Meeting: December 8th, 2013

Merlyna Lim gave a great presentation to kick-off our speaker series. She discussed her research into the role of new media in the Mid and Far east protest movements with fascinating observations about where it is — and is not– actually helpful. For example, contrary to popular conception, these movements did not just erupt in the past few years, but had long development stages going back to the late 90s during which the social connections necessary for their recent “eruptions” were laid. Texting took the place of face–to–face meetings in countries like Malasia, where severe government regulation of social gatherings was in place. However, social media, such as Twitter and Facebook, were much more important as a way of getting different sectors of society (rather than individuals) to communicate. In this sense, these media served as “brokers” between different, otherwise disconnected, parts of the society.

Interestingly, the success of these media often turned on their being used by traditional community groups, such as soccer clubs in Egypt, which had huge followings quite accustomed to taking the streets (if for other purposes). We learned a lot with the above being just a smattering. Cathy blogged about Merlyna’s talk on Mathbabe on Dec. 9.

The regular meeting discussion of the use of eminent domain to write-down underwater mortgages was very engaged and instructive. Cathy gave a great description of the basic idea, with many other folks adding content. There appears to be a lot of indicia that public welfare would be greatly enhanced through a mechanism that re-set the terms of presently hugely mis-priced mortgages, both because homeowners would have an incentive to remain in their homes (rather than abandoning them, thereby hurting their neighbors home-values too), and investors would get some payments, rather than just having a bunch of mortgages in default. This isn’t happening now either because banks have incentives to prevent write-downs due to the fees they are collecting on the current arrangements, or because the collective action problem of finding and getting the agreements to the write-downs from all the investors owning bits and pieces of the packaged and re-packaged debts is next to impossible.

The problem with the current proposed solutions via eminent domain is that they seem to rely on a capital infusion from a firm, like a private equity fund, that would enable the State to make the eminent domain-facilitated purchase of these mortgages. The private equity firm would get the property at a reduced price (i.e. current, rather than say 2006 “fair market value”), and re-issue mortgage debt to the homeowners on terms that keep them in their houses, even as the private equity firm makes a profit because it picks up the property for less than it sells it back to the homeowner.

 
Sounds great as long as the private equity firm does not end up with all the value. For more on this check out Robert Hockett’s talks and articles.

Here is some other content from Cathy’s Dec 7 e mail.