Ben Stein Says Economy Is Fine

Sunday Morning Commentator Says Don't Worry About Foreclosure Blues, The Mortgage Market Is Robust

(CBS)  Despite all the bad buzz about subprime mortgages, Sunday Morning correspondent Ben Stein says the economy is strong and that the amount of foreclosures is small in relative terms.

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Perspective is a great thing. It's especially good where money and the stock market are concerned.

Recently, there has been large movement, mostly down, as the stock market reacts to a large number of foreclosures on homes in the so-called "subprime" mortgage area. This is the place where higher risk borrowers got loans during the housing boom of the last three or four years. Now, to people who actually made those loans, it's a scary phenomenon to see those loans default, and the companies that made those loans are in real trouble.

But here is where perspective comes in, and is such a lovely thing: The U.S. mortgage market is immensely large, spectacularly large. Total foreclosures are a large amount in dollar terms, but a tiny amount in percentage terms. Foreclosures are now about 1 percent of loans. The lenders will sell the houses and recover at least fifty per cent of the value. That means the total loss may be about ½ of one percent of the mortgages made and probably less, and a lot of it is insured. This is an absolutely trivial number in the context of a $14 trillion economy with net wealth in the realm of $60 trillion.

This whole subprime mortgage mess is just an excuse for the gunslingers and river boat gamblers on Wall Street to use their tricks to move markets and make money. The economy is still very strong. The most cagey players on Wall Street like Goldman Sachs are now trying to buy — not sell — as much distressed merchandise in the mortgage area as they can. This is a good clue about where the smart money is going.

You can panic if you enjoy being panicky. But this will all blow over and the people who buy now, in due time, will be glad they did.

Anyway, that's my perspective.

[glenlake]

At last someone who makes sense. 92% of the people still have a job and 92% of the people still have a house. Go back to a normal life and don't listen to the govenment or the news media, they are both trying to scare you. They wany to control you and they already control to much.

[cedski11]

Every day, I hear stories of how the lender's "bamboozled" these poor borrowers into signing Adjustable Rate Mortgages, and the borrowers didn't realize what they where signing.

I've read articles about how Congress is going to get involved with the implosion of the subprime market, and make the lenders give these poor borrowers a break on their interest rates. In fact, a famous woman that is running for President (name withheld) has proposed that these poor borrowers that didn't know what they were signing should have some type of "rollback" of interest!

Reality!
1) ARM disclosures are given to the borrowers about 5 times in closing. In fact on the note;

ADJUSTABLE RATE MORTGAGE NOTE

is the largest printing on the note, and on Page 1!

2 Give Me A Break The borrowers have explained in writing and verbally how the note works, and all the parameters of the note, including adjustment terms, prepayment penalties, negative amortization and whether escrows are included in the payment or the borrower's pay the escrows on their own!
3) Congress can get involved all they want to, but the reality is that the borrowers know full well what they are signing, and these same borrowers that should qualify and purchase a $160,000 home opted for an adjustable rate, or interest only so they could buy the $220,000 home, and "hoped" they could afford it when the adjustments hit.

[ckg2007]

bueller....bueller....bueller....

[smwebb1]

Thank you for your refreshing view of the housing market. Unfortunately your view is not being widely accepted. The environment we now live in is one of blame. These poor people that are being foreclosed upon have been taken advantage of. I thought that the mortgage companies were required by law to disclose of the product being sold. I was also under the impression that the customers had to sign legal documents that explaining the terms of the loan as well as the payment. It must be someone else%u2019s fault as to why they didn't read the documents or thought they could handle a payment that is obviously beyond them. I truly feel sorry for those that have been laid off or lost their jobs. However, of the very small foreclosure percentage, the ones that are a result of circumstance out of the buyer%u2019s hands are minimal. There are more people than ever that are homeowners because of mortgage lenders. These lenders have allowed people with marginal credit to invest in homes rather invest in landlords. Hadn%u2019t the opportunity been available for these customers, there is like to have been someone screaming discrimination. Of course it has to be someone%u2019s fault why people have bad credit to begin with. Personally, I salute you Ben Stein. I for one am glad that there are gentlemen, like yourself, who have there own opinion and are courageous enough to state that opinion even though it doesn't fall in line with the propaganda machine that we call journalism.

[lindalee333]

Notice that Mr.Stein's concern is with the businesses that own the foreclosure notes.The people losing their homes are nameless, unimportant detritus.As long as those pretty houses get resold and the numbers get easier to manipulate in the propaganda-spin set every day by Bush conservatives, we will be okay!All I have come to expect are lies from our proud American leadership, so please LIE TO ME!Make it easier fro me to live. Make the economy and this war and its effects on our lives seem AMERICAN!Make me believe our country is not stacking up bad Karma like a fragile house of cards!Oh, when I think I was worried about all those kids leaving their friends and their schools, and their Dads and Moms losing their jobs, I just can't believe how senselessly foolish I was. What could I have been thinking?Thank-you Mr. Stein, thank-you for your capacity to miss the point.Thank-you for your capacity to so easily be able to devalue the lives of the chaff of this world.That is what makes this war so American.Just as we can weep for the 3000 we have lost and ignore the hundreds of thousands of Iraqis lost, we can hope for the best for our businesses and ignore the ones who fall through the cracks.Perhaps that is what happened to your soul Mr. Stein, perhaps it was like chaff and blew away in the winds of this war on humanity.

[libubble1]

I think Ben Stein should go back to doing what he does best...."clear eye's" commercials.

[toldyouso21]

Of course to Ben the economy his fine. He's still employed, his job has not been outsourced, he still gets his check and his home probably holds its value and he can barely feel the pinch of the 300% increases in food and gas since Clinton left office--perspective is the name of the game--but a rich man's "perspective" will rarely match the reality of most Americans.

Basically, we can believe the economy is fine when you can take us to a middle class neighborhood in a midsize city and they "perceive it as fine" anything other than that is just the bs of a man who stands to gain as long as others keep playing the market. Ben Stein is the shill at the county fair who tells you that "You were just this close....why not just bet more--after all the losses ---surely it's your time to in." Then he smirks to himself as dupes give it another spin and covertly hits that button under the game which will ensure HE wins again.

[buddykrusty]

Ben... you are right most of the time.. missed it this time however.