize that not all mortgage companies are bad, even though that industry was widely corrupt, and that many employees are honest and hard-working. But, like the title of the post, “It’s only Biddness”, I also realize that their issuance of loans collateralized by the value of houses was just that, business that entailed some risk on their part. So to engage in a “strategic default” is not “screwing” the mortgage company, it is enabling a part of the contract. And don’t forget, they still have the house, so it may not be much of a loss for them – after all, in my son’s case they still keep all those payments he made for years, most of which were interest because of the front-loading. What about that?
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Jim,
You have not been specific on the mortgage so I can’t judge what you mean . I’ve had two mortgages and the interest is always front loaded . The way to beat that is to make one interest payment and several principal payments per month .
I am not argueing that your son should not take your advice . I can’t know all of the circumstances . I am only argueing with your reasoning that the mortgage company essentially has it coming to them .
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No, Alan, you are still mis-reading me. I am not advocating punishing the mortgage company. As I said, for all I know they are honest. I’m simply saying that they took a business risk and my son declaring a strategic default would be simply selecting an option provided by his contract. It’s just business.
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