...maybe I am biased but I do not see any 50% drop in housing values. What housing values may be is certainly unclear but...
I've been in housing construction at all levels for 35 years and never in one of those years has construction met the theoretical demand for new houses in that year. In short, housing is despite the current turmoil in short supply. That's one big reason why folks were willing to sign up for crazy loans.
Other factors enter here. Right now at this very moment I have subcontractor bids on my desk which say that the costs of wire and pipe for a project will be calculated the day they are installed. Inflation is raging.
Another factor...where I live, my immediate neighborhood in Berkeley, CA, rapid transit, BART, can be walked to, and the commute to downtown SF and Oakland is and will remain doable. If...if you live in Tracy or further out into the Central Vally where much of the new housing has been erected, on flood plains by the way CA has 10 time the amount of levees LA does, you are.....
Fucked.
My point. It's not very responsible to be making predictions of 30 to 50% corrections. The housing market is too diverse and has lots of wrinkles folks not familiar with it are unaware of for such to be credible. I'd be more apt to agree with a Case-Shiller analysis than this.
People need a place to live all the rest of it flows from that. The problem with the current market is: Folks bought housing they could not afford because that's all that was available.
Flipping and all the rest of the scams are always happening and do not drive the market.
Underneath all this is the secret that dare not speak it's name. The average American, not McSame and not Barkey who have other folks buy their houses, cant' afford a good house because they don't get paid enough.
Corporatist America is siphoning off all the productivity gains and telling the populace, 'You are poor because you lazy, ill-educated and don't love Got enough.'
There are signs this scam is about to implode also.
Ever since choice and the church became involved in politics, the jobs government is supposed to do, say lead the United States in solid economic policy...have been sidelined. (my opinion).
The 'modest' FDR reforms often cited by students of history involve the counter to the infamous use of the Army against the WWI Vets who marched on Washington, led by McArthur.
One of the finest examples of what FDR stood for was the use of unemployed WWI vets to build the highway over the Florida Keys. It was the very first thing FDR did.
Our question for Obaminalbes is what action similar to FDR's
would Obama do early on in his presidency? He has gotten many ideas. Will he reach towards the Chicago School? We all need to find out soon.
Or to put the question differently, how is Obama not a Republican?
What you point out is very true. On the list of experts discussing economics/taxes and even some in Congress, you would swear they would be Democrats or Republicans from their writings to discover they are in the other camp.
Why this site is nonpartisan. I believe fact based policy, based on real statistics, real cause/effect brings people together.
He is a reality based economist (a good one) in my view too. but I agree the Hamilton Project or the Rubinomics/DLC branch might just lose this election.
I guess Obama supported the Americans in Fairness in lending group, which is very good.
But, in reading this article, truly the major policies as well as the Democratic Platform, what you are observing sure seems to be true.
Mortgages have been pooled and commoditized since the '70s.
Could pooling, and marketing of residential real estate be part of the solution? Of course, a triage of the mortgage meltdown is coming. As Robert Oak suggests a division of mortgages between the wealthy and speculator classes, the middle class with ARMs, and the poor is natural.
The wealthy get no help. The middle class can survive with rate relief and the poor just need help.
But that still leaves the question of the lack of liquidity in the housing market. The inventory overhang is huge. The time to sell is forever.
What if residential housing was sold like stocks with certificates? The certificate is the initial offering value changed by the market with buyers and sellers. The name of the game would be quick listing of properties on a national scale with ease of paperwork.
Mortgages could follow the owner for life of term and buyers could move in and out of properties like time-shares.
Empirically, NY Times suggests that housing prices over time track other commodities, roughly. In an unsentimental way, a house is another commodity, without liquidity.
Not only do the politics of many people change throughout their lives and their views shift on issue to issue, many shift from left to right and vice versa.
Consider George Orwell. "Homage to Catalonia" is Orwell's story of fighting in the Spanish Civil war on behalf of the Republic (communists, anarchists and diverse left groups).
Later he turned against the orthodox left and wrote "1984", & "Animal Farm". In the 50's through the 60's, Orwell was a fair-haired boy of the Right.
Let's not forget Reagan. A big left-wing labor activist in the Screen Actors Guild in the 30's and 40's.
Inheriting the politics of your parents and keeping them permanently is even more bizarre.
They want to kill economic populism in the Democratic party. Obama is basically in collusion with them and is adopting their ideas and discourse into his campaigns.
He doesn't get that tax cuts have little use for those who are so poor that they are exempt from Federal taxes through the EITC.
There are good people, see Alan Blinder, on his economic staff, but its the neolibs running the show.
I know places like Cleveland and Detroit are loaded with abandoned homes to the point it's a real crime and infestation problem.
I don't see why they don't auction them off for a buck to people who are responsible and can afford the upkeep and taxes as well as turn them into housing for the poor.
"Permanently increase "conforming loan" limits. The bill would permanently increase the cap on the size of mortgages guaranteed by Fannie and Freddie to a maximum of $625,500 from $417,000"
This permanently increases the price of homes, and permanently makes them less affordable to less affluent buyers.
And it proves that both parties in Congress and the Senate are "permanently" controlled by Corporations and the Wall Street Cosa Nostra.
As in: The federal government WILL guarantee tax bailouts for any property that does not sell in a TAX foreclosure.
Most of these bank foreclosures now, will, in the next 6 years, become tax foreclosures- because banks don't want to be property managers, and if they can't unload their foreclosed property right away, they'll simply stop paying taxes on it and make the local government deal with it.
What if the federal government stepped in and said to the cities, counties, and states "If you can't auction off a tax foreclosure property, HUD will buy the house for back taxes and turn it into a low income rental".
Effectively, you will have provided housing for the poor *AND* a potential additional stream of income for the federal government to pay some interest to China with.
The bank deserves to lose the house. The guy who lied to get a loan deserves to lose the house. But that guy's family, who is now out on the streets, will need some low income rentals to live in, and right now the free market isn't entirely willing to provide. But auction it off first- because if there are any takers, that means that the free market *MIGHT* be willing to begin to provide again.
Bailouts will make the problem worse, not better. Pumping money into the housing market will keep prices higher, and maintain widespread housing unaffordability in such areas as California, where affordability had dropped as low as 10% during the peak of the bubble in 2006.
Propping up home prices does not make homes affordable, nor does it allow more people to buy homes. It does the exact opposite. More money available to lenders makes more money available to borrowers, which keeps prices high. The increased ability to borrow is more than offset by the increase in prices. Home ownership increased because of speculators, buyers of multiple homes, and leasers of homes, not from residential buyers.
By propping up and bailing out lenders, it preserves their capital and loan-making ability, allowing them to loan larger individual amounts to prospective home buyers, which allows sellers to continue charging exorbitant, above-market prices for homes.
The government needs to stay completely out of this. The government created this problem by encouraging and subsidizing investment in a non-productive asset -- housing. Little real wealth was created from this misdirected investment, unlike the real wealth that would have been created had it gone into industrial production.
Government subsidization has gone into inflating the value of fixed assets like homes, instead of into productive assets like factories and manufacturing equipment.
I just read his father's policies and they are socialist.
These policies coming from Obama are corporate agenda, I cannot even say capitalist because it's obvious corporations are writing some of these agenda items.....with some token middle class issues sprinkled.
Does anyone seriously believe that all things amount to tax cuts?
Seriously, read the article, it documents the manipulation during the primaries trying to imply Obama would do something about trade when in fact he has no intention on that score beyond a few token worker and environmental standards which is basically your corporate policy sprinkled with a few nice pieces that make people feel better but do not have any real effect.
I cannot believe how many supposed Progressives wrote the spin on Obama and NAFTA when at the time it was clearly a manipulation and now it is even more obvious.
I'm not so much irritated with the Obama campaign than the supposed Progressives who completely ignored the real policy positions and just rang the cheerleading bell.
Now they are shocked (supposedly) on his real policy positions or are still in denial with claims that FDR ran on modest reforms and so on.
He tries to claim that the left wing of the party is Protectionist.
This is NOT the case. People are demanding modifications in trade policy specifically that would assuredly reduce the deficit
They are not arguing for tariffs! It's just a smear to label those wanting policy changes.
I found this by looking at tradereform (see middle column) and frankly I think we should encourage them to be a little more forthright in calling this lack of an agenda out.
Considering Presidential campaigns now spend so much money one could start a major corporation, fund a jobs program and maybe start a small country, yes the big money is clearly running the show and more importantly, the agenda.
I think getting the money out of DC is starting to look like the top issue to get anything else.
It's pretty clear the American people gave a mandate to Congress to pass legislation in favor of the US middle class in 2006 and frankly, they have done almost nothing.
So far, all attempts to get the corporate/special interest money out of DC and out of campaigns has failed.
I think there is another category here. Most bankruptcies are due to medical bills. I see more people lose their homes when they become ill and cannot work. There is no national long term disability insurance. Social security, if someone can get it, gives them enough money for a card board box and maybe a free Burger King begging cup as a bonus gift. Employers now barely cover health insurance, still workers are left with high deductibles and copayments but more importantly seemingly long term disability insurance is rarely offered or does not cover living expenses.
Obviously this cost could be exorbitant but things really do happen, people get sick, get injuired and cannot work and the way things are set up now, if one gets sick they lose everything.
There have been 3 times in U.S. History when Republicans held the White House for 3 terms: Lincoln-Johnson-Grant, Harding-Coolidge-Hoover, Reagan-Bush. Just look at the economies at the end of those 12 year dynasties - 1872, 1932 and 1992. There are so many economic conditions in common.
- 1872. End of Grant Presidency, high unemployment, weak dollar, banking crisis, high national debt. No regulation.
- 1932. Hooverville. No need to elaborate much except to note the 12 years of no financial regulation.
- 1992. Housing prices fall, very mild deflation, lingering unemployment The S&L Crisis continues. Remember the connection between McCain and Charles Keating? Why would McCain persist in his faith based economics of deregulation?
The common thread in all this is that 12 year Republican Dynasties are an unmitigated disaster. If McCain is elected, our troubles are only started. McCain and his adviser Phil Gramm (whom he still consults), are the firmest believers in deregulation and 'Free Trade'.
If you were Obama, would you have something to say about this? I would. But Obama likes to talk like a college professor. America needs, and the rank and file Democrats want a black FDR. But the limousine liberals run the party since at least the time of McGovern.
Cleavland beat Blaine with Identity Politics (Blaine tarred by 'Rum, Romanism, Rebellion' sermon of a preacher). Clinton and FDR won on the economy.
...maybe I am biased but I do not see any 50% drop in housing values. What housing values may be is certainly unclear but...
I've been in housing construction at all levels for 35 years and never in one of those years has construction met the theoretical demand for new houses in that year. In short, housing is despite the current turmoil in short supply. That's one big reason why folks were willing to sign up for crazy loans.
Other factors enter here. Right now at this very moment I have subcontractor bids on my desk which say that the costs of wire and pipe for a project will be calculated the day they are installed. Inflation is raging.
Another factor...where I live, my immediate neighborhood in Berkeley, CA, rapid transit, BART, can be walked to, and the commute to downtown SF and Oakland is and will remain doable. If...if you live in Tracy or further out into the Central Vally where much of the new housing has been erected, on flood plains by the way CA has 10 time the amount of levees LA does, you are.....
Fucked.
My point. It's not very responsible to be making predictions of 30 to 50% corrections. The housing market is too diverse and has lots of wrinkles folks not familiar with it are unaware of for such to be credible. I'd be more apt to agree with a Case-Shiller analysis than this.
People need a place to live all the rest of it flows from that. The problem with the current market is: Folks bought housing they could not afford because that's all that was available.
Flipping and all the rest of the scams are always happening and do not drive the market.
Underneath all this is the secret that dare not speak it's name. The average American, not McSame and not Barkey who have other folks buy their houses, cant' afford a good house because they don't get paid enough.
Corporatist America is siphoning off all the productivity gains and telling the populace, 'You are poor because you lazy, ill-educated and don't love Got enough.'
There are signs this scam is about to implode also.
Ever since choice and the church became involved in politics, the jobs government is supposed to do, say lead the United States in solid economic policy...have been sidelined. (my opinion).
The 'modest' FDR reforms often cited by students of history involve the counter to the infamous use of the Army against the WWI Vets who marched on Washington, led by McArthur.
One of the finest examples of what FDR stood for was the use of unemployed WWI vets to build the highway over the Florida Keys. It was the very first thing FDR did.
Our question for Obaminalbes is what action similar to FDR's
would Obama do early on in his presidency? He has gotten many ideas. Will he reach towards the Chicago School? We all need to find out soon.
Or to put the question differently, how is Obama not a Republican?
What you point out is very true. On the list of experts discussing economics/taxes and even some in Congress, you would swear they would be Democrats or Republicans from their writings to discover they are in the other camp.
Why this site is nonpartisan. I believe fact based policy, based on real statistics, real cause/effect brings people together.
He is a reality based economist (a good one) in my view too. but I agree the Hamilton Project or the Rubinomics/DLC branch might just lose this election.
I guess Obama supported the Americans in Fairness in lending group, which is very good.
But, in reading this article, truly the major policies as well as the Democratic Platform, what you are observing sure seems to be true.
Mortgages have been pooled and commoditized since the '70s.
Could pooling, and marketing of residential real estate be part of the solution? Of course, a triage of the mortgage meltdown is coming. As Robert Oak suggests a division of mortgages between the wealthy and speculator classes, the middle class with ARMs, and the poor is natural.
The wealthy get no help. The middle class can survive with rate relief and the poor just need help.
But that still leaves the question of the lack of liquidity in the housing market. The inventory overhang is huge. The time to sell is forever.
What if residential housing was sold like stocks with certificates? The certificate is the initial offering value changed by the market with buyers and sellers. The name of the game would be quick listing of properties on a national scale with ease of paperwork.
Mortgages could follow the owner for life of term and buyers could move in and out of properties like time-shares.
Empirically, NY Times suggests that housing prices over time track other commodities, roughly. In an unsentimental way, a house is another commodity, without liquidity.
Not only do the politics of many people change throughout their lives and their views shift on issue to issue, many shift from left to right and vice versa.
Consider George Orwell. "Homage to Catalonia" is Orwell's story of fighting in the Spanish Civil war on behalf of the Republic (communists, anarchists and diverse left groups).
Later he turned against the orthodox left and wrote "1984", & "Animal Farm". In the 50's through the 60's, Orwell was a fair-haired boy of the Right.
Let's not forget Reagan. A big left-wing labor activist in the Screen Actors Guild in the 30's and 40's.
Inheriting the politics of your parents and keeping them permanently is even more bizarre.
The key Bob is the Hamilton Project.
They want to kill economic populism in the Democratic party. Obama is basically in collusion with them and is adopting their ideas and discourse into his campaigns.
He doesn't get that tax cuts have little use for those who are so poor that they are exempt from Federal taxes through the EITC.
There are good people, see Alan Blinder, on his economic staff, but its the neolibs running the show.
New boss.... same as the old boss.
I know places like Cleveland and Detroit are loaded with abandoned homes to the point it's a real crime and infestation problem.
I don't see why they don't auction them off for a buck to people who are responsible and can afford the upkeep and taxes as well as turn them into housing for the poor.
Keep out the crime and so on.
He's on vacation and this is a 3 part blog series.
So, I think tackling the housing crisis, he's saying there is already a massive bailout of Freddie/Fannie and he's not talking about that here at all.
Good to see ya unlawful.
"Permanently increase "conforming loan" limits. The bill would permanently increase the cap on the size of mortgages guaranteed by Fannie and Freddie to a maximum of $625,500 from $417,000"
This permanently increases the price of homes, and permanently makes them less affordable to less affluent buyers.
And it proves that both parties in Congress and the Senate are "permanently" controlled by Corporations and the Wall Street Cosa Nostra.
EconomicPopulistForum
As in: The federal government WILL guarantee tax bailouts for any property that does not sell in a TAX foreclosure.
Most of these bank foreclosures now, will, in the next 6 years, become tax foreclosures- because banks don't want to be property managers, and if they can't unload their foreclosed property right away, they'll simply stop paying taxes on it and make the local government deal with it.
What if the federal government stepped in and said to the cities, counties, and states "If you can't auction off a tax foreclosure property, HUD will buy the house for back taxes and turn it into a low income rental".
Effectively, you will have provided housing for the poor *AND* a potential additional stream of income for the federal government to pay some interest to China with.
The bank deserves to lose the house. The guy who lied to get a loan deserves to lose the house. But that guy's family, who is now out on the streets, will need some low income rentals to live in, and right now the free market isn't entirely willing to provide. But auction it off first- because if there are any takers, that means that the free market *MIGHT* be willing to begin to provide again.
Bailouts will make the problem worse, not better. Pumping money into the housing market will keep prices higher, and maintain widespread housing unaffordability in such areas as California, where affordability had dropped as low as 10% during the peak of the bubble in 2006.
Propping up home prices does not make homes affordable, nor does it allow more people to buy homes. It does the exact opposite. More money available to lenders makes more money available to borrowers, which keeps prices high. The increased ability to borrow is more than offset by the increase in prices. Home ownership increased because of speculators, buyers of multiple homes, and leasers of homes, not from residential buyers.
By propping up and bailing out lenders, it preserves their capital and loan-making ability, allowing them to loan larger individual amounts to prospective home buyers, which allows sellers to continue charging exorbitant, above-market prices for homes.
The government needs to stay completely out of this. The government created this problem by encouraging and subsidizing investment in a non-productive asset -- housing. Little real wealth was created from this misdirected investment, unlike the real wealth that would have been created had it gone into industrial production.
Government subsidization has gone into inflating the value of fixed assets like homes, instead of into productive assets like factories and manufacturing equipment.
EconomicPopulistForum
I just read his father's policies and they are socialist.
These policies coming from Obama are corporate agenda, I cannot even say capitalist because it's obvious corporations are writing some of these agenda items.....with some token middle class issues sprinkled.
Does anyone seriously believe that all things amount to tax cuts?
Seriously, read the article, it documents the manipulation during the primaries trying to imply Obama would do something about trade when in fact he has no intention on that score beyond a few token worker and environmental standards which is basically your corporate policy sprinkled with a few nice pieces that make people feel better but do not have any real effect.
I cannot believe how many supposed Progressives wrote the spin on Obama and NAFTA when at the time it was clearly a manipulation and now it is even more obvious.
I'm not so much irritated with the Obama campaign than the supposed Progressives who completely ignored the real policy positions and just rang the cheerleading bell.
Now they are shocked (supposedly) on his real policy positions or are still in denial with claims that FDR ran on modest reforms and so on.
It is what it is and what it is has always been.
http://www.ibdeditorials.com/IBDArticles.aspx?id=303952499910291#top
He tries to claim that the left wing of the party is Protectionist.
This is NOT the case. People are demanding modifications in trade policy specifically that would assuredly reduce the deficit
They are not arguing for tariffs! It's just a smear to label those wanting policy changes.
I found this by looking at tradereform (see middle column) and frankly I think we should encourage them to be a little more forthright in calling this lack of an agenda out.
More like a guru of some large self-help inspirational talk show circuit.
I really wish people had paid attention to policy positions in the primary for here we are.
Considering Presidential campaigns now spend so much money one could start a major corporation, fund a jobs program and maybe start a small country, yes the big money is clearly running the show and more importantly, the agenda.
I think getting the money out of DC is starting to look like the top issue to get anything else.
It's pretty clear the American people gave a mandate to Congress to pass legislation in favor of the US middle class in 2006 and frankly, they have done almost nothing.
So far, all attempts to get the corporate/special interest money out of DC and out of campaigns has failed.
I think there is another category here. Most bankruptcies are due to medical bills. I see more people lose their homes when they become ill and cannot work. There is no national long term disability insurance. Social security, if someone can get it, gives them enough money for a card board box and maybe a free Burger King begging cup as a bonus gift. Employers now barely cover health insurance, still workers are left with high deductibles and copayments but more importantly seemingly long term disability insurance is rarely offered or does not cover living expenses.
Obviously this cost could be exorbitant but things really do happen, people get sick, get injuired and cannot work and the way things are set up now, if one gets sick they lose everything.
There have been 3 times in U.S. History when Republicans held the White House for 3 terms: Lincoln-Johnson-Grant, Harding-Coolidge-Hoover, Reagan-Bush. Just look at the economies at the end of those 12 year dynasties - 1872, 1932 and 1992. There are so many economic conditions in common.
- 1872. End of Grant Presidency, high unemployment, weak dollar, banking crisis, high national debt. No regulation.
- 1932. Hooverville. No need to elaborate much except to note the 12 years of no financial regulation.
- 1992. Housing prices fall, very mild deflation, lingering unemployment The S&L Crisis continues. Remember the connection between McCain and Charles Keating? Why would McCain persist in his faith based economics of deregulation?
The common thread in all this is that 12 year Republican Dynasties are an unmitigated disaster. If McCain is elected, our troubles are only started. McCain and his adviser Phil Gramm (whom he still consults), are the firmest believers in deregulation and 'Free Trade'.
If you were Obama, would you have something to say about this? I would. But Obama likes to talk like a college professor. America needs, and the rank and file Democrats want a black FDR. But the limousine liberals run the party since at least the time of McGovern.
Cleavland beat Blaine with Identity Politics (Blaine tarred by 'Rum, Romanism, Rebellion' sermon of a preacher). Clinton and FDR won on the economy.
Try to get that bunker built before Election Day.
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