newsworthy translation

Here is a bit of news that I must admit deserves to be translated (for article in original version, see link below):

lunes, 25 de mayo de 2009 17:00h. TERRA NOTICIAS / AGENCIAS - EL GARROFER
Gravely injured after attempting a "lunar landing" into a jewelry store from a bicycle

A man of around 45 years of age, referred to by the initials J.M.D.R., was badly injured when he attempted to rob a Madrid jewelry store by means of “a lunar landing”.

The injured man tried several times without success to break through the storefront windows by smashing himself against them while on an Orbea bicycle until he lost consciousness.

In statements made from the San Carlos Clinic in Madrid, J.M.D.R. explained to the police that he had planned to rob the jeweler with a stolen car, but when it came time, he was feeling a bit lazy to try and break into the car “taking into consideration the additional charge that that could have landed him,” according to what he said. He, therefore, decided to try it “at all costs” with his son’s bike.

According to witnesses, you could hear the insistent dinging of a bicycle bell from Jose Ortega y Gasset street near the intesection with Serrano. It turned out to be a man coming down the hill at full speed heading straight for the storefront of the watch and jewelry store, Omega.

The store possesses two steel posts in front to prevent the “lunar landing” of cars. Moreover, the storefront windows consist of armored glass 5 centimeters thick. The cyclist passed between the steel posts at about 15 miles per hour and smashed headlong into the door without making the slightest mark on the glass.

Several bystanders came to his aid, as it seemed like it had been an accident. However, the robber refused help and returned up the hill with the bike only to launch himself down once more and crash headlong against the glass again with the exact same result.

After the third attempt, J.M.D.R. remained on the ground not able to move. Within a few minutes, the local police and paramedics arrived on the scene having already been notified by a witness. The frustrated robber was detained and has been diagnosed with a severe concussion.

Herido grave tras intentar 'alunizar' con una bicicleta en una joyería

Is it really bad for EVERYONE to not modify loans that are going into foreclosure?

I've been listening to the planetmoney podcasts from a couple weeks ago and have heard mentioned a couple times that not helping home buyers who are on the verge of foreclosure to modify their loans so they can continue to stay in their homes is bad systemically. It's bad for the home owners, it's bad for the lenders. The banks lose more money in foreclosure proceedings. They're stuck with a house that they don't really want and cannot sell. And above all, it kicks people out of their homes. But, I tend to think that there are a lot of players in the economy that you are not taking into consideration here. I agree that perhaps so many foreclosures are bad for borrowers and lenders of "bad" loans, but what about the rest of us. I, for example, do not have a mortgage, owe very little (except for a fair amount in student loans for my college education), and am not looking to take out a loan from any of those financial institutions that are suffering so dearly in the immediate future. I just want to see the economy recover (more on this towards the end). And I will wait patiently for that to happen.

I believe that making big efforts to help modify and thus save bad mortgages is hurtful in the long run. For all new home buyers who were not affected by the housing crisis, foreclosures inevitably mean a drop in real estate prices. This is GOOD for people looking to buy a home. Perhaps it's not great for people who own a home for housing prices to go down, but hey, they already have their home. And for all those that purchased before the pricing boom, saw the value of their homes double and sometimes triple in the early to mid 2000s, they will now see the value go back to perhaps what it should be at. And, tahdah!, they still have their home which in reality is worth exactly that. It's worth is not the dollars they spent to buy it or the dollars its value supposedly reached at the peak or even any dollars at all. It's worth "a home" to a family. True, some people bought homes when housing prices were highly inflated. But not everyone.

Secondly, financial institutions such as banks and mortgage brokers who made "bad" loans that drove the spike in the housing crisis will not be "punished" for making those bad loans if they are bailed out. And more importantly, financial institutions that did NOT make "bad" loans (i.e. checked potential buyers credit, analyzed home pricing before offering financing, etc.) but were actually financially responsible with their lending will not benefit from the suffering of their competition if their competition does not suffer.

Now, naturally the argument exists that all those "bad" loans got packaged together and ALL the financial institutions have some amount of investment in these mortgage backed securities, so there's no differentiating between "good" lenders and "bad" lenders. But, I disagree. Sure, to try and cure the ailing global economy the financial institutions can generally be grouped together as "needing help" on a systemic level. But at a local level, after this recession works itself out, and all these securities are revalued and taken apart and resold, the paper trail is going to show who is to blame. And I'd guess it's going to happen faster than we might think. The sound financial lenders, should benefit from their sound decisions. And the poor lenders should suffer. And here we touch on what you guys love to bring up on planetmoney which is "who is to blame." Yes, all those bad mortgages have gotten packaged together--that was bad, and yes, the securities rating agencies either were ignorant of or failed to properly report the risk that was being created--also bad, and yes, all the big financial institutions leveraged too much--REALLY bad, etc. But the real heart of the matter (call it "blame" if you want), lies with people taking out credit that they couldn't pay back and lenders giving out credit that wasn't going to get paid back.

Since we came so close to the armegeddon last September, and we realized that what was going to tear our economy apart was the lack of lending between the banks because of a loss in trust between them, it seems like our focus in the last 6 months has been entirely on this aspect of the downturn: the banking system. But, as I heard briefly in the intro segment to episode #39 in which Adam and a woman are heard to "raise their voices" at each other, I'm not sure, but it seems that her point was exactly what I'm saying here. "Having a functioning financial system is a necessary but not sufficient condition of a healthy economy." Precisely. And the economy is much much broader and contains many many more components. Including banks that made sound lending decisions and us first time home buyers who want to see the housing market fall from the outrageously absurd levels that they have reached. Because if they don't, we're not going to buy. At least I hope we won't. Because if we do, we're just destined to repeat this entire bubble cycle again.