patrick.net

Should we outlaw recessions

Don't give them suggestions!

@FAB,

Easy Al's 1% basically "forced" banks to lend to anyone who could fog a mirror, or miss out on all the free (in real, inflation-adjusted terms) loot, and be punished by shareholders.

Honestly, I don't know how to begin to quantify the impact of ACORN's (and other like-minded organizations) efforts to ban mortgage "red-lining" and encourage lending to (mostly) unqualified borrowers in poor, minority areas. However, I doubt that all of those efforts combined would even come close to the impact of (quasi-)ZIRP, Congressional tax subsidies, and the GSEs taken separately. To me, it is like comparing an anthill to a skyscraper.

Easy Al’s 1% basically “forced” banks to lend to anyone who could fog a mirror, or miss out on all the free (in real, inflation-adjusted terms) loot, and be punished by shareholders.

Only if the shareholders are short-sighted, which unfortunately they are!

The church-state separation is still be best solution. But won't a Christian leader prevent us from turning into Europe?

No one said anything about giving ruling authority to the church. What if they ban shellfish?

I don’t know… I am busy this Friday. I thought Randy suggested making this a monthly thing.

I did. Let's see if we can get the first one rolling. I'm still on track to make it there, but won't know for sure until late tomorrow.

Too bad I am busy this Friday. I miss HARM. :(

The idea of pitching homeownership to those unworthy of homeownership is highly flawed.

Yes, that's a valid point of contention. However, we begin to get into the affordability issue here. The cheaper it gets, the more folks that get worthy, no? Is that the only marker, or how would you define worthy and unworthy?

I can't believe I'm going to say this, but I think there is room for innovation at the bottom rung to expand homeownership. Certainly not the same "innovation" we've just experienced. Maybe social pooling of mortgages, buy downs, hardship funds, proactive community counseling, ect.. Its a tough problem but all problems are solvable.

How much does it cost to house a prisoner in our gulags again? Some ridiculous amount, maybe $35,000 annually each? Has anyone considered an early release program, putting them in the foreclosures? Solves the upkeep problem and gives 'em a chance at a fresh start, no? Recidivism would go way down. Maybe no worse moral hazard than the recent refund stimulus package. If we doubled and tripled them up, that would cover servicing of a $1M note at current interest rates nicely. About 700K non-violent currently incarcerated, that would do wonders to gobble up supply.

Maybe social pooling of mortgages, buy downs, hardship funds, proactive community counseling, ect.. Its a tough problem but all problems are solvable.

How about building more homes?

@HARM 3:52

Well said, I'm nearly entirely agreed.

HARM - there are open AP's (access points) all over the BA. Assuming you're in the Sunnyvale area, just go downtown. Coffee'n'More has free access, the Bean Scene does, and Firehouse (noisy sports bar) does. Also, the Kinko's in that nearly impossible to get into complex with the theater etc., I only know how to get in/out by one stringy little street off of Lawrence. Kinko's in there has free access, just take your laptop in and plug in their Ethernet cable. It's an unspoken thing, you get to surf the net for free on that.

Or get month's worth of T-mobile and you can use the net at any starbucks etc if you can stand their horrible music.

But there are really APs all over the place, this is why no real "Fash-Crash Doomer" uses a desktop machine, laptops are the way to go. Grab it and run!

@ESVR,

Thanks for the free AP tips. Actually I do have a laptop, but my biggest problem has been time. Getting moved out of storage and into my new place leaves very little time for blogging :-).

I'm still buzzed about Super Tuesday....

If you want to read just one political op-ed story about Idaho this year, read this one:

http://www.idahostatesman.com/localnews/story/287135.html

Obama took the Idaho caucuses 80% to Hillary's 17%. That's the largest percentage of ANY state which went for Obama this year. People in Idaho don't care about your skin color, but are quick to spot a crooked politician. As the article points out, when the Idaho courts seized the neo-Nazi's land holdings, they were converted into a human-rights monument. Idaho is really a libertarian place, where, if I may coin a phrase, people are judged not by the color of their skin but by the content of their character.

Idaho sounds like a nice place.

As I have said, Obama is quite likable. He is quite anti-guns though, isn't he?

I didn't say I liked his politics. He's as "liberal" as they come. But he doesn't pretend to be something he's not.

Getting moved out of storage and into my new place leaves very little time for blogging :-).

That's what happens with renters ;-) Once you buy a home and not "forced" to move, you will have a lot of time for blogging. It would be wonderfully ironic to buy a house so that you get time to blog on a housing crash site. And if you buy multiple houses you can blog as much as Casey Serin !

But he doesn’t pretend to be something he’s not.

True. This is why I find him likable. He won't pretend to cry just to get votes.

I met Newt Gingrich today at a book signing here in Boise (his new book "Real Change").

It's too bad that he and Joe Biden aren't the candidates this year, as those are the two "idea" guys in their respective parties.

So should Obama chose Bill Richardson or Joe Biden for his VP?

Looks like we are stuck with McCain on the GOP side. I hope he picks someone like Romney or Gingrich as his VP.

Economists may be bad at predictions, but they know how to judge a Fed chief.

From WSJ :

Despite his efforts, Mr. Bernanke drew increasing criticism, with economists faulting him for what they said was his poor management of Fed communications and being overly attentive to fluctuations in the stock market. The overall grade they gave Mr. Bernanke dropped below 80 for the first time.

But 43% of the participants said the Fed was too quick with its surprise 0.75-percentage-point cut on Jan. 22, a response to falling stock prices. "They looked unsteady," said Dana Johnson of Comerica Bank.

So should Obama chose Bill Richardson or Joe Biden for his VP?

As long as he does not choose Hillary Clinton...

I hope he picks someone like Romney or Gingrich as his VP.

I just hope he picks someone that will help him win.

PeeterPee - I"m sure Osama's not anti-gun when it's a matter of guns in the hands of the "brothers", it's just guns in the hands of Those Awful White People that bother him.

I saw two large Mitt Romney signs today, and there may have been more I didn't see.

one of those rare trips into the metropolis of Chino Valley lol.

Lots of Mormons here, it's probably why the people here SO nice and decent.

I'd probably have become a Mormon years ago except I grew up in Hawaii and they let Hawaiians and Samoans in etc. I'm not at all fond of that decision.

From Ben's blog.

“I asked Senator Clinton, ‘As President, what would you do to make housing more affordable in California?’”

“The senator’s answer was, ‘Well, I’m the only candidate in either party who has a specific plan. I will have a moratorium on home foreclosures for 90 days to help people work out staying in their homes, and I would freeze interest rates for five years.’”

This is what Hillary is. There are so many things wrong with her promise !
First of all, she is lying. She is making promises about what she has no power over. If she is unaware of her lies, she is an idiot. If she is aware of her lies, she is just being a Clinton. And if she really means it, then it's one horrible proposal.

Basically, she just shouldn't win.

Dunno about Romney, Huckabee is much more likable.

Romney resembles Hillary, doing everything right in a very calculating way. American public don't like that. They like (apparently) simple-minded, down-to-earth folks. McCain - Huckabee is a better combination to appeal to the conservative right and the conservative middle.

Anyway, say NO to HillBilly.

Basically, she just shouldn’t win.

Huh? How is that supposed to make us feel better?

Huh? How is that supposed to make us feel better?

Why do you think I am doing anything to make you feel better ? ;-)

Freeze interest rates for 5 years, when Ben Bernanke is aspiring to lower interest rates to 3%?

You can tell Hitlery's best friends are the banksters.

Stuck, That quote really caught my eye, too.
What I think is most interesting about Senator Clinton's reply, is that she is anwering the wrong question (maybe on the campaign trail too long). The question she answered was "What will you do about those suffering folks whose homes are being foreclosured?" Blah, blah, blah... handwave... you know, I really can't do anything... but if I had a magic wand...
What's ironic, if she did really did do those things, it would actually help prop up prices and keep homes from becoming affordable.

Hey ex-sunnyvale-renter:

http://news.yahoo.com/s/ap/20080207/ap_on_go_ca_st_pe/economy_stimulus;_ylt=ArQ2f7uqXLbaee7291Lh2gQDW7oF

The fate of $600-$1,200 rebate checks for more than 100 million Americans is in limbo after Senate Republicans blocked a bid by Democrats to add $44 billion in help for the elderly, disabled veterans, the unemployed and businesses to the House-passed economic aid package.
ADVERTISEMENT

GOP senators banded together Wednesday to thwart the $205 billion plan, leaving Democrats with a difficult choice either to quickly accept a House bill they have said is inadequate or risk being blamed for delaying a measure designed as a swift shot in the arm for the lagging economy.

So I think you can stop blaming Pelosi (in other threads) for trampling on vets and poor people.

OK so the Dems strike again, it doesn't matter to me anyway, I wasn't counting on getting anything.

Patrick,

I think I got an email from you - which accidentally got deleted. If you have sent an important email, please resend it. Sorry for the trouble.

Folks, I had to paste this here..more of this sh*t is coming in my mailbox every day lately from used house salesmen.

Five Reasons Houses Beat Stocks

Despite what Wall Street wants you to believe, owning a home isn't the same kind of investment as stocks or bonds. What you get is a USE asset that depreciates over time, while it grows in market value. All you have to do is keep the home in good repair to max out your take.

Here are five reasons why you get more for your money with a house than a worthless sock puppet.

Leverage: with stocks, you put in all your money for a little piece of a company. With a house, you put in a little money to get all of the house.

Tax benefits: Uncle Sam knows that owning a home is a pain in the neck, that's why you get subsidies. These are basically government bribes to get you to buy. What other investment can you put in 5 percent of the cost of the asset, reap all the appreciation and pay no capital gains? That's right: live in your home two years, rent it for three, sell it, and pay no tax on capital gains up to 250,000 for singles, $500,000 for married couples. And you're worried about paying too much?
And that's not all - think about the benefits of fixed-rate mortgages, property tax write-offs, interest rate deductions, depreciation. Is this a great country or what?

Control: When you buy stocks, you're paying some CEO 500 times the average worker's salary for results you'd lose your job for. With a home, you have control - what you buy, how much you pay, and where you live. You can improve the value with repairs and updates. Compare that to getting heard at the next shareholders' meeting.

Lifestyle: Do you want to look at a dumpsite or your children playing in their own back yard? With a home, you're purchasing a vantage point for yourself and your family. The neighborhood you want to be in, the size and style home that fits your needs. And the more wisely you choose, the better off you are.

Value: Unlike our little sock puppet friend, your house will seldom become worthless. Barring a catastrophe, your home will retain a major portion of its value, even in the worst of times. So don't freak out about a losing a few percent this year. You'll make it up. Housing has lost value only one year out of the last 35. It's more normal to beat inflation by one to two percent.
Let's get a little perspective here. You lost a greater percentage on the stock market this year than if you owned a house. You lost more on your SUV. And you sure lost more on your iPhone.

And keep this in mind -- when it rains, which would you rather have over your head, a roof or a stock certificate?

Written by Blanche Evans

And keep this in mind — when it rains, which would you rather have over your head, a roof or a stock certificate?

Got to hand it to the man. This was definitely a new bottle for the old wine. Yeah, my rental does not have a roof, so I need to go out and buy a 1M raincoat. Raincoats never lose their value, do they ?

I would agree with these reasons. Just because the timing isn't good right now doesn't change the fact that home ownership has specific advantages over renting during normal times.

I hope to see everyone here eventually own their home. I've never viewed Patrick.net as an anti home ownership site, I've always viewed it as a housing bubble site. There is definitely a difference.

it seems like CA has about half the years being 'good years' to buy RE and the other half the time its bad

Good: 82-87, 93-2003
Bad: 88-92,04-08+

land on a bad a year and it could wipe you out, land on a good year and you will be well positioned for the bad years. if you are lucky in the game of CA -you get to be 'trapped in your house' by prop 13 and cannot move or sell due to fear of prop tax going up tenfold. whata game.

Original link for the 5 reasons piece is here:

http://realtytimes.com/rtpages/20080102_fivereasons.htm

HARM said:
Even so, I take issue with the idea that ZIRP or 1% FF rate was somehow “necessary” or “helps” the economy avoid recessions.

I would in fact argue that ZIRP "hurts" the economy by artificially reducing the cost of capital to the point where it gets misallocated.

Instead, if interest rates are higher, any venture that is careless with capital is more quickly extinguished before it can squander it on unproductive or speculative bets.

I think it's a mistake to view Lockhart at OFHEO as a problem. He may be one of the few responsible parties in this mess - appointed to clean up policy and accounting at the GSEs and that's exactly what he's done.

When it became clear the conforming limits could be raised, he registered his disappointment, yes, but also made it clear anyone thinking the GSEs would become a dumping ground for ailing jumbos will be far more disappointed than he is.

Tanta over at CR says he's a straight shooter. I can't offer much better recommendation than that. The guy's nobody's stooge.

coretexity,

And do you KNOW... what Blanche (the douchebag) Evans can Do with her sock puppet!

"So don't freak out about losing a few percent this year. You'll make it up. Housing has only lost value in one year of the last 35."

And what year would that be Blanche?

"You'll make it up"

And what DECADE would that be Blanche?

Oh and don't worry, no one is "freaking out". They have a new web-site that takes care of all this (it's called "justwalkaway")