It's not "unethical" to walk away from a mortgage

From an article in today’s NY Times about people who walk away from mortgages:

Walking away, he knows, is not without peril. At minimum, it would ruin his credit score. Mr. Koellmann would like to attend graduate school. If an admission dean sees a dismal credit record, would that count against him? How about a new employer?

Most of all, though, he struggles with the ethical question.

“I took a loan on an asset that I didn’t see was overvalued,” he said. “As much as I would like my bank to pay for that mistake, why should it?”

That is an attitude Wall Street would like to encourage. David Rosenberg, the chief economist of the investment firm Gluskin Sheff, wrote recently that borrowers were not victims. They “signed contracts, and as adults should also be held accountable,” he wrote.

Of course, this is not necessarily how Wall Street itself behaves, as demonstrated by the case of Stuyvesant Town and Peter Cooper Village. An investment group led by the real estate giant Tishman Speyer recently defaulted on $4.4 billion in debt that it had used to buy the two apartment developments in Manhattan, handing the properties back to the lenders.

Moreover, during the boom, it was the banks that helped drive prices to unrealistic levels by lowering credit standards and unleashing a wave of speculative housing demand.

There’s the old adage about business ethics being an oxymoron, and it certainly applies in this situation. Financial institutions themselves care only about making money. I know someone who recently left a job to take an allegedly better position with a bank. A month later, the bank decided to cancel the project they hired him for and let him go. Now he is unemployed. The bank could certainly afford to keep paying his salary, but the bank decided it had no legal obligation to do so and it was better to save money (thus creating more money with which to pay the bank bigwigs multi-million dollar bonuses) rather than live up to any non-legally enforceable promises made when he was hired.

If banks were stupid enough to lend money in a non-recourse mortgage state without requiring a sufficiently high down-payment, then it serves them right.

The last paragraph of the NY Times quote is especially poignant. Had the banks not irresponsibly lent money to homebuyers, then there wouldn’t have been a housing bubble in the first place, and there wouldn’t have been a subsequent sharp drop in prices causing those same borrowers to be underwater.

* * *

Steve writes:

Any lawyer (or even first semester law student) could tell you that a contract is defined as "a promise to perform OR to breach and pay damages." There is nothing unethical about breaching a contract, especially a non-recourse mortgage. You walk away, the bank gets the house. Indeed, this is spelled out in the contract itself.

And it has nothing to do with the banks being wolves; it's simply that they took a risk of giving a loan to someone to buy a house and it didn't work out. Besides, the bank already assumes that a certain number of borrowers will default and figures in this information when determining interest rates (i.e. those with poor credit scores pay higher rates).

And after I attended a day-long bankruptcy CLE program, I learned that bankruptcy lawyers feel the same way about bankruptcy: it’s not a moral decision; it’s just something for which you should weigh the costs and benefits. One of the topics was how to advise the client for whom bankruptcy was in his best interest, but who didn’t want to proceed because of misplaced moral feelings.

Comments

[stephen]

I initially disagreed with you on this issue, but Steve Waldman, Mike Konczal, and yourself have since convinced me otherwise.

[BrunoBrazil]

Personally, I think you should apply the same logic to student debt. It is much worse, because at least in mortgages you can declare bankruptcy, while at student debt, you can´t.

When you go to a college, Sallie Mae offers you a gigantic pile of cash. A 18-year old might not have car, home, nothing and not even know what he/she wants from life, but SLM borrows you 200k for undergrad or grad without questioning. Remember the post about the law graduate with 450,000 in debt? Who the hell offered someone 450k without any collateral?

As there is a gigantic availability to borrow, universities hike tuition to the stratosphere, most times for unnecessary things like a professional football team and a coach that earns a gigantic salary.

Of course, you need an education, so you borrow to the death and then... you are screwed. You become a debt slave for the rest of your life because the only way to go to college is to borrow a fantastic sum of money much beyond you can repay with your salary.

You should write more about student debt.

Pratically, the only way to get through college is to be a debt slave, except the very lucky who are real tightwads and choose the cheapest college, no matter if it is tenth tier.

450k in debt for Vegas gambling, going to strippers and buying stereos? you are ok, you can declare bankruptcy and go on with your life. 450k in debt for student loans (like the law graduate you showed here some months ago)? Slave for the rest of your life.

There irrational banks should really deserve being bankrupt. They lend unrealistically extremely high amounts, what could they expect?
If you offer hundreds of thousands for someone that earns 25,000 a year, of course the borrower will not pay. He/she unrealistically won´t pay and the bank will fail earlier or later.

[BrunoBrazil]

You might tell that it is immoral to be a deadbeat, that someone should pay his obligation et coetera.

But the real fact is that someone that earns 20,000 a year will never pay off a debt of 100,000. Never. No matter what he/she does, the borrowe will default, so for what the heck to offer a loan with such an unrealistic amount?

[BrunoBrazil]

I heard that people who are unemployed for 2 or 3 months can declare Chapter 7 bankruptcy.

[ironrailsironweights.wordpress.com]

Walking away from a mortgage is unfair in the sense that it's not an option available to all underwater borrowers. People who live in recourse states cannot do it, at least without grave risk. It just seems, well, unethical in that the option's availability depends on the peculiarities of state law.

Peter

[Black Death]

A capitalist ethic:

"Make as much money as possible without breaking the law."

[J1]

"I know someone who recently left a job to take an allegedly better position with a bank. A month later, the bank decided to cancel the project they hired him for and let him go"

I disagree that this is analogous to a mortgage, unless he had a contract with the bank in which it committed to paying him a salary every month for X years. The ability to enforce contracts is one of the foundations of our economy.

The reasoning in the article is poor too. Believing that it's a bad idea to rob liquor stores is an idea our society would like to encourage. There's no inconsistency in acknowledging that's not how all members of our society behave.

[Peter A]

Businesses walk away from their debts all the time. It's called Chapter 11. Ethically it seems to me that not paying a vendor for merchandise they delivered and you then sold is far worse than walking away from a mortgage. At least the bank gets the asset back.

[pzed]

walking away from a mortgage certainly isn't the pinnacle of ethical behavior. the homebuyer signed a contract which he then invalidates when it's convenient for him.

while the lender may be a dumb or greedy institution, the homebuyer wasn't forced at gunpoint to sign the contract. i don't particularly care if someone walks away from an underwater mortgage, but it certainly doesn't make him a good person. it just makes him a self-interested one.

[Aspic sentence]

I agree, except to add that the banks did not take on toxic debt because they felt like it, but rather they were strong-armed by the social engineers in government to make "the American dream" available to all (codeword for NAMs). And since you can't open it up just to minorities who can't pay, you open it up to everyone. Now you have demand outstripping supply, housing prices rise (shock), people think bubbles last forever and pretend that houses are investments instead of places to live, they take advantage of the easy money, rinse and repeat and boom.

So don't be like those bobble-heads on the TV news and blame this on the 'unregulated' market.

[AllanF]

Damn straight Half Sigma. Nothing scares bankers more than the prospect of Americans walking away en mass. They and their abettors in Washington are doing everything possible to shame, cajole, and scare people into keep paying for houses that will never be worth what they paid for them.

Actually, a truth campaign against the establishment's disinformation on this topic is perfect for the blogoshpere.

[bbartlog]

I agree with your assessment, but in the long run I think it's fair to ask: is the solution here for people to adopt the ethics (or lack thereof) of corporations, or should we try to reform the corporate model so that corporations are held to the same standards as people? The problem as I see it as that corporations, originally conceived as an instrument for distributing risk, have also turned out to be fine mechanisms for diffusing responsibility. Logically it might make sense to hold the people in charge of a corporation personally responsible for its actions, and to change the current absolute mandate to maximize shareholder value.

[Thras]

Your argument is that big corporations are wolves, and that there is no responsibility to act ethically towards wolves.

Fair enough.

But it's important to delve into the assumptions behind the arguments here. Are all banks wolves? Should they be? Can they be changed?

It is obviously a simplification to say that "financial institutions themselves care only about making money" as you do. It is important to figure out whether this is a true simplification, or whether it is in fact an oversimplification.

Financial institutions are organizations of individuals, all with their own goals, and each his own agent. We can talk about the "goals" of such an institution and the "cares" of such an institution because, to exist and the thrive, the organization needs to achieve some degree of conformance between all its individuals. But these aggregate cares and goals will be determined by many things. The structure of the organization (its incorporation documents, hierarchy, etc.). The environment it operates in and the laws that define it. But also the characters of the individuals who make it up. The "corporate culture."

In fact, "corporate culture" is so important a determinant of an institution's degree of ethical action, that it can and often does outweigh the other parts.

So there is a flaw here. You ignore the possibility that certain financial institutions act as wolves because they are run by wolf-like men. The actual solution, of course, is to hunt these fellows down and remove them from any position of authority or social responsibility.

Advocating the opposite solution, that all men act as wolves because some men are wolves, is really counsel of despair, advocating for the breakdown of social order.

[outlaw josey wales]

There is no justiciable moral component to a breach of contract. You just have to be prepared to pay damages. Law 101.

[Capt. Obvious]

The bad thing with "walking away" is it completely destroys your credit score.

Also, wouldn't this make it hard to rent a new apartment or get a job (especially a white-collar one)?

Credit checks are usually done when renting an apartment or applying for a job.

I guess it will have be a decision the borrower makes on his/her own.

I don't buy what the CNBC talking heads say about the economy. The housing market is going to be in the toilet for the next several years (or possibly longer), so maybe being underwater for that length of time is just stupid.

[ironrailsironweights.wordpress.com]

"As there is a gigantic availability to borrow, universities hike tuition to the stratosphere, most times for unnecessary things like a professional football team and a coach that earns a gigantic salary."

I don't mean to get the thread off-topic, but it should be pointed out that big time (FBS) college football teams usually make money, often very large amounts of money. In many cases their profits are enough to pay the expenses of the entire athletic departments.

Peter

[Steve]

Exactly, Josey. Any lawyer (or even first semester law student) could tell you that a contract is defined as "a promise to perform OR to breach and pay damages." There is nothing unethical about breaching a contract, especially a non-recourse mortgage. You walk away, the bank gets the house. Indeed, this is spelled out in the contract itself.

And it has nothing to do with the banks being wolves; it's simply that they took a risk of giving a loan to someone to buy a house and it didn't work out. Besides, the bank already assumes that a certain number of borrowers will default and figures in this information when determining interest rates (i.e. those with poor credit scores pay higher rates).

[sabril]

"It just seems, well, unethical in that the option's availability depends on the peculiarities of state law."

Except that banks are presumably aware of the law when they set the terms of the loan. One would hope that a bank in California will be a bit more conservative in its underwriting standards than a bank elsewhere.

[sabril]

I agree with BrunoBrazil. The situation with student loan debt is shocking in its unfairness and abusiveness. The system is in desperate need of reform.

[mike]

"One would hope that a bank in California will be a bit more conservative in its underwriting standards than a bank elsewhere."

One would hope.

[sabril]

"There is no justiciable moral component to a breach of contract. You just have to be prepared to pay damages. Law 101."

I'm not sure about "justiciable," but I do think that sometimes there is a moral component. For example if you lend your brother in law $250 in advance of his payday and then he stiffs you and spends his paycheck on a big TV.

That said, I don't think there is anything immoral about walking away from a non-recourse loan. The difference is that the bank is a sophisticated repeat player with the resources to hire analysists and attorneys to protect itself.

[widespreadpanic]

The difference between right and wrong is not a contract we make with society. These beliefs are subjective and arbitrary. I never signed a social contract when I reached a rational decision making age, did YOU?

There is no consensus or unified theory of ethics and this is exactly why I won't change your mind and you won't change mine.

This is the classic disagreement of Consequentialism versus Deontological ethics.
Wiki: Ethics, OR summarized "The ends justify the means," versus, "duty to act regardless of outcome."

a)(Deontological case) Continue to throw good money at bad down the rabbit hole of underwater mortgage to "honor your promise to pay" to banks that **poofed** 90% of the loan money into existence via fractional reserve banking. Your "honor" gives you value and good "morals."
OR
b)(Consequentialist case) Break your promise to the bank and vanish X amount of debt from your families finances, enabling a higher quality of life for your loved ones, to whom you hold a moral duty to care for. You will carry the stigma as a contract breaker or one that goes back on your word given certain circumstances.

Which is more right or more wrong? Your belief is as subjective as mine. Except I would say, placed in another man's shoes, most loving, rational, "moral" men would choose option B.

[let's diversify]

HS, you may be interested in doing an HBD post focusing on whites. Look at this map of AP test failure rates (even in "diverse" areas, AP classes are primarily white or Asian):

http://www.usatoday.com/news/education/2010-02-04-1Aapscores04_ST_N.htm

Notice how West Virginia sticks out like a sore thumb. The states with the highest AP test passing rates also have large proportions of Anglos/ Scands/ Germans.

[Enamdar]

Well we can not expect "ethics" to be anything more than self-interest defined by history. But people are more self-interested than Ayn Rand gives them credit for. Rand expects people to be egoist in the market of buying and selling, and altruistic everywhere else. In fact the "altruism" she complains about is the fact that people's self-interest extends to means other than trade.

[Brutus]

Siggie (off topic)

Why do you call the blog Half Sigma?

[HS: I thought of many cooler names, but all those domain names were already taken.]

[ironrailsironweights.wordpress.com]

" The states with the highest AP test passing rates also have large proportions of Anglos/ Scands/ Germans. "

What about Connecticut and New Jersey?

Peter

[Steve Z]

Three cheers for the "bad man" theory of law!

[Uri]

Half Sigma, the below post was very very interesting to me

__
HS, you may be interested in doing an HBD post focusing on whites. Look at this map of AP test failure rates (even in "diverse" areas, AP classes are primarily white or Asian):

http://www.usatoday.com/news/education/2010-02-04-1Aapscores04_ST_N.htm

Notice how West Virginia sticks out like a sore thumb. The states with the highest AP test passing rates also have large proportions of Anglos/ Scands/ Germans.
_____

Half Sigma, we all believe in the truth of HBD, otherwise we wouldn't be here. We all understand that there is a genetic difference between the races, and this genetic difference is partially responsible for the IQ difference between races. But what about within the white population? Is there a genetic difference between the whites in West Virginia, who seem to have low IQ, and the whites in Minnesota, who seem to have high IQ?

Putting it another way, if we took 100 average West Virgina families and had them marry each other for generations and generations, would the offspring in 500 years still have a lower IQ than the white people in Minnesota? What I mean is, do the whites in West Virginia revert to the overall white mean (100) or do they revert over time to a special lower West Virginia white mean?

[HS: West Viriginia whites stay at the lower WV mean. Reversion to the mean can be better thought of as reversion to your grandparents' mean.]

[Sheila Tone]

"The bad thing with "walking away" is it completely destroys your credit score."

This risk is overrated. First, because most people underwater and strapped by high-interest mortgages had bad credit in the first place, and will probably continue to incur bad credit due to being strapped by their house payments. Second, creditors know a person who recently filed BK can't do so again for 7 years. So this actually makes them a better risk than a lot of non-filers.

Half Sigma, how come you're stuck meeting CLE requirements even though you're not practicing?

[Sheila Tone]

"[HS: I thought of many cooler names, but all those domain names were already taken.]"

I always thought the name was kind of sexy. I like that it rhymes with "stigma" and "enigma."

[seeitnow]

There should be no ethics question involved here. Remember, the bank used its own appraiser when you purchased the home. Their appraiser then reported to them that the home was suitable collateral. If the value of the asset decreases it simply meand that both you and the bank made a mistake. At the very least the bank should be willing to reduce the amount of principal owed, if not then the borrower is morally free to default.

[Clem]

But what is it that causes the genetic material of whites in West Virginia to be so crummy? Was there one specific ethnic group in Europe w a low IQ that populated West Virginia, or was it just that West Virginia used to have same IQ as rest of USA, and smart whites left, leaving mostly low IQ types ?

[HS: Smart people wanted to live in the northeastern cities, and this was true even back in the 1700s and 1800s. Also, the slave states were considered barbaric places where smart civilized people didn't want to live.]

[wreaver]

@Black Death said,
"A capitalist ethic: "Make as much money as possible without breaking the law.""

I think you may be confusing the law with morality. They are not the same thing.

[Lawful Neutral]

I work for a major bank reviewing loan modification documents (yes, a chimp could do my job, but I still see things). The banks, the borrowers, and the government are all scum - the whole industry is sprinkled with a generous mix of crookedness and stupidity; there are no good guys.

That said, if walking away from the mortgage makes sense, you should do it. You're dealing with a soulless bureaucracy, not your friend, your partner, or your brother-in-law. The bank doesn't care if your word is good, it can't respect you or not respect you, and you'd better believe it would crush you without compunction if its uncaring juggernaut wheels ever happened to start moving in your direction. Sheila Tone is absolutely right: the credit score thing is not much of a threat - by the time it gets to that point, your credit is in the toilet anyway.

The vast, vast majority of borrowers do not want to walk away from the house, though. Maybe they're emotionally attached to it, maybe they don't want to admit failure, or maybe they just want to save rent by staying as long as possible before the bank kicks them out. Here's a hint: keep requesting loan modifications and sending all the necessary docs even after being denied. At least at my bank, we stop the foreclosure process until we have a loan mod decision; this can easily get you several more months in the house for the cost of a few hours' work and a little more damage to your lost-cause credit score.

[eh]

The loan was made against collateral. Presumably the lender had that collateral appraised, and the interest rate charged took (every sort of) risk into account.

So I agree it is not 'unethical' to walk away. You are just surrendering the collateral.

As part of much-needed housing reform (along with fully privatizing FNM, FRE, etc, and eliminating the mortgage interest deduction), recourse mortgages should also be prohibited. All of that would make all parties behave more sanely.

[superdestroyer]

Peter,

At virtually all universities, the Athletic Department costs students money as student fees and other funds are transferred from the university to the separatedly organized athletic Department.

HS,

The need to maintain a security clearance and apply for jobs may explain why DC have a much lower foreclosure rate. Walk away from your mortgage and one could close clearance and the ability to work for the government or a government contractor.

[dk]

Anyone remember the opening scene of fight club?
Probably not to far off the mark in reality. Banks don't have morals they perform a cost/b analysis. So are the homeowners. What exactly is the problem here? The homeowners ARE fulfiling the contract: pay or lose the house+downpayment. They perform a cba and chose door #2. Just like the the bank would.

[let's diversify]

"What about Connecticut and New Jersey?"

There are a large proportion of Anglos among the white population in the NorthEast. The further south you go, it is more Scotts/Irish. The midwest has large numbers of Scandinavians and Germans.

I've actually spent some time in W. Virginia. The rural southern bulk of the state really has some of the most hopeless white people you'd ever want to meet. Toothless, illiterate, lazy alcoholics. Think "People of Wal Mart" x 10.

Another interesting case of especially poor white genetic stock are the Redlegs of Barbados, who are the descendants of white slaves, and are behind the majority black/mulatto population in every regard.

I think these sorts of examples are the result of both inbreeding and brain drain.

[Kevin K]

"[HS: Smart people wanted to live in the northeastern cities, and this was true even back in the 1700s and 1800s. Also, the slave states were considered barbaric places where smart civilized people didn't want to live.]"

But that doesn't explain why people smarter people moved to Minnesota, where its really freaking cold, and not WV. (And technically, WV wasn't a slave state at least not the same way as the rest of Virginia).

WV (and the rest of the Appalachians) was mostly settled by the Scot-Irish (i.e. hillbillies) versus the Anglicans who mainly made up the rest of the South. Arkansas, Kentucky, Tennessee and WV are noticably different people from the rest of the South.

A state like Texas, being in the middle of nowhere, had to develop its own economic centers to accomodate the petro-chemical industry which is why they were able to attract smart people (like my family!). WV, being so close to the NE and mid-west (like Pittsburgh) didn't really need to do this.

[sabril]

"As part of much-needed housing reform (along with fully privatizing FNM, FRE, etc, and eliminating the mortgage interest deduction), recourse mortgages should also be prohibited. All of that would make all parties behave more sanely."

I disagree about the mortgage interest deduction. Even now, the government is not doing enough to support the middle class. We need to encourage people in the middle class to marry and reproduce.

If our government encourages the lower class to reproduce while discouraging the middle class, it's not good for the future.

As far as housing reform goes, our policies need to be based on accepting the following two facts:

(1) A certain subset of the population (the lower classes) is better off renting than owning. Pushing these folks into owning will not turn them into middle class people.

(2) A heavily disproportionate amount of these folks are NAMs.

____________

As far as recourse versus non-recourse goes, I doubt it makes much of a difference in the scheme of things. Most people don't default on their mortgage unless they cannot pay and the house is underwater. In that case, a deficiency judgment is unlikely to do the bank much good.

JMHO

[not too late]

“I took a loan on an asset that I didn’t see was overvalued,” he said.

He didn't wish to see it as overvalued. He wished to believe he could just magically make money for nothing.

And this genius wants to go to grad school. Stupid schlub should take an extra job and meet his obligation. Slimy, weak little creep.

I wonder if psychologically going back to school is like people wanting to go home to mommy. Mommy in this case being the institution of the school where they spent their youth.

[not too late]

"Personally, I think you should apply the same logic to student debt. It is much worse, because at least in mortgages you can declare bankruptcy, while at student debt, you can´t."

It is not worse. It is better. Medical bills should be the same way. The provider can't get back his service, so you can't discharge the debt without dying. Imagine if all the people who go bankrupt because of medical bills instead had to pay them. That would lower costs for everyone.

[Black Death]

"A capitalist ethic: "Make as much money as possible without breaking the law.""

I think you may be confusing the law with morality. They are not the same thing.

I thought the point of my accurate but cynical quote was that law and morality were quite different. Ow, well....

[sabril]

"Imagine if all the people who go bankrupt because of medical bills instead had to pay them."

Probably hospitals and doctors would start cranking up their bills even more and push the patients into accepting lots and lots of unnecessary services.

Kinda like how the education industry is right now.

[Peter A]

"But that doesn't explain why people smarter people moved to Minnesota, where its really freaking cold, and not WV."

Simple - farming. In the early-mid 19th century most people still made their living off the land. The Minnesota prairie is much better agricultural land then the rocky hills of WV. Hell, even Alberta is better than WV. Also Minnesota has easy access to the Missippi and trade, WV you have to slog through the Appalachians to get anywhere. The quality of life in Minnesota was much higher. Now that WV is becoming a suburb of Washington DC and there are fewer advantages to freezing your ass off in a Minnesota winter over time we may see the population mix change - more smart whites moving to WV, more smart whites leaving Minnesota.

[Rick]

First off, let me state that I am not Scottish or Irish or Scotch Irish so I have no personal stake in any of this, But since this is an HBD site, I'd like to better understand the genetic IQ of Scottch Irish people

My understanding is that the romans conquered Scottland up to a certain point. North of that point the Scottish people remaind sort of independent and free and South of that line the Scottish were sort of beaten in to submission to Rome.

My understanding is that the decendents of the defeated Southern Scottish people are sort of more cereberal , more obedient, more orderly, more organized, more tidy. Sort of the stereotypical upper beta organization man type that you want working for you if you are building a large corporation

My understanding is that the descendents of the undefeated Northern Scotts are more wild, muscular reckless, lacking respect for authority. Exactly the type of man you want by your side in no holds barred bar fight. America only exists because of the willingness of these Northern Scottish types to risk their lives for our country, sometimes against hopeless odds. But not exactly the type of man you want in a middle manager role, he would probably resent the rules and structure.

Now my understanding is that the Government in London encouraged huge numbers of these wild muscular independent Northern Scottish to settle in Ireland and reporoduce. The government in London wanted to establish a massive number of protestants over the whole Island of Ireland so that Ireland could never successfully break away from the rest of the UK.

for some reason, this experiment failed and almost all of these Scottish people who had moved to Ireland decided to leave Ireland. Most of them got on a boat and came to the USA, and some of them got on a boat and moved to Australia.

So in sum, the Scotch Irish people that settled in West Virginia had a number of formative experiences. First they successfully avoided being defeated by the Romans, and lived free of Roman control. Then they moved from North Scottland to Ireland, Then they moved from Ireland to West Virginia.

My first question is, is there any evidence that all of the Scotts Irish living in America, all of them taken as a group, have lower IQ than the other "white" groups in America?

If there is evidence that Scotts Irish in America have lower IQ, why do we (the HBD community) think this is so? Did somehow the smarter of the Northern Scotts stay in Scotland and the dumber ones move to Ireland and then to the USA? Or are Northern Scottsmen as a group dumber than Southern Scottsmen?

I really am just guessing here, but perhaps the areas conquered by Romans had some sort of system where smart fathers got to have many more grandchildren than dumb fathers. While in the lands not conquered by Romans, things were more chaotic and generally the most violent aggressive and fearless (but not smart) men got to have the most grandchildren, and thus these Northern undefeated Scotts tended to get braver and stronger in each generation but also tended to be dumb.

It should be clear that I personally respect and admire the bravery, the intensity, and the courage of the Scotts Irish men here in America. If indeed it turns out that Scotts Irish men have lower IQ than other white men, it won't diminish their role in the success of our nation. But I am very interested in the relative IQ of different groups of white people here in the USA. I would like to see more examination of this topic here at Half Sigma and I invite people that can answer my questions to do so.

[rightsaidfred]

Since we're on the topic of morality, how about the morality of selling a house for way more than it is worth? Hmmm? Across from many schlubs signing a mortgage that went underwater is someone raking in cash from excess profit. They should feel guilty and give this excess profit back. Bwahahah.

[Brutus]

Rick--

I believe the average IQ of Ireland is 96, which is below any other European country (I think). You bring up a complicated issue; nevertheless, I urge you to read Charles Murray's "Human Accomplishment" because it examines why accomplishment happens in certain geographic areas and not others, among other interesting speculations. Check out the link

http://www.techlawjournal.com/series/innovation_03/20031120_murray.asp#B

[Sheila Tone]

""But that doesn't explain why people smarter people moved to Minnesota, where its really freaking cold, and not WV."

Simple - farming. "

Most of them were Norwegians and Swedes. To them the Dakotas, Minnesota and Wisconsin weren't that cold. Parts of Norway even have the midnight sun. And farming is a warmer lifestyle than fishing, which was the more common way to earn a living in the old country.

Plus when those particular immigrant groups were arriving in the late 1800s-early 1900s, that's where the available land was. It was wide open. West Virginia was recovering from the Civil War. The Great Plains were less crowded, which was great for Scandinavians since they take well to isolation.

[Sheila Tone]

""But that doesn't explain why people smarter people moved to Minnesota, where its really freaking cold, and not WV."

Simple - farming. "

Most of them were Norwegians and Swedes. To them the Dakotas, Minnesota and Wisconsin weren't that cold. Parts of Norway even have the midnight sun. And farming is a warmer lifestyle than fishing, which was the more common way to earn a living in the old country.

Plus when those particular immigrant groups were arriving in the late 1800s-early 1900s, that's where the available land was. It was wide open. West Virginia was recovering from the Civil War. The Great Plains were less crowded, which was great for Scandinavians since they take well to isolation.

[Lil' Barry Bailout]

Your post reminds me of a friend who lost his job but refused to take the unemployment benefits available to him. He was simply too proud to take money that he didn't earn, even though he was "entitled" to do so. I think most Americans feel embarrassed when forced to take handouts.

I've traveled widely in Europe and Asia and I find the opposite attitude in most places--in these more socialist or welfare-state countries, one would be considered a chump for not grabbing everything they can.

[Ben]

An economics professor published an article in the SF Times months ago advising people in the SW US to default on their mortgages.

Also, about student debt: This notion that you have no hope in life if you don't go to a 50K/year school is simply not accurate. Indeed, many people go to expensive colleges, major in something useless, and end up worse-off than some of their public school peers.

[TGGP]

How about this:
http://www.dallasobserver.com/content/printVersion/1653972

[Yawner]

"Since we're on the topic of morality, how about the morality of selling a house for way more than it is worth?"

It is impossible to sell a house for way more than it is worth, because the worth of a house is what someone is willing to pay you for it.

And, you're not putting a gun to the buyer's head. If he doesn't want to pay your price, he doesn't have to.

[sabril]

"Also, about student debt: This notion that you have no hope in life if you don't go to a 50K/year school is simply not accurate. Indeed, many people go to expensive colleges, major in something useless, and end up worse-off than some of their public school peers."

I agree, but I think part of the problem is that history needs a chance to catch up with reality. For example, back in the 1950s, many fewer people went to college than today. Also, college was much much cheaper. To the point where it really was feasible to work your way through a top school like Harvard just by taking a low paying job on the side and during summers.

The upshot was that college was a really good deal. You didn't need to take out a mountain of debt to go, and it distinguished you quite a bit from other people in the job market.

Of course, like everything else in a free market, good deals have a tendency to fade out of existence as more and more people learn of the good deal and try to take advantage of it. In 2010, a college degree doesn't distinguish you all that much. And tuition has turned into an exercise in extracting as much money as possible from the parents of young people.

Still, society is just starting to learn that higher education is no longer that much of a good deal.

[Death to Them All]

Your post reminds me of a friend who lost his job but refused to take the unemployment benefits available to him. He was simply too proud to take money that he didn't earn, even though he was "entitled" to do so. I think most Americans feel embarrassed when forced to take handouts.
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Yeah, blacks and hispanics especially! Seriously, they are OWED that money, you honky muthafucka! WE wuz slaves 'n shit! You should tell your pal to take the cash. Why? Why the fuck not? He fucking earned it. How much do working whites have to hand over in taxes just to the Feds every year, not to mention if you live in a LibState? Considering how much money he has paid to Uncle Sambo (and you and me and on and on), he should grab whatever he can. Why have some pregnant (again) negress get the money for new ring tones and twinkies who has never had a job in the first place, not to mention the money she gets because she pays no taxes! Why have the money get to a hispanic federal law breaker with manteca between his ears and adds to the supply with food stamps that you and I and your pal paid and still pay for? Tell him to take the cash, buy a gun and get ready for the SHTF. I'm fucking serious. Good day.

[sabril]

"It is impossible to sell a house for way more than it is worth, because the worth of a house is what someone is willing to pay you for it.

And, you're not putting a gun to the buyer's head. If he doesn't want to pay your price, he doesn't have to."

One could make the same argument about non-recourse mortgages. I suppose it wouldn't be as strong since the government really did lean on lenders to relax underwriting standards.

[rightsaidfred]

""It is impossible to sell a house for way more than it is worth, because the worth of a house is what someone is willing to pay you for it...""

"Willing to pay" is hardly a gold standard for determining worth. In hindsight, many people overpaid for homes

[Yawner]

"Willing to pay" is hardly a gold standard for determining worth. In hindsight, many people overpaid for homes

So what? Who said the "worth" of a house had to be a fixed, unmoving eternal quantity?

To repeat: the value of a house is what someone is willing and able to pay you. There is no other meaningful metric. If you think my asking price is "too high" and someone else comes along and pays it, then I did not sell my house for "more than it was worth".

[not too late]

"Most of them were Norwegians and Swedes. To them the Dakotas, Minnesota and Wisconsin weren't that cold.

Um, no. Norway and Sweden are nowhere near as cold as the Dakotas and Minnesota.
Average January temp in Stockholm is 27 F. Coldest ever Jan, 8 F

Average January temp in Minneapolis is 13 F. Coldest ever Jan, -41 F.

Notice the huge difference in the record low temps. Those poor bastards, (my forbears) just couldn't leave and had to figure it out or die.

[rightsaidfred]

"Who said the "worth" of a house had to be a fixed, unmoving eternal quantity?"

Not the issue.

Price is a signal, of current and expected future value. Not all signals are accurate. "If everyone is jumping off a cliff to buy a house, would you?"