patrick.net

In At the Rise Says: March 15th, 2006 at 11:26 am
After another a year of incredible home appreciation since Spring of 2006, home prices seem to be gaining momentum for another rise again. The 50 year loan is introduced making it easier for families to afford the new averge price of 742,000 for a home. Over 200 new bubble blogs have emerged to accomodate the newly created mass of renters that missed the wave again.

IATR may be being droll... The interesting thing is that house prices ultimately have to be underpinned by wages and salaries (or equivalent earnings). The banks will only lend where you can demonstrate you are able to meet repayments based on income, altho they have liberalised lately. Even landlords are limited by the wages and salaries of their tenants in terms of how much to pay for an investment property without committing economic suicide. So there is held to be an automatic cap on housing inflation that will kick in eventually - or else you will see massive upward pressures on wages to compensate instead = inflation. The 'illogical economics' market reality is the 'irrational exuberance' effect of speculators and the panic buying effect of young people who don't want to miss out. The actions of RE agents and others make sure that prices immediately fill any vacuum, due to the nature of the selling process. In some other postulated society, profiteering from real estate might be seen as immoral, as charging interest on a loan is proscribed in the Qu'ran, for instance...

i may be ranting, but perhaps for good cause. i think i’ve clearly articulated my position, i HAVE listened to others, and i think your comments are completely unjustified.

Different Sean,

You are obviously passionate about your beliefs, and while I don't share all of them, I don't fault you for believing what you believe. Where I think you started to cross the line was in making personal attacks on other bloggers, based on blind assumptions. Peter P is clearly Libertarian-leaning in his economic views, as am I (though not as strongly).

Many here are fiscally conservative (this is a bearish blog, after all). Almost none of us, however, are pure market fundamentalists and/or anti-government extremists. You may want to re-read the points made in the "Libertarian" thread. Don't be so quick to assume that everyone here speaks with one mind/voice regarding every issue. We represent a fairly wide ranging political/social spectrum. Anyone posting here will read many things to disagree with, as well as many things to agree with.

Many of us are also socially liberal (myself included) and believe that government, while not the answer for everything, should provide certain services essential to the well being of its people. I believe that some forms of market regulation can --if well designed-- can help promote economic and social stability, and to smooth out some of the inequalities that inevitably result from pure, unregulated capitalism.

When it comes to adding more government regulation, however, the devil is in the details. There is always a very real problem of creating new moral hazards (unintended consequences) by incentivizing/subsidizing certain activities above others. The housing bubble, I believe, is itself largely a consequence of moral hazards caused by Fed interest rate manipulation, GSE risk underwriting, and a powerful pro-housing bias in American tax laws. When the public decides that the government should regulate something, I think it should take care to be sure that the "cure" is not worse than the disease.

The fact that I or Peter P believe the above does not automatically make either one of us a sociopath, though you may feel otherwise. I have shared this blog with Peter P practically since its inception. We have shared our opinions on a wide range of subjects, and I can tell you he is not an evil person. He may be bit shy when it comes to discussing issues of morality or religion, but so what? Many people are shy when it comes to those topics. Maybe he's just more comfortable discussing economics and housing, I really don't know. Regardless, this doesn't give you the right to make assumptions about people you barely know.

Now, if you'd like to continue to post your opinions here and debate other bloggers, you're welcome to do so. However, I will ask that you keep your comments civil and not engage in needless personal attacks. If you find certain views expressed here "nutty", then by all means rebut them. Just attack the argument, not the person.

The housing bubble, I believe, is itself largely a consequence of moral hazards caused by Fed interest rate manipulation, GSE risk underwriting, and a powerful pro-housing bias in American tax laws.

I'd agree with that, although the bubble is occurring in a dozen countries at once - altho US interest rates tend to affect the rest of the world, and lenders are global institutions nowadays. The Oz govt encouraged investment borrowing by reducing capital gains tax on investments and allowing deduction son investment losses, leading to a spruiker/guru's paradise, the rise of massive greed and selfishness in those who already had some equity, etc. as documented elsewhere here...

I've also noted elsewhere that central banks only have one lever left these days, being interest rates - not exactly a multi-faceted instrument to finely tune an economy.

I stand by my comments in defence of human life and a more civil society being contructed through positive welfare measures. I've noted that the incarceration rate in the US is some 6-10 times the rate of comparable countries, and higher than Russia. Please read bap's inflammatory comments starting the ball rolling if you want to know why I get progressively more upset with certain attitudes. I have no sympathy for people worried about not being able to buy a $2m house who in turn do nothing and feel nothing for people less fortunate than they are.

All governments are armed robbers. The only role of the government is to leave us alone, disappear, run away, or die.

I have no sympathy for people worried about not being able to buy a $2m house who in turn do nothing and feel nothing for people less fortunate than they are.

Nor do I. The only caveat I would add is, public assistance for the able-bodied/able-minded should be limited to the "hand-up" type and geared towards weaning people off public assitance when they are abke to sustain themselves. I have seen far too many cases of generational welfare. While this doesn't represent a majority of those receiving aid, it has a corrosive effect on society and clearly undermines the incentive to work and to become self-sufficient.

Ditto for corporate welfare --if a company cannot stay in business without perpetual government aid, then it should be allowed to fail and be replaced by a company with a more efficient business model. Taxpayers are actively subsidizing losers, which hurts our competitiveness and economic health in the long run.