The catch, for he/she who buys such a flexible mortgage is, “the cost of workouts would be priced into the original mortgage rate” (quoting from your article). And how is this any different from adjustable interest rate mortgages? Even if it were different, for the sake of simplicity, if one were to imagine a market with two kinds of mortgages—say, 30 year fixed interest rate and a mortgage adjusted for economic upheavals, the risk of “moral hazard” would still not be eliminated. As a customer, I might opt for the 30 year fixed interest rate even though I might be a “bad agent” who is ill-equipped to deal with economic changes (i.e., more susceptible than Joe-Shmoe). Customers like me could once again cause trouble in the mortgage industry. Well, I am not an economist, and I am sure I am missing out on something obvious. I guess the smart thing to do would be to read Bob Shiller’s, “The Subprime Solution” and figure out exactly what he means.

I agree. There was a time when I would take "U2" with me for my bi-annual check-ups/cleaning at the dentist; their loud (but sensible) music was a life saver back in those days! :-)

Hi Quiet_2008,

Your previous post was informative. But you use the words, "regulation" and "free market principles" in the same breath; can you clarify? Also, much as I like the sound of it, what makes you think that we are truly at the cusp of the next wave of energy technology? Which development are you thinking of? And hey, thanks for taking the time to respond--your previous posts were helpful.

Regards,
GBS

I think the average Body Mass Index in the U.S. has shot up so much in recent times that it is not altogether surprising that people's perceptions of the "average" body type has undergone a change. It is always shocking to me when I return to the U.S. after a trip to Europe--people seem morbidly overweight here. What is saddenning is that 8 times out of 10 I see these very same people walking around with extra-large servings of Coca Cola and fries. I think that the root cause of the problem is education; research shows that there is a correlation between socio-economic status and obesity, with those in the lower strata of society often lagging in education. But of course, who gives a f**k about education, right?