Wednesday, December 05, 2007

Are there no workhouses....

Belle Waring at Crooked Timber is calling out a mortgage workthrough specialist for being an absolute Scrooge (via the New York Times) as the specialist shows how divorced she is from reality.
“The risk is that you could be modifying loans for people who don’t need it,” said Sharon Greenberg, director of mortgage strategy at Barclay’s. “There’s only so much you can do without talking to the borrower. You’re spending $60 a month on cable TV; can you get by with less? You’re spending $200 a month on food for two people, but food costs in your area show that you should be able to get by with $100 a month. These are the kinds of conversations that loan-servicing companies have to have with borrowers.” (my emphasis)
Let's just take a look at the food costs. Let us assume that a month is 30 days to make the math easier, and that each person eats three meals and only three meals per day which means no snacks, or desert or anything else. So @$200 per household, that is $100/person, or roughly $3.33 per day. So $1.11 per person per meal on an excessive lifestyle. The specialist contends that it is possible to eat on half of that level, or being generous 56 cents per person per meal and presumably maintain decent health over the long run.

Well Gov. Kulongski (D-OR) led an interesting public demonstration of food budgetting priorities earlier this year and shows the absurdity of trying to live on 56 cents per meal.
Governor Ted Kulongoski has challenged all Oregonians to join him and his wife, Mary Oberst, during “Hunger Awareness Week” from April 23rd-29th, and live off of an average food stamp budget of $21 per person for the week - or an average of $3 per day, per person.

“I challenge all Oregonians to experience first-hand what thousands of Oregon families go through everyday,” said Governor Kulongoski. “Budgeting just $1 a meal each day for food, and trying to make that food nutritious, is a difficult task that sadly is a reality for too many Oregonians and their families.”
I believe food stamps are already insufficient to provide a sustainably healthy diet with any degree of variety [oatmeal and veggie chili twice a day for months on end is not sustainable], and they provide a base for a food budget that will be greater than than $3.33 per person per day. Get real, and figure out that a big chunk of the problem with the loans that are in trouble is on your absolutely shitty business model and screwed up incentive structure that rewarded very short term thinking and rational risk ignorance over making reasonable loans that people could actually afford.

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