Stiffing the Professional Classes

Listening to a Bloomberg reporter interview Yale professor and housing guru Robert Shiller, I couldn't help detecting a certain anguish in her voice as she described the plight of jumbo mortgage borrowers, left out of the current version of the Obama administration's housing rescue package. Reading a Bloomberg article on soaring default rates among jumbo borrowers reinforced my sense that the interviewer actually knew, from personal exposure, something about the issue (not that she's personally in the situation, but her socio-economic cohort sure is). Sort of like the difference between living through a hurricane and watching the event on national televison.

There are going to be a lot of upside down homeowners with six figure incomes, seven figure real estate exposure, sufficient assets outside their homes and retirement accounts, etc. who are about to be awfully surprised the first time a major life event compelling recognition of a real estate loss occurs. I'm talking job loss, divorce, corporate relocation, retirement, etc.

Plowing through Obama's version of a bildingsroman (novel of a young man coming of age), I don't think he's going to personally have much sympathy for that group. Of course, others in his adminstration will, since it is the class to which they belong.

This promises cultural and social consequences as well as having economic implications. It may have political repercussions, as well, though it's going to take a while for the innate conservatism of those who believe themselves winners on the basis of merit to be punctured.