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I don't have a problem with the federal reserve, but the housing complex of the 20th century is over. We need to find 21st century solutions to reform housing, education, and infrastructure.
In particular, policies could be considered that would help
moderate the inflow of properties into the large inventory of unsold homes,
remove some of the obstacles preventing creditworthy borrowers from accessing mortgage credit,
and limit the number of homeowners who find themselves pushed into an inefficient and overburdened
foreclosure pipeline.
These sound like reasonable goals to me. I'm about halfway through and haven't seen anything there that i disagree with. So far, this looks like an extremely informative letter.
These sound like reasonable goals to me. I'm about halfway through and haven't seen anything there that i disagree with. So far, this looks like an extremely informative letter.
How can housing get back on its feet if wages are supressed?
How can housing get back on its feet if wages are supressed?
wages would obviously be the ideal way to improve housing, as opposed to the gub't loosening its standards for mortgages. Higher wages are not a simple thing to achieve in a free market economy. My suggestion would be:
eliminate the payroll tax: wages go up
institute a tax on assets: asset values go down
voila, problem solved. houses are more affordable, and your typical non-homeowner has more money in his or her paycheck to buy one. more homes start to sell, you have transactions, economic activity, and the economy grows.
this won't happen because there's a large voting bloc that depends on home prices (and asset prices in general) staying high -- sort of a de facto coalition between banks , and boomers who've had time to pay off their mortgages, and plan to liquidate those assets to fund retirement. A good portion of america thinks that high land prices are a good thing for the economy, which i suppose makes sense to that particular cohort of people, who have owned their home for many years and don't have to pay today's expensive rents and mortgages. These people would sh*t a brick at the idea of paying a tax on their assets.
Last edited by Cletus Awreetus-Awrightus; 01-05-2012 at 12:00 PM..
I don't have a problem with the federal reserve, but the housing complex of the 20th century is over. We need to find 21st century solutions to reform housing, education, and infrastructure.
How can housing get back on its feet if wages are supressed?
Wages are suppressed, they're over-inflated, in relation to the rest of the world. You have to think globally and you're part of a global economy whether you like it or not, or want it or not, or think it's good or bad.
As I've said repeatedly, you cannot violate the Laws of Economics without suffering negative consequences.
Just like your wages are inflated, so is your housing market.
Quote:
The ongoing problems in the U.S. housing market continue to impede the economic recovery. House prices have fallen an average of about 33 percent from their 2006 peak, resulting in about $7 trillion in household wealth losses and an associated ratcheting down of aggregate consumption.
I'll give you the plain English translation:
Quote:
We have a consumer-driven consumption FIRE economy and we're suffering because housing prices deflated and Americans consumers can't use their home as a big friggin' credit card.
As I've also said, in a stable economy, the housing market should have no impact positive or negative on the economy.
The funny thing is that you all did this before, but didn't learn from it.
When American consumers ran out of money, you had the Big Credit Card Proliferation. In a shocking move that was unprecedented, banks started giving credit cards to the under-21 crowd; to people who just had bankruptcies discharged; to people who were high credit risks; and then they increased everyone's credit limits.
And then when American consumers ran out of credit card credit, they just started stuffing people into McMansions, and artificially inflating home values so that Americans could use the equity to consolidate their credit card debt and run it up again, and also get a HELOC to use their home as a gargantuan credit card.
I would rhetorically ask, "What's next?" but there is nothing next.
If you want the housing market to truly recover, then you need to get the government out of the housing business and to stop interfering in the market.
Translating government gobbledy-****...
Mircea
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more homes start to sell, you have transactions, economic activity, and the economy grows.
