I've been saying this all along to people: The only real obstacles are in your head. There's no reason in the world to keep throwing good money after bad.

And he's right. Banks won't negotiate with borrowers until more people start to do this:

Go ahead. Break the chains. Stop paying on your mortgage if you owe more than the house is worth. And most important: Don't feel guilty about it. Don't think you're doing something morally wrong.

That's the incendiary core message of a new academic paper by Brent T. White, a University of Arizona law school professor, titled "Underwater and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis."

White argues that far more of the estimated 15 million American homeowners who are underwater on their mortgages should stiff their lenders and take a hike.

Doing so, he suggests, could save some of them hundreds of thousands of dollars that they "have no reasonable prospect of recouping" in the years ahead. Plus the penalties are nowhere near as painful or long-lasting as they might assume.

"Homeowners should be walking away in droves," according to White. "But they aren't. And it's not because the financial costs of foreclosure outweigh the benefits." Sure, credit scores get whacked when you walk away, he acknowledges. But as long as you stay current with other creditors, "one can have a good credit rating again - meaning above 660 - within two years after a foreclosure."

Better yet, you can default "strategically": buy all the major items you'll need for the next couple of years - a new car, even a new house - just before you pull the plug on your current mortgage lender.

"Most individuals should be able to plan in advance for a few years of limited credit," says White, with minimal disruptions to their lifestyles.

What kind of law school professorial advice is this? Aren't mortgages legal contracts? In an interview, White said that in so-called anti-deficiency states such as Arizona and California, mortgage lenders have limited or no legal rights to pursue defaulting homeowners' assets beyond the house itself. In other states, lenders may decide it is not worth the legal expense to pursue walkaways, or consumers may be able to find flaws in the mortgage documents, disclosures or underwriting to challenge the original contract.

The main point, he says, is that too often people's "emotions" get in the way of clear financial thinking about mortgages, turning them into what he calls "woodheads" - "individuals who choose not to act in their own self-interest." Most owners are too worried about feelings of shame and embarrassment following a foreclosure, and ignore the powerful financial reasons for doing so.

Buttressing these emotions is a system that White labels "the social control of the housing crisis" - pressures and messages continually sent to consumers by the "social control agents," namely banks, government and the media. The mantra these agents - all the way up to President Obama - pound into owners' heads, says White, is that "voluntarily defaulting on a mortgage is immoral."

Yet there is an inherent imbalance in the borrower-lender relationship which makes this morality message unfair to consumers: Banks set the rules during the housing boom, handing out home loans with no down payments, no income checks, and inflated appraisals. Now that property values have dropped 20 percent to 50 percent in many areas, banks have been slow to modify troubled mortgages and reluctant to reduce principal debts.

Only when homeowners cut through the emotional fog and default strategically in large numbers, White argues, will this inequitable situation be seriously addressed.

On Friday, to help honor Independence Day, the president appeared in Charlottesville, Virginia, and hosted a naturalization ceremony at Monticello. Bush had quite a bit to say about the president who called Monticello home.

“The principles that Thomas Jefferson enshrined in the Declaration became the guiding principles of the new nation. And at every generation, Americans have rededicated themselves to the belief that all men are created equal, with the God-given right to life, liberty, and the pursuit of happiness.

“Thomas Jefferson understood that these rights do not belong to Americans alone. They belong to all mankind. And he looked to the day when all people could secure them. On the 50th anniversary of America’s independence, Thomas Jefferson passed away. But before leaving this world, he explained that the principles of the Declaration of Independence were universal. In one of the final letters of his life, he wrote, ‘May it be to the world, what I believe it will be — to some parts sooner, to others later, but finally to all — the Signal of arousing men to burst the chains, and to assume the blessings and security of self-government.’”

That’s very nice, but as Ed Brayton noted, it’s not quite what Jefferson said. Here’s the actual portion from the letter Bush referenced (thanks to R.M. for the heads-up):

“May it be to the world, what I believe it will be, (to some parts sooner, to others later, but finally to all,) the signal of arousing men to burst the chains under which monkish ignorance and superstition had persuaded them to bind themselves, and to assume the blessings and security of self-government.” [emphasis added]

Hmm. Jefferson’s actual sentiments weren’t quite what Bush wanted to say, so it looks like Bush’s speechwriters gave Jefferson a little touch-up.

This has Liebermans website written all over it. In New Jersey, Republican challenger Tom Kean Jr. has accused the Menendez campaign of jamming the campaign headquarters doors with locks, chains and broken keys. Of course, no evidence whatsoever. Other than baseless accusations, that is.

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While O'Reilly was pushing the right wing meme-feigning outrage over the people who spoke out at Coretta King's funeral, he said something he wished he hadn't. Sharpton picked up on it and embarrassed Bill.
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O'Reilly: I'm going to write in my will tonight, when I die make sure Sharpton's in chains for 24 hours before I'm in the ground.

Sharpton: I could say something about you wanting me in chains, but I'll let it go

O'Reilly: Oh, alright-I didn't mean that...

Sharpton: Well you said chains, Bill.

Bill lost his bite then...

BAGHDAD, Iraq - Eight suicide bombers struck in quick succession Saturday in a wave of attacks that killed 55 people as Iraqi Shiites marched and lash themselves with chains in ritual mourning of the death of the founder of their Muslim sect 14 centuries ago. Ninety-one people have been killed in violence in the past two days.

For the second year running, insurgent attacks shattered the commemoration of Ashoura, the holiest day of the Shiite religious calendar, but the violence produced a significantly smaller death toll than the 181 killed in twin bombings in Baghdad and the holy city of Karbala a year ago.