0
0

High House Prices Hurt People


 invite response                
2009 Feb 4, 4:00am   20,797 views  273 comments

by Patrick   ➕follow (55)   💰tip   ignore  

slavery

Why do we see so much suffering and moaning in the press about falling house prices when high house prices have directly injured and enslaved millions of Americans? To quote myself:

Housing is the biggest expense in nearly everyone's life, far more expensive than food, gas, energy, even more expensive than education or medicine. To reduce the time you spend working to pay for housing is to increase the time you have for everything else.

Cheap housing is good for us all! High housing costs take away from families' ability to save for retirement, fund their children's education, travel and lead a quality life.

How can we make lower house prices our official government policy? How can we completely eliminate the mortgage interest deduction which drives up housing costs and discriminates against renters? How can we wipe out Fannie Mae, Freddie Mac, the FHA, and other agencies whose job it is to enslave Americans to mortgage debt?

Patrick

#housing

Comments 1 - 40 of 273       Last »     Search these comments

1   OO   2009 Feb 4, 4:17am  

low housing value is bad for the Wall Street.

Why? Because Wall Street pigmen make money from valuation of financial assets, in which housing is a major component. How do you think one person's paper pushing can be worth $100M a year? Because he is able to convince that his stack of paper, and particularly the "asset" that such paper is attached to is worth bezillion, so letting him take a 1% cut of $100M is justifiable.

The core of Wall Street is about valuation. No valuation, low valuation, no bonus or low bonus. Their skill is primarily story telling, justifying the value that they pull out from their ass. In fact, the more the common people suffer, the better off the Wall Street pigmen are. If we don't bust our ass trying to drive the housing price skyhigh, how can the pigmen take a cut on the grossly inflated overall valuation?

Enslaving the Americans is a CRITICAL PATH to fattening up the pigmen.

2   Chuck Ponzi   2009 Feb 4, 4:35am  

Low housing value is bad for boomers.

Why? They are soon downsizing. Since boomers control the media and government, we only hear their voices. The average non-boomer who sides with them just parrots their talking points. It's generational theft. Rob the poor to pay the rich and irresponsible. Same thing is happening in Congress with the bailout packages. Not a single one to date has made a lick of sense except viewed as an intergenerational transfer from non-boomers to boomers. Where is Surfer-X when you need him?

I only agree with OO with regards to equities and the "buy and hold" strategy. WS wants people to invest money and buy and hold while they get paid a commission to futz around with money. They're screwed if Americans catch a drift that they can actually time the market better with the flip of a coin (which is true, by the way).

I would agree, enslaving Americans is the CRITICAL PATH to those in charge accruing more wealth.

3   HeadSet   2009 Feb 4, 6:25am  

Why do we see so much suffering and moaning in the press about falling house prices when high house prices have directly injured and enslaved millions of Americans?

Good question. I think it is related to the concept of how so many people react when the HELOC or credit card limit is reduced - They actually believe that they have "lost" money. Lower house price equals less ability to borrow which means less money to spend. To these folks anything that can be spent is "money," regardless if the tender is from savings, earnings or debt. They literally cannot distiguish between the three.

4   kewp   2009 Feb 4, 6:37am  

Just *once* I would like to see someone in the media point out that high home prices are the problem and foreclosures the solution. If there ever was a problem that didn't need fixing its kicking deadbeats to the curb.

I'm already experiencing buyers remorse for voting for Obama. The idea of creating a 'bad bank' and using *my* tax-dollars to overpay for distressed real-estate assets in an effort to keep housing artificially inflated is simply vomitus.

5   Malcolm   2009 Feb 4, 7:25am  

Rather than eliminating the mortgage interest deduction, can we just go back to making all interest deductible?

6   Peter P   2009 Feb 4, 7:28am  

Better yet, flat tax without deductions!

7   Patrick   2009 Feb 4, 10:39am  

How about a flat LAND tax instead of all other taxes? I'm for the complete elimination of all income tax, sale tax, capital gains tax, etc. There should be just a single tax, on land alone, impossible to evade, and public knowledge for every land parcel.

We want people to be productive and earn incomes. We don't want them to slack off and charge rent on land they did not create. The building is a different story. Fine to charge rent on a building and call it non-taxable income.

Sales tax should also be eliminated. We want people to buy and sell stuff without penalty.

I can't find the economic flaw in Henry George's argument for a single tax on land values. The flaw is political: land tax makes everyone the tenant of the government in terms of land. Perhaps with a cap on the tax it could be acceptable.

8   GammaRaze   2009 Feb 4, 11:16am  

I support a flat tax that is simple with no deductions.

As far as the original question is concerned, I am convinced that high house prices and even the concept of a mortgage is a plot by bankers to enslave average people during their entire productive timespan. For many millenia, houses did not cost so much. People just built houses themselves with the help of friends and family.

Even beyond that, people were able to outright pay off the cost of building a house with just their savings. Once again, they might borrow a bit from their friends or family but it was for a short duration only. Things still happen this way in many countries where the mortgage death trap is not automatically assumed to be the way to go.

Think about where we are now. Pretty much every family in the USA owes banks money out of every paycheck, to cover the mortgages. If housing became cheaper, banks would lose that.

9   kewp   2009 Feb 4, 11:34am  

Think about where we are now. Pretty much every family in the USA owes banks money out of every paycheck, to cover the mortgages. If housing became cheaper, banks would lose that.

Well, that's kinda the point of the fractional reserve system. Money = debt; so the only way to get more money into the system is to convince everyone to take on as much debt as possible.

Of course; the end game of this all the money ends up concentrated in the hands of the wealthiest .1% and the rest of us toil endlessly as their debt slaves.

Re: Taxes.

I like they idea of just a property tax and a sales tax. Property taxes to pay for local services and sales taxes to manage externialities and fund health care.

10   Patrick   2009 Feb 4, 12:15pm  

But why even bother with a sales tax? It discourages commerce, which is not good. A sales tax is also a pain to monitor and collect, and it is easily evaded.

Most wealth is land. It's much more valuable than all cash, stock, gold, and everything else put together. So a tax on land equalizes things the best, while not discouraging productive work.

And a tax on land should drive down the cost of buying property, but then you'd owe substantial land tax forever.

11   GammaRaze   2009 Feb 4, 12:19pm  

>equalizes things the best

Why have equalization as the goal?

12   Malcolm   2009 Feb 4, 1:05pm  

Admin Says:
"We want people to be productive and earn incomes. We don’t want them to slack off and charge rent on land they did not create. The building is a different story. Fine to charge rent on a building and call it non-taxable income."

Oh no, come on man, "Slack off?" In other words there is never a point that someone becomes rich in this model and doesn't have to toil for the state. This is fascisim IMO.

13   pshawn   2009 Feb 4, 1:51pm  

The Senate voted Wednesday night to give a tax break of up to $15,000 to homebuyers in hopes of revitalizing the housing industry...
Sen. Johnny Isakson, R-Ga., who advanced the homebuyers tax break, said it was intended to help revive the housing industry, which has virtually collapsed in the wake of a credit crisis that began last fall.

The proposal would allow a tax credit of 10 percent of the value of new or existing residences, up to a $15,000 limit. Current law provides for a $7,500 tax break but only for first-time homebuyers.

Isakson's office said the proposal would cost the government an estimated $19 billion.

Democrats readily agreed to the proposal, although it may be changed or even deleted as the stimulus measure makes its way through Congress over the next 10 days or so.

Other GOP attempts to change the measure went down to defeat. The most sweeping of them, by Sen. Jim DeMint, R-S.C., failed on a mostly party-line vote of 36-61. It would have replaced the White House-backed legislation with a series of tax cuts on personal and business income and capital gains at the same time it made cuts passed during the Bush administration permanent.

"This bill needs to be cut down," Republican Mitch McConnell of Kentucky said on the Senate floor. He cited $524 million for a State Department program that he said envisions creating 388 jobs. "That comes to $1.35 million per job," he added.

After days of absorbing rhetorical attacks, Obama and Senate Democrats mounted a counteroffensive against Republicans who say tax cuts alone can cure the economy.

Obama said the criticisms he has heard "echo the very same failed economic theories that led us into this crisis in the first place, the notion that tax cuts alone will solve all our problems."

"I reject those theories and so did the American people when they went to the polls in November and voted resoundingly for change," said the president, who was elected with an Electoral College landslide last fall and enjoys high public approval ratings at the outset of his term.

14   justme   2009 Feb 4, 4:46pm  

Low housing values are bad for the haves, and good for the have nots.

The great American pyramid scheme (or should I say "great American pyramid dream") is fundamentally based on owning stuff and inflating the price of what you own, at the expense of the latecomers that own nothing and are renting the assets and desperate to buy same at ANY price (*) from the current owners.

(*) Or at least used to be.

15   seamoan   2009 Feb 4, 9:49pm  

OT
Thank you so much for the Nursing Home Blog!!! I have a mother in a nursing home right now. We are using her and my deceased father's life's savings right now with a combo of of her SS and some Long Term Care Insurance. My siblings and I do not anticipate any inheritence from Their savings. I know they did not intend for the nursing home to end up getting all of their savings. Nursing homes are very expensive, it is NOT living the golden years. Maybe a forum topic could be started that would get the ball rolling instead of commenting on an individual nursing home. There might be good advise given on a nursing home site that i might never know about unless I clicked on that specific nursing home. So I think a general site might also be a good idea. Just a suggestion. Thank you once again! I feel your pain and the agony that you have gone through. I, like you, feel there will be an epidemic coming our way in dealing with this issue. Thanks for all that you do!

16   frank649   2009 Feb 4, 11:28pm  

TARP recipients paid $114M to lobby lawmakers

http://pacific.bizjournals.com/pacific/stories/2009/02/02/daily43.html?ana=yfcpc

Is this a surprise to anyone?

17   Peter P   2009 Feb 4, 11:29pm  

I support a flat tax that is simple with no deductions.

I love Sriram. :)

Remember, mort-gage really means death-pledge.

18   Peter P   2009 Feb 4, 11:33pm  

Gentlemen, wealth is NOT meant for the mass. If a lot of people look wealthy, a severe correction is near.

Boomers appear to have money, but their have not seen their depression-in-a-lifetime yet.

19   justme   2009 Feb 4, 11:39pm  

I support a tax that is progressive with no deductions.

20   Patrick   2009 Feb 5, 1:02am  

>>equalizes things the best
>
>Why have equalization as the goal?

I put that badly. What I mean is that no one should be allowed to "run away with the ball" and end the game. The normal historical pattern everywhere is for some families to become landlords and permanently do no work by virtue of their land ownership, while all others have to work for them, forever.

One goal of any tax policy should be the prevention of a permanent state of masters and servants.

21   Patrick   2009 Feb 5, 1:07am  

Thanks for the feedback on the nursing home blog seamoan!

True, it's hard to find good general commentary if you have to poke through many different nursing home pages. OK, I will make a general page... done. Here it is:

http://patrick.net/wp/?page_id=16200

Patrick

22   Peter P   2009 Feb 5, 1:12am  

I support a tax that is progressive with no deductions.

Sure. 0% for people making less than $500 a year. 5% for income above $500.

23   Peter P   2009 Feb 5, 1:15am  

One goal of any tax policy should be the prevention of a permanent state of masters and servants.

I beg to differ...

Becoming a master ought to be the goal of everyone. I want servants.

24   Patrick   2009 Feb 5, 1:33am  

Peter, I agree that retirement is a worthy goal, and that means doing no work. Therefore others are doing everything it takes to keep you alive and comfortable.

But when it starts crossing generations, where people are born rich and never have to work simply by virtue of their family's massive land holdings, it is unfair. They didn't make the land. Why should they be able to exclude others from it forever?

25   Peter P   2009 Feb 5, 1:39am  

Patrick, I understand the concern. However, those who do not "deserve" the money will soon part with it. This is an invariable truth of finance. We just need to tempt them with iPods/yachts/jets/girls/etc. ;)

We DO need to worry about power and influence crossing generations.

BTW, I agree landowners should be taxed on the consumption of the land. This can be determined using rental-equivalence valuation.

26   Patrick   2009 Feb 5, 1:42am  

Oh no, come on man, “Slack off?” In other words there is never a point that someone becomes rich in this model and doesn’t have to toil for the state. This is fascisim IMO.

I think it would be easier to become rich because there would be no income tax or sales tax. You can minimize your taxes by minimizing your land ownership.

Accumulate a big pile of dollars, or gold, or whatever, and live off of that in a small house.

27   Peter P   2009 Feb 5, 1:50am  

Will it be similar to the lump sum taxation in Switzerland?

28   Patrick   2009 Feb 5, 2:06am  

How does lump sum taxation work?

29   Peter P   2009 Feb 5, 2:08am  

http://www.steuern.lu.ch/index/p_welcome/w_e_lump-sum_taxation.htm

The lump-sum tax is based on the living expenses of a taxable individual, including his/her family. The minimum living expenses are computed as five times the rent expenditures, or for home owners the homes annual rental value, or double the value room and board.

30   Patrick   2009 Feb 5, 2:38am  

When is that tax paid? I don't quite get it.

31   Peter P   2009 Feb 5, 3:00am  

The tax is paid every year, but the rate is tied to the rental-equivalent value of the residence.

32   Malcolm   2009 Feb 5, 3:19am  

If the goal is to stop the idle rich from passing idleness on to their children then tax the hell out of large inheritances but this recurring notion of people looking around and judging whether someone has it too easy is just not acceptable.

33   EBGuy   2009 Feb 5, 3:43am  

this recurring notion of people looking around and judging whether someone has it too easy is just not acceptable.
Are you talking about the feudal lords judging the serfs... or vice versa?
These are the types of societal divides, between the very rich and the rest of the populace, that have led to uprisings in the past. Even somebody making $500,000 is doing better than 99% of the rest of the working masses. When the divide grows too large, and the greed is so thoroughly exposed, as it has been in recent weeks, somebody needs to do something before the anger becomes too great. Obama seems to understand that. Excerpted from here.

34   justme   2009 Feb 5, 4:20am  

Malcolm,

I think the problem with inheritance tax is that the scheme is that it is too easily subverted by propaganda about the "death tax". It is better to tax people evenly throughout a lifespan, and have a less noticeable inheritance tax at the end.

Apropos inheritance tax, not to Malcolm in particular:

I think inheritance tax really is nothing much more than income tax on inheritance, with the key feature that it is levied before the payout, rather than after, for collection reasons. Image the amount of people who would try to flee the country with a suitcase full of cash if they received their inheritance in untaxed form.

And along the same lines, it is a very benign form of income tax, given that there is a multi-million dollar non-taxable portion that is excluded up front, the equivalent of a big deduction from taxable income in regular tax parlance.

35   Peter P   2009 Feb 5, 5:08am  

Most people are meant to be poor. Any allusion to the contrary is a delusion in itself.

36   OO   2009 Feb 5, 5:12am  

To those "extraordinary talents" who claim that they are going elsewhere for greener pasture on WS if income is capped, please do so. I would be very interested in finding out how much they will be worth once they leave their sheltered paper pushing positions.

Time to bring these paper shovelers down to the reality. And I hope they have some skills that we all desire, apart from running excel spreadsheet and drawing up PPT slides.

37   Peter P   2009 Feb 5, 5:15am  

I am all for shareholder rights and I am against excessive executive compensation.

However, only shareholders should decide if compensation is too high. It is none of the government's business to decide what is too high.

If someone thinks WS does not deserve a bailout, DO NOT BAIL THEM OUT!

38   kewp   2009 Feb 5, 5:28am  

However, only shareholders should decide if compensation is too high. It is none of the government’s business to decide what is too high.

And what if the government is the majority shareholder?

39   Patrick   2009 Feb 5, 5:41am  

Posted for a reader:

What I would like to see......

Some crackerjack video editor geek take an old film scene with people carrying torches, pitchforks, and clubs....and have them standing around the Capitol Building. Youtube that sucker and send the link to every member of Congress.

40   Deadbeat   2009 Feb 5, 6:37am  

The easy way to make housing affordable is to make rent tax deductible and to offer tax allowance or outright stipends to the poor renters. It is totally unfair that renters subsidizes homeowners and landlords who are eligible for all kinds of tax deduction on their debts.

Consumer debts as a tax deduction was repealed in 1986 and that was perhaps the only tax deduction that renter ever got. There needs to be an overhaul to the tax code that makes allowance to renters.

Comments 1 - 40 of 273       Last »     Search these comments

Please register to comment:

api   best comments   contact   latest images   memes   one year ago   random   suggestions