Oct
5
Alan Blinderis an American economist, on the faculty of Princeton University. He has served as the Deputy Assistant Director of the Congressional Budget Office, on President Bill Clinton’s Council of Economic Advisors, and as the Vice Chairman on the Board of Governors of the Federal Reserve System. Sounds like a government conformist right? Wrong
He has recently wrote a controversial column for the Foreign Affairs magazine about globalization in which he opined that globalization could cause more disruptions in service jobs than originally believed. He says that he still believes that globalization would be a net plus for the United States. This analysis has not been published in a peer-reviewed journal of economics. His views on this issue is not widely accepted by economists.
Then comes this gem: Six Fingers of Blame in the Mortgage Mess
Who’s the first finger? Everyone who has a mortgage.
The first finger points at households who borrowed recklessly to buy homes, often saddling themselves with mortgages that were all too likely to default. They should have known better. But what can we do to guard against it happening again?
Not much, I’m afraid. Gullible consumers have been around since Adam consumed that apple. Greater financial literacy might help, but I’m dubious about our ability to deliver it effectively. The Federal Reserve is working on clearer mortgage disclosures to help borrowers understand what they are getting themselves into. (“Warning! This mortgage can be dangerous to your family’s financial health.”) While I applaud the effort, I’m skeptical that it will work. If you have ever closed on a home, you know that the disclosure forms you receive are copious and dense. Should we add even more?
Fewer words, and in plainer English, might help, especially if they highlighted the truly important risks. (“In two years, your mortgage payments could double.”) But the truth is that there is much to disclose, that complicated mortgage products are, well, complicated, and that people don’t read those documents anyway.
He does go on to blame Lenders, bank regulators, and countless others. If you don’t read the New York Times, you should. Real estate is local, mortgages are national.