Thursday, May 21, 2009

Due Diligence on the Andrews' Story

Megan McArdle appears to have discovered that the Edmund Andrews story is not quite the baring I had thought it was.
Seems he is part of a team of serial bankruptcy experts, and they sure aren't bankruptcies caused by indigence!
Serial bankruptcies can, of course, happen to anyone with enough bad luck. But they usually don't. And when they do, they usually hit people with marginal incomes that leave no margin for error in the budget. Most people, even in LA, are able to build a sustainable budget out of an income in the low six figures.
Moreover, pesky bad luck isn't really the picture painted by either filing. Rather, Ms. Barreiro seems to have spent most of the last two decades living right up to the edge of her income, and beyond, and then massively defaulting. If you structure your finances so that absolutely everything has to go right, it's hard to blame the mortgage company when you don't quite make it.
Andrews married a woman with a lengthy history of debt and spending problems. Serial bankrupts were getting into trouble long before there was a credit bubble, indeed long before there were credit cards or 30-year self-amortizing mortgages. In fact, the literary history of America is littered with them; we owe much of Mark Twain's later work to his catastrophic financial mismanagement.


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