Rochester’s very own Steven E. Landsburg, professor of economics at the U of R, has been debating the subprime mortgage mess and the economic downturn on the LA times with Jason Furman of the Brookings Institute. What is amazing here is the utter lack of pathos at all for home owners who’ve lost their homes, and worse yet, the repetition of the canard that those with subprime mortgages simply lived beyond their means and deserved the punishment:

What can we blame? - Los Angeles Times

The sub-prime crisis has led to a lot of home foreclosures and a lot of unhappy former homeowners. But it was sub-prime lending that allowed many of those people to be homeowners in the first place. The fact that you got to live beyond your means for a few years should not create a presumption that you’ll get to live beyond your means forever.

Much to our enduring delight, Landsburg pays at least a bit of lip service to “sympathizing” for those “experiencing hardship,” a phrase that exudes all the empathy of a Microsoft error message. But when he says folks were “living beyond [their] means,” it’s worth mentioning that this is not a case of a few people accidentally getting free HBO for a week. We’re talking about people’s homes, and losing your home is likely bound to make you more than simply “unhappy.”

More importantly, let’s keep in mind just who it is that was living beyond their means. The same banks who make the determination as to whether or not you qualify for a mortgage (whether or not the house you want is “within your means”) also made the determination that lowering their standards was a profitable move. Joe Sixpack did not force the bank to give him a mortgage, but Joe Investor Class sure made it seem like a good idea. When the housing market lost value through no fault at all of the newly-minted homeowners - when the profit gravy train turned into a money pit for banks - it was also they that decided to then use said homeowners to rake in more cash by raising their interest rates through the roof.

And if you can’t find a way to be a bandage on the bloody wound of the banking industry, they don’t need your ass.

So really, the question is not about whether homeowners and hard working Americans lived beyond their means, but whether the banks did. If you think they should suffer for their crimes, I’m right there with ya, Bub. But of course, we know that’s not going to happen.