Told you so (finance), told you so (more finance), didn’t tell you so (Wikipedia)


Peter Schiff, the man who told them it was all going to end in tears. Here in a series of clips where he’s telling them so, and they wouldn’t listen, dating back to 2006.

Next: BusinessWeek, which is one of only four magazines I read each week (since you ask: the New Yorker, New Scientist, the Economist), which was the first – that I’ve known of – to point to all the toxic mortgages and their possible effects. And this was back in September 2006.

That’s Nightmare Mortgages:

The option adjustable rate mortgage (ARM) might be the riskiest and most complicated home loan product ever created. With its temptingly low minimum payments, the option ARM brought a whole new group of buyers into the housing market, extending the boom longer than it could have otherwise lasted, especially in the hottest markets. Suddenly, almost anyone could afford a home — or so they thought. The option ARM’s low payments are only temporary. And the less a borrower chooses to pay now, the more is tacked onto the balance.

The bill is coming due. Many of the option ARMs taken out in 2004 and 2005 are resetting at much higher payment schedules — often to the astonishment of people who thought the low installments were fixed for at least five years. And because home prices have leveled off, borrowers can’t count on rising equity to bail them out. What’s more, steep penalties prevent them from refinancing. The most diligent home buyers asked enough questions to know that option ARMs can be fraught with risk. But others, caught up in real estate mania, ignored or failed to appreciate the risk.

There was plenty more going on behind the scenes they didn’t know about, either: that their broker was paid more to sell option ARMs than other mortgages; that their lender is allowed to claim the full monthly payment as revenue on its books even when borrowers choose to pay much less; that the loan’s interest rates and up-front fees might not have been set by their bank but rather by a hedge fund; and that they’ll soon be confronted with the choice of coughing up higher payments or coughing up their home. The option ARM is “like the neutron bomb,” says George McCarthy, a housing economist at New York’s Ford Foundation. “It’s going to kill all the people but leave the houses standing.”

You’ll recall I’ve written about the hangover from ARMs before. That’s some bill. And BusinessWeek wrote about Ralph Cioffi – now on bail, I believe.

Finally, don’t trust Wikipedia for your pharmaceutical advice:

Entries were often missing important information, for example the fact that the anti-inflammatory drug Arthrotec (diclofenac and misoprostol) can cause pregnant women to miscarry, or that St. John’s wort can interfere with the action of the HIV drug Prezista (darunavir).

1 Comment

  1. The last point is something I have to laugh at. I’m a med student and in pharmacology seminars we spend hours on Wikipedia looking for drug interactions. But then I suppose we also know things are missing and check with other sources…most of the time.

Comments are closed.