Thursday, August 9, 2012

Distracting The Professionally Indignant

I was listening to National Propaganda Radio this morning, and I heard something rather interesting.  The panel was discussing the problem of people who are underwater on their mortgages, and the efforts of the various government programs to help solve this problem.

This is not a surprise; I'm underwater, and I think most people in America are.  It creates some serious problems, even for those who are able to make their payments.  One problem is actually a virtue; it discourages people from using home equity lines of credit to go on vacation, or buy fancy cars, or 72" flat screen televisions, or cabins by the lake.  The period that ended in 2006 was awash in pretty extravagant spending that was backed by housing bubble created equity, which disappeared as soon as the bubble popped.  (The debts, however, remain.)

Another problem is actually pretty serious because being underwater strongly discourages relocating for a job.  Right now, there are a surprising number of jobs out there for software engineers in places like Dallas, and California, and New Jersey.  There are effectively no jobs in Boise and lots of other cities across the nation.  Even for engineers willing to relocate to these places, the cost of doing so is very high: you either have to continue making your housing bubble sized mortgage payment while paying rent in very expensive parts of America, or you have to default on a mortgage, which is both a moral failing and a credit history disaster.  If I suddenly had to do something like this, it isn't clear that it would be a net gain; $60,000 a year in Dallas vs. minimum wage in Boise still makes places like Boise look pretty good when you factor in the cost of living and consequences of default.  And I understand employers are generally no longer paying to relocate professional level employees.  I am impressed at the number of job openings that I see that offer only stock options and health insurance--no paycheck.

What was interesting is that while NPR listeners are usually calling in to complain about the little people who are getting injured, here they were deeply upset about something that injured them: being upside down in their mortgages, and in some cases, suffering foreclosure.  I guess when the economic hardships trickle up to the NPR listener class, things really are bad.  It makes me wonder if some of them might engage in heresy and not obediently line up in November to re-elect Obamessiah.


  1. I waiting to hear Obama worshipers start telling the rest of us that if only we would accept him as our savior and lord and start praying to him everything would be wonderful.

  2. Actually, what everyone's doing is neither: they keep the underwater house and rent it. For example, a computer programmer X bought a house in California Bay Area for $300,000. It is worth $190,000 (in theory). Mr.X then relocates to Albuquerque, New Mexico, to work for Northrop Grumman. He hires a management company, who deal with renters, and gets about $1500/mo. In NM, he pays $975/mo for about the same size rental house in a decent subdivision, located about a 30 minute drive away from Northrop building. So, he is $500 ahead (pure gross advantage, albeit governments steal half with taxes) from if he stayed in California.

  3. I wonder if renting out the house in the hinterlands and moving to California produces the same net result. My guess is higher rents on the coasts and low (often non-existent) rents in the interior make this not possible.

  4. Concerning worship of Obama: google "Lightworker" and "Obama." It's quite sickening. Remember when he gave the speech at the 2008 convention and talk about how the oceans would stop rising? I presume that he meant because he was going to stop global warming, but the tale of King Cnut comes to mind--except Cnut knew nonsense when he heard it. Obama really doesn't.

  5. It's true that moving from a less costly area to more costly one would require corresponding income bump to work out. It may still be possible, depending. Fortunately, in this country it is not how it used to be. Everyone who wanted to leave Detroit left it long time ago. Now people run from California and New York into the heartland.

  6. Software consulting firms regularly hire folks who then travel every Monday and Thursday to and from their home to a client site.

    You get paid a salary plus expenses, which always includes hotel, car rental, air fare and per diem.

    What about that?