Yesterday, Scott Lewis wrote a great piece on the logical inconsistencies of some of the the city’s affordable housing efforts.
One such policy, while having escaped Scott’s truculent attentions, nonetheless deserves to be highlighted as especially irrational. It is described in a recent Daily Transcript piece called "Sanders seeks action on affordable housing" (subscription required):
…the [San Diego Housing Commission] is continuing its efforts to expand homeownership through the creation of two new, first-time homebuyer programs…
Giving people money to buy houses artificially stimulates housing demand (sorry, "expands homeownership"), the effect of which is to render housing less, not more, affordable. It’s effectively a government subsidy for the housing bubble and entirely the wrong way to approach the problem.
Rich, I completely agree.
Rich, I completely agree. Further, why would the City waste its money on promoting a bubble? Truly helping the needy could involve grants for job training. If they insist on providing housing, a temporary rental-assistance program would make sense. Nobody is entitled to own a house, so why is the City helping with that. What’s next: giving childless couples money for in vitro fertilization? Besides, what happens when the housing market tanks, as the City Council should well know could happen.
I liked your story on the hedge funds too. If you ever talk to Scott, ask him how much MBS the city pension fund has. I think that the MBS tentacles are snarled around pensions funds all over this country, and in central banks the world over. Just wait until foreclosures rise.
This is what Ritholtz had to say about Amaranth. He blames the investors for demanding high returns. I blame Amaranth for claiming they could deliver. “So Amaranth put up great numbers for a while. And now we know how they did it: They took extraordinary risks, using lots of leverage on the highest beta trades. And when one went against them, it blew up, and they lost a few billion dollars in a week.” – From Barry Ritholtz, at the Big Picture, today
Like a famous person once
Like a famous person once said, give a man a fish and he’ll be full for 1 day. Teach a man to fish and he’ll be full everyday for the rest of his life. Instead of fixing to root cause of the problem, they’re just masking it. Either raise everyone’s salary so everyone can afford it or let the price fall so that everyone can afford it.
It is all political
It is all political gamesmanship. When people cant afford homes the uninformed masses blame the government among others. To satisfy the people, the government makes token efforts in an attempt to make it appear they are trying to do something about it.