Speak The Language

When you earn your living by trying to explain things to other people, one of the first lessons you learn is “try to use language your subject can understand – language that is accessible to the person you’re trying to expain to”.

I try to apply this lesson to the rest of my life.

Molly “Is It White In Here” Priesmeyer seems to have drawn the “real estate” beat for the Minnesoros Monitor “Independent”.  This despite the fact that her understanding of key real estate concepts like “equity” seems to be just a tad suspect

…but that’s OK.  We’re all about the teaching today.

In a piece that came out in the  Monitor “Independent” last week, she wrote about Governor Pawlenty’s  veto of the Floyd Olson-style  foreclosure moratorium (emphasis added):

But the homeowners suffering with subprime or negative amortization loans are offered no recourse — including a simple deferment period that still required payments — because, according to Gov. Pawlenty, helping homeowners renegotiate loan terms would make credit more difficult to obtain.

Ms. Priesmeyer states that as if she finds it implausible – which brings up two possibilities:

  1. She is actively trying to disinform the Monitor “Independent” reader,
  2. She doesn’t know any better.

You know good ol’ pollyanna Mitch; I’ll assume it’s really #2.

So I’ll try to explain this concept – the notion of unintended consequences of government action – in a language Molly Priesmeyer might understand.

“So, like, remember when you lent your totally cute feedbag purse to Ashley, your roommate from Saint Olaf/Macalester/Carlton/wherever it was you did your undergrad?  The documentary filmmaker and telemarketer? And on Monday when you wanted it back, she said she didn’t, like, have it with her?”

“And you gave her another week, because the purse is, like, totally cute, but then you like needed it?  And you met her at “Drink” and like asked her, and she totally said she’d bring it to Chino on Monday?”

“And then on Monday, she totally flaked, and said she’d have it for you on Friday?  And you’re like “Byatch, I need my purse?”, but you totally gave her til Friday?”

“And on Friday, you met her, and of course she flaked again.  And you were totally pissed.  But Ashley had brought Justin, this guy from St. Thomas that she buys X from, and he was like totally cute wearing Roc-A-Wear, which is normally kinda  poser on a white boy, but Justin was kinda hot in that bad-boy kind of way…”

“…anyway, Justin said that Ashley would bring the purse back when she could, and quit bugging her or he’d, like, totally slash it up.”

“So like, totally, how likely are you to ever lend Ashley anything again?”

“Like, doyy”.

A guy’s gotta try.

14 thoughts on “Speak The Language

  1. Awesome analogy, Mitch. Except Molly would have been making money off the purse loan with basically no risk, cause she sold off the risk and interest payments in slices, called tranches, of complex securities to wealthy, sophisticated investors, including the biggest banks in the world. Oh, and Molly has been begging Ashley to borrow her purse, non-stop, for weeks – telling her how good it would look with this outfit or that and how, even if she’s lost purses in the past, Ashley should borrow Molly’s purse right away. Also, Molly’s in the business of lending purses and assessing the risk that they won’t be returned. And Ashley really tried to return the purse, only she got hit by a car after she was laid off from her job at the purse manufacturing plant, which just filed Chapter 11 in the great purse meltdown of 2008. And Molly made a buttload of money from purses before the speculative purse bubble burst and now she’s asking the government to shore up her purse-lending ability by guaranteeing her purse loans.

    Otherwise, right on!

  2. Also, Molly’s in the business of lending purses and assessing the risk that they won’t be returned.

    And part of that assessment was that Molly could send repo-man out to retreive the purse if Ashley didn’t pay or voluntary return it. Only the Dems wanted to change the rules after the deal was made.

    And Ashley really tried to return the purse, only she got hit by a car after she was laid off from her job at the purse manufacturing plant, which just filed Chapter 11 in the great purse meltdown of 2008.

    And this affects Molly how? If Ashley needs more time, she should ask Molly, but if Molly is unwilling to change the deal (maybe Molly has payroll to meet), why does Justin think he has any say in the deal? If Justin thinks it’s a good deal, he could lend Ashley the money to pay Molly.

    And Molly made a buttload of money from purses before the speculative purse bubble burst and now she’s asking the government to shore up her purse-lending ability by guaranteeing her purse loans.

    Good for Molly making a lot of money, but markets change and she should forget about going to the government for handouts. Government shouldn’t be shoring up markets. Instead Molly should start selling trendy shoes. (Gag, I just agreed with AC)

  3. Otherwise

    …y’mean, “other than a bunch of stuff that explains the details of how the mortgage business operates, but has little to do with explaining the “unexpected” disincentives of government collections moritoria, which was the subject of the post?

    Natch.

  4. A tranche is a collection of MBSes of the same character (level of risk and return). Since Molly’s feedbag is a single loan, it cannot be sliced into horizontal tranches. While it can be securitized into Colateralized Accessory Obligation or the like, unless it is grouped with other securitized handbag loans that carry similar risk and returns it cannot be converted into a tranche.

  5. That said, Molly could sell the note and security interest in the feeedbag to a third party. But this is refered to as a “commercial paper” transaction. Not a tranche.

  6. Foot clearly practices in the area of women’s fashion accessory securitization.

  7. Mitch carped: “…y’mean, “other than a bunch of stuff that explains the details of how the mortgage business operates, but has little to do with explaining the “unexpected” disincentives of government collections moritoria, which was the subject of the post?

    Natch.”

    Ah right, simplistic analysis for simple people. How’s this: the mortgage industry should heed the advice of the old Toyota slogan: “You asked for it, you got it.”

  8. the mortgage industry should heed the advice of the old Toyota slogan: “You asked for it, you got it.”

    Agreed, but so should the borrowers.

  9. the mortgage industry

    …is not the subject of the post! Unintended consequences of distortions to ANY market is!

  10. How’s this: the mortgage industry should heed the advice of the old Toyota slogan: “You asked for it, you got it.”

    Wasn’t that the point of the veto of the bill, as blogged about? You don’t pay you mortgage, we take back the house. We told you that would happen at the time we lent you the money to buy the house.

    We would much rather you paid us, as originally agreed upon, but as we also agreed, if you don’t pay us, we have to take the house back and sell it to get repaid.

  11. If you REALLY want to protect the stupid, angryclown, you should probably prevent them from buying anything at all.

    Doh! Now I see the whole point of the Democratic Party tax policy. 😉

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