DeLong: Buying House Gave "Busted" NYT Reporter An Extra $100,000 To Spend

Berkeley economist Brad DeLong  blasts New York Times ombudsman Clark Hoyt for missing the real story behind “Busted” reporter Ed Andrews’ personal financial nightmare: Selling his New York Times stock and buying a house with a sub-prime mortgage was a great financial move. 

So far, it has kept a roof over his head and given Andrews an extra $100,000 to spend:

Can the New York Times please hire an ombudsman to deal with its ombudsman, Clark Hoyt? [Hoyt’s comment on Megan McArdle’s revelation that Andrews omitted his wife’s bankruptcies from his memoir] grates for four reasons:

  1. “a weblogger” [who revealed Andrews’ omissions] has a name: Megan McArdle of the Atlantic Monthly. She deserves credit for her work.
  2. “a weblogger” has a reputation–a considerably better reputation at this point than Clark Hoyt or the New York Times, I believe…
  3. At the time when Hoyt wrote he knew or ought to have known that Patrica Berreiro’s second bankruptcy discharged $29,000 in family loans, $7997.25 in lawyers’ bills, $3604 in telecommunications bills, $9065 in medical bills, $5377 in credit-card debt, $188 in veterinary bills, and $83 in fines from the Los Angeles Public Library. To write that it “involved an old loan from a family member” is remarkably incomplete.
  4. Megan McArdle’s point is that dysfunctions in mortgage lending have next to nothing to do with Edmund Andrews’s personal financial crisis. The crisis comes from the radical disjunction between the style of life Andrews and his wife expect and Andrews’s income–$10,000 a month, $3,500 in taxes, $4,000 (in the book; $5,000 in the bankruptcy filing) in alimony and child support, leaving $2,500 a month to live on for all expenses. If Andrews hadn’t bought his house in Silver Spring he would, McArdle believes, be in a worse financial position right now–for one thing, his landlord would have evicted him. I think she is probably right, and that Patricia Berreiro’s second bankruptcy is telling evidence for McArdle’s position. Hoyt’s claim that “I think it was clear that [Andrews] and his wife could not manage their finances, bankruptcies or no” appears to me to be a deliberate attempt to miss the entire point.

So Ed Andrews’s adventures in real estate have lost him $46K in NYT stock that he sold to make his down payment–stock that would now be worth $14K…

He has now lived rent-free for the 10 months since be stopped paying his mortgage–call that +$32K…

He paid essentially a market rent for the house via his mortgage payment but he got a tax shield worth $500 a month for 42 months–+$21K…

And he pumped $58K out in his home equity loan…

So by my count his adventure in real estate has enabled him and his wife to spend $97K more over the past five years and still arrive at the same asset position as if they had rented…

Lots more on Brad’s Grasping Reality With Both Hands…  Keep reading >

Catch Up On The Whole “Busted” Saga
How I Became A Sub-Prime Borrower And Blew Myself Up
Ahem: “Busted” NYT Reporter Failed To Mention Wife’s Two Bankruptcies
“Busted” Reporter Explains Bankruptcies
NYT Tut-Tuts Reporter For Not Disclosing Bankruptcies

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