patrick.net

End all taxpayer subsidies of idiot borrowers:

End Fannie/Freddie
End mortgage interest deduction
End Prop 13
End primary residence capital gains exclusion
End NAR lobbying in Washington
End bank bailouts
End TARP
End the Fed

Just one? I'm a woman, I can't say "one thing" about anything!

But I do agree with Patrick. I think also that 20% down should be a minimum requirement. People should have some "investment" in their homes. And they shouldn't hold me responsible if they lose equity.

Hell, I've lost equity in this whole thing. But my house is still worth more than I paid, and certainly more than I owe. There's something to be said for not overpaying.

Revolution.

Violent.

End all taxpayer subsidies of idiot borrowers:

You'll have to be more specific here. Which subsidies? Interest deductions? First time buyer credits?

End Fannie/Freddie

I doubt that would make any difference at all as far as the 'crisis' is concerned. It might help prevent another one, but I'm skeptical.

End mortgage interest deduction

Maybe. I actually do believe that encouraging home ownership is a worthwhile objective, as home ownership is good for society (much in the same way that having children is good for society). I do think that we need policies that make buying more favorable than renting, but deducting mortgage *interest* seems like a favor to banks more than anything else.

End Prop 13

Of course, but that wouldn't fix the crisis either. They don't have prop 13 in florida or arizona.

End primary residence capital gains exclusion

Possibly -- the exclusion just encourages 'trade up' purchases, it doesn't directly improve home ownership rates. Also not going to fix the current crisis.

End NAR lobbying in Washington

End *ALL* lobbying in Washington (and in state capitals).

End bank bailouts

It's too late for that. Now that AIG has paid goldman what they 'owed', they'll be allowed to tank and the fed/treasury will gladly claim that they have concluded that the bailouts aren't working, so will stop. The thieves have already made off with our money, and we're never going to get it back. Anyone who thinks AIG is going to be able to repay the money we gave them is a moron -- that money was handed directly back to GS and co, who are not obligated to pay it back in any way. Hell, these assholes actually think that they somehow 'earned' the money they made on what amounts to insurance fraud.

End TARP

TARP is already more or less dead -- the policy was shifted to make AIG into the 'bad bank' 8 months ago, and now that AIG is beyond redemption it will be quietly killed.

End the Fed

I don't think that would have any impact on the current crisis. Beyond that, you've got to have a viable alternative in place. The fed performs many duties, and you can't end all of them. At a bare minimum you've got to create a new monetary system, and somehow do that without plunging the entire country into chaos.

I think there are only three potential ways out of the crisis:

1. (Fast) High inflation
2. (Fast) High arson rates (reduce supply and prices could be justified)
3. (Slow) Just wait until everything bottoms.

I'm betting on some combination of 1 and 3.

Kevin says

End mortgage interest deduction

Maybe. I actually do believe that encouraging home ownership is a worthwhile objective, as home ownership is good for society (much in the same way that having children is good for society). I do think that we need policies that make buying more favorable than renting, but deducting mortgage *interest* seems like a favor to banks more than anything else.

If you want to encourage house ownership, the best way is low prices. All the programs I just mentioned encourage or enable people to overpay, simply driving up prices to the point where the program is negated -- except that banks earn vastly more interest on mortgages.

But can you imagine a national policy of low house prices? Current owners would come up with all kinds of justifications why the government should be encouraging buyers to overpay them. And banks, of course, will work behind the scenes to scuttle it as well.

Tenpoundbass says

Kevin surely you don’t suggest that if prices were somehow justified, people could afford 300K-1mil for a house?

Not at all -- but the "crisis" would be over. People who still have houses would retain their value, and there would be a lot more renters.

"Justified" here refers to simple supply and demand. If there are 1 million people chasing 1 million houses, prices aren't going anywhere, but if there are 100,000 people chasing 100 houses, prices will go up.

But can you imagine a national policy of low house prices? Current owners would come up with all kinds of justifications why the government should be encouraging buyers to overpay them. And banks, of course, will work behind the scenes to scuttle it as well.

Oh, I can imagine such a policy, but that isn't what the government wants. "Affordability" to you and me means "lower prices", but for them it means "lower monthly payments".

The overall economy is driven mostly by consumer spending, so lower prices don't help in that regard, but lower monthly payments do.

Getting the economy to be less driven on the rampant consumer spending prevalent in the US might help, but there are a lot of consequences of such a change that I don't believe the country is prepared to live with yet. For one, you'd have to eliminate suburbia. That's a scary thought for the average american.

Tenpoundbass says

Lower interest rates isn’t doing “Anybody” any favors right now.

Sure it is -- remember that the banks are also borrowing at low rates. If rates go up, their borrowing costs increase. Mortgage interest rates are only low because all interest rates are low. You can buy cars interest free right now. Savings accounts pay below 1%. It's definitely helping the banks.

Tenpoundbass says

When did we get stupid?

Decades ago. The same phenomenon that causes people to want high house prices is the one that makes American Idol the most popular show on American television.

Tenpoundbass says

BTW, I’d take any Communist regime over a government that would intentionally destroy housing supply to keep prices out dreaming range for your average middle class American.
At least in that Socialist government I’d get the satisfaction of watching that regime drag the folks that supported such a notion so their investment would be safe, out by the ankles and shot them in their head, and then put 5 destitute families in said estate.
I’d cheer them on in their carnage, just before I expatriated of course.

Not to nitpick, but there never has been a "Communist regime". Communism is the ultimate goal of those who believe in Marx's utopia, but it has never been realized and never could be because humans are inherently greedy. Communist political parties have a goal of achieving communism (or at least they used to), but they never have. The idea of a "communist state" or "communist regime" itself is an oxymoron, since the definition of Communism is a classless society.

frodo says

Revolution.
Violent.

Histrionics.

Tenpoundbass says

I know but it never works out that way does it?

Which is why I “don’t” care for neo Politics where assholes try to break away from what we know works in America under the guise of “Change”. There ain’t no telling what we’ll end up with at that point.

Face it this generation is not the ideal subjects to be tinkering with the Master piece that “WAS” our system.

This is like watching McDonalds fry cooks, suddenly working in the Space program.

What is it that "we know works in America"?

Are you talking about what worked from founding until the Civil war?
Are you talking about what worked from the Industrial Revolution to the Great Depression?
Are you talking about what worked from WWII until the late 70s?
Are you talking about what worked from the mid 80s until the late 90s?

I am curious. What "worked"? How would it continue to "work" today?

The pre-civil war society had a small government where the poor were subsistance farmers and the rich owned everything. There was no middle class to speak of. Who did that "work" for?

The society of the Industrial revolution saw the beginnings of the middle class, but robber barons and industrialists like Rockefeller and Carnegie ruled with an iron fist. Who did that "work" for?

The society of the post-WWII era was quite prosperous -- the "golden age" in American history according to many. It was also the period of the highest government spending and taxation in our history. There's no going back to that even if we wanted to -- the manufacturing jobs that fueled growth from the 1940s to the 1970s are long gone.

That brings us to the Reagan/Bush/Clinton doctrines of massive government spending combined with low taxes. The exact same policies that got us into the current mess by creating an artificial period of high growth.

So if weused to have some sort of "masterpiece", when was it? Which period? Which system?

TPB say:

Lower interest rates isn’t doing “Anybody” any favors right now.

Hey, they saved me $200/mo on my payment, an amount that I'm now applying toward interest (and a little toward the evil empire of medical bills...).

Kevin saysCommunist political parties have a goal of achieving communism (or at least they used to), but they never have. The idea of a “communist state” or “communist regime” itself is an oxymoron, since the definition of Communism is a classless society.
Good 'ol Pete Seeger of The Weavers fame is still alive and well at the age of 90--I still love their hits of '50 and '51 On Top of Old Smoky and Goodnight Irene--but still unapologetically Communist. Altho an Atheist, he still observes two sacred traditions of most communists: First, he lives in America to reap the bounties of Capitalism because who wants to stand in line for three hours for a piece of stale bread. Second, when asked the question in 1990 or 1991 after the fall of the Soviet Union, if Communism is so great, why did it collapse, he gave the answer they always give: "What was practiced in the Soviet Union was not "real" Communism". Of course it was "real" Communism, that's why it collapsed.

Kevin says
The society of the post-WWII era was quite prosperous — the “golden age” in American history according to many. It was also the period of the highest government spending and taxation in our history. There’s no going back to that even if we wanted to — the manufacturing jobs that fueled growth from the 1940s to the 1970s are long gone.

This is the era many people today refer to as going "back to" because they can remember it. I don't believe America will ever be the thriving, prosperous entity it was in these years because the circumstances that allowed for it will never exist again. It was wonderful for the people who experienced it--without a college education you could take your place in any number of industries, work 35 or 40 years and retire with a pension. In any store you entered, 95% of everything sold had "Made in USA" stamped somehwere on it. The Great Society was conceived and launched from this prosperity in the mid-60's, a time of high productivity, low inflation and low unemployment. It was believed at the time that every enterprise of human existence required the staffing and funding of a goverment agency to expedite it and that the wealth being produced at the time would always be available to support such an idea. Ten years into the Great Society, 1975, was a time of double digit inflation and unemployment, which came to be called Stagflation. In a sense, we've never recovered the momentum lost to the trauma of that era. A recent book by Newsweek and Washington Post columnist Robert J. Samuelson titled The Great Inflation and its Aftermath: The Past and Future of American Affluence puts this all into perspective and shows how we are still experiencing fallout from this era.

Tenpoundbass saysBut one thing for sure, having a government provide, protect or somehow regulate crucial needs, doesn’t not solely make a country on a slippery slope to fascism, dictators.

Reminds me of a column Vermont Royster (1914-1996), longtime Wall Street Journal contributor, wrote, again in the mid-70's. His thesis was that no society, regardless of its wealth, can afford to subsidize everything. Sooner or later, that subsidization is going to lead to stagnation and inflation.

N Dr Lo R says

Of course it was “real” Communism, that’s why it collapsed.

"Real" commnism would be a completely classless society, where you wouldn't need a government at all.

The Soviet Union was not a communist state -- it was a socialist state. There is a whole world of difference that, sadly, very few people actually understand. Marx considered socialism a stepping stone towards communism (first you take the means of production away from the capitalists, then you give it to the state, then you give it to the people). The reason communism never has and never will work is because when you take the means of production away from the capitalists, the capitalists just become the state, and they won't allow you to take it away from them then.

Most people seem to just think that "Communism" means "Socialism with a dictatorship for a government", mostly because of anti-communist propaganda during the cold war.

Since communism can never work, we're stuck with an analog scale with capitalism on one end and socialism on the other, and virtually every prosperous country on this planet (including China) falling somewhere between these two polls. Go completely to one end or the other and your society will collapse.