The boat turns slowly

[Nor-LA-SD-guy]

UCGal,

You are correct, I over estimated the amount of union workers in the 70’s, but they are only about 12% of workers today so their impact has been far diminished, and it was the Owners equivalent rent that was the biggest factor in keeping CPI much higher in the 70’s, it would have been close to 10% inflation if we were still including the cost to buy homes in the 2000’s and that would have forced the fed’s to both raise minimum wage much faster and also keep interest rates much higher during that period.

[briansd1]

[quote=sreeb]I still think any real downward turn of the housing market will wait for a rise in interest rates. As long as banks get nearly free money, they will be reluctant to take their losses.
[/quote]

I agree. The bond market can turn suddenly. We maybe surprised.

We know that the US deficit is unsustainable. It’s necessary now because the recession. But do we have a plan for cutting spending in the future?

We shall see…

Ferguson: Well, we have a little foretaste, because there is already a fiscal crisis in America and it’s happening in the States. And what happens is that you find yourself actually having to cut public services and also raise taxes because you’ve reached the limit of your ability to borrow. If we find that 20 or 25 cents of every tax dollar that we pay is just going on interest payments, then you get into some very difficult choices. Do you put up taxes? Never very popular. Do you cut entitlements? These are the questions that are currently being asked at the state level. They will soon be having to be asked at the national level too.

Ryssdal: What do we do though? Is this the time to cut in the middle of a recession when still so many millions are out of work and the economy is struggling?

Ferguson: I think there’s a false dichotomy here, where essentially the problem is phrased as follows — either we need more stimulus or we need austerity. I wouldn’t envisage fiscal tightening in 2010 or 2011, but we need to have a credible plan so that by 2020 we’re not running trillion dollar deficits. And I’d like to hear it couched in the following form: We’re going to reform the entitlements that are currently threatening to bankrupt the United States. We are going to introduce a federal sales tax or value added tax which would take some of the strain off the income taxpayers. It’s a big bang reform that we need. So this is the third option: Not a further stimulus, not a ghastly austerity package, which could push us back into recession, but radical fiscal reform that creates a foundation for more rapid growth and therefore, for more job creation.

http://marketplace.publicradio.org/display/web/2010/07/27/pm-us-debt-not-sustainable/

[briansd1]

[quote=sreeb]I still think any real downward turn of the housing market will wait for a rise in interest rates. As long as banks get nearly free money, they will be reluctant to take their losses.
[/quote]

I agree. The bond market can turn suddenly. We maybe surprised.

We know that the US deficit is unsustainable. It’s necessary now because the recession. But do we have a plan for cutting spending in the future?

We shall see…

Ferguson: Well, we have a little foretaste, because there is already a fiscal crisis in America and it’s happening in the States. And what happens is that you find yourself actually having to cut public services and also raise taxes because you’ve reached the limit of your ability to borrow. If we find that 20 or 25 cents of every tax dollar that we pay is just going on interest payments, then you get into some very difficult choices. Do you put up taxes? Never very popular. Do you cut entitlements? These are the questions that are currently being asked at the state level. They will soon be having to be asked at the national level too.

Ryssdal: What do we do though? Is this the time to cut in the middle of a recession when still so many millions are out of work and the economy is struggling?

Ferguson: I think there’s a false dichotomy here, where essentially the problem is phrased as follows — either we need more stimulus or we need austerity. I wouldn’t envisage fiscal tightening in 2010 or 2011, but we need to have a credible plan so that by 2020 we’re not running trillion dollar deficits. And I’d like to hear it couched in the following form: We’re going to reform the entitlements that are currently threatening to bankrupt the United States. We are going to introduce a federal sales tax or value added tax which would take some of the strain off the income taxpayers. It’s a big bang reform that we need. So this is the third option: Not a further stimulus, not a ghastly austerity package, which could push us back into recession, but radical fiscal reform that creates a foundation for more rapid growth and therefore, for more job creation.

http://marketplace.publicradio.org/display/web/2010/07/27/pm-us-debt-not-sustainable/

[briansd1]

[quote=sreeb]I still think any real downward turn of the housing market will wait for a rise in interest rates. As long as banks get nearly free money, they will be reluctant to take their losses.
[/quote]

I agree. The bond market can turn suddenly. We maybe surprised.

We know that the US deficit is unsustainable. It’s necessary now because the recession. But do we have a plan for cutting spending in the future?

We shall see…

Ferguson: Well, we have a little foretaste, because there is already a fiscal crisis in America and it’s happening in the States. And what happens is that you find yourself actually having to cut public services and also raise taxes because you’ve reached the limit of your ability to borrow. If we find that 20 or 25 cents of every tax dollar that we pay is just going on interest payments, then you get into some very difficult choices. Do you put up taxes? Never very popular. Do you cut entitlements? These are the questions that are currently being asked at the state level. They will soon be having to be asked at the national level too.

Ryssdal: What do we do though? Is this the time to cut in the middle of a recession when still so many millions are out of work and the economy is struggling?

Ferguson: I think there’s a false dichotomy here, where essentially the problem is phrased as follows — either we need more stimulus or we need austerity. I wouldn’t envisage fiscal tightening in 2010 or 2011, but we need to have a credible plan so that by 2020 we’re not running trillion dollar deficits. And I’d like to hear it couched in the following form: We’re going to reform the entitlements that are currently threatening to bankrupt the United States. We are going to introduce a federal sales tax or value added tax which would take some of the strain off the income taxpayers. It’s a big bang reform that we need. So this is the third option: Not a further stimulus, not a ghastly austerity package, which could push us back into recession, but radical fiscal reform that creates a foundation for more rapid growth and therefore, for more job creation.

http://marketplace.publicradio.org/display/web/2010/07/27/pm-us-debt-not-sustainable/

[briansd1]

[quote=sreeb]I still think any real downward turn of the housing market will wait for a rise in interest rates. As long as banks get nearly free money, they will be reluctant to take their losses.
[/quote]

I agree. The bond market can turn suddenly. We maybe surprised.

We know that the US deficit is unsustainable. It’s necessary now because the recession. But do we have a plan for cutting spending in the future?

We shall see…

Ferguson: Well, we have a little foretaste, because there is already a fiscal crisis in America and it’s happening in the States. And what happens is that you find yourself actually having to cut public services and also raise taxes because you’ve reached the limit of your ability to borrow. If we find that 20 or 25 cents of every tax dollar that we pay is just going on interest payments, then you get into some very difficult choices. Do you put up taxes? Never very popular. Do you cut entitlements? These are the questions that are currently being asked at the state level. They will soon be having to be asked at the national level too.

Ryssdal: What do we do though? Is this the time to cut in the middle of a recession when still so many millions are out of work and the economy is struggling?

Ferguson: I think there’s a false dichotomy here, where essentially the problem is phrased as follows — either we need more stimulus or we need austerity. I wouldn’t envisage fiscal tightening in 2010 or 2011, but we need to have a credible plan so that by 2020 we’re not running trillion dollar deficits. And I’d like to hear it couched in the following form: We’re going to reform the entitlements that are currently threatening to bankrupt the United States. We are going to introduce a federal sales tax or value added tax which would take some of the strain off the income taxpayers. It’s a big bang reform that we need. So this is the third option: Not a further stimulus, not a ghastly austerity package, which could push us back into recession, but radical fiscal reform that creates a foundation for more rapid growth and therefore, for more job creation.

http://marketplace.publicradio.org/display/web/2010/07/27/pm-us-debt-not-sustainable/

[briansd1]

[quote=sreeb]I still think any real downward turn of the housing market will wait for a rise in interest rates. As long as banks get nearly free money, they will be reluctant to take their losses.
[/quote]

I agree. The bond market can turn suddenly. We maybe surprised.

We know that the US deficit is unsustainable. It’s necessary now because the recession. But do we have a plan for cutting spending in the future?

We shall see…

Ferguson: Well, we have a little foretaste, because there is already a fiscal crisis in America and it’s happening in the States. And what happens is that you find yourself actually having to cut public services and also raise taxes because you’ve reached the limit of your ability to borrow. If we find that 20 or 25 cents of every tax dollar that we pay is just going on interest payments, then you get into some very difficult choices. Do you put up taxes? Never very popular. Do you cut entitlements? These are the questions that are currently being asked at the state level. They will soon be having to be asked at the national level too.

Ryssdal: What do we do though? Is this the time to cut in the middle of a recession when still so many millions are out of work and the economy is struggling?

Ferguson: I think there’s a false dichotomy here, where essentially the problem is phrased as follows — either we need more stimulus or we need austerity. I wouldn’t envisage fiscal tightening in 2010 or 2011, but we need to have a credible plan so that by 2020 we’re not running trillion dollar deficits. And I’d like to hear it couched in the following form: We’re going to reform the entitlements that are currently threatening to bankrupt the United States. We are going to introduce a federal sales tax or value added tax which would take some of the strain off the income taxpayers. It’s a big bang reform that we need. So this is the third option: Not a further stimulus, not a ghastly austerity package, which could push us back into recession, but radical fiscal reform that creates a foundation for more rapid growth and therefore, for more job creation.

http://marketplace.publicradio.org/display/web/2010/07/27/pm-us-debt-not-sustainable/

[kcal09]

This is a brief article published yesterday. Would appreciate your opinions…

To buy or not to buy?

That is the question, right? When you are bombarded by headlines that scream at you … “Historic Low Mortgage Rates” …”All Time Affordability Ratios” … “Pricing is Climbing from Recessionary Lows“…”Tax Credits for Home Buyers”… doesn’t that make you want to run out and buy a home?

Well, it should! But, in many places, like San Diego, buyers are sitting on the sidelines. They are waiting for something, someone or some reason to get into the home buying mode. What could be keeping them from taking advantage of what is, without a doubt, some of the best conditions for buying a new home in the last 10, maybe 15 years? Let’s explore the possibilities.

Mortgage rates are at historic lows. 4.56% for a conforming, fixed rate, 30 year loan, with 0.7 points for an origination fee. This is from the posted Freddie Mac Primary Mortgage Rate Survey, as of July 22, 2010. 15 year loans and adjustable loans have even lower rates!

Pricing continues to climb, evidencing that the pricing pendulum swung too far from the norm and we are seeing a recovery in home pricing. The S&P/Case-Shiller index shows San Diego pricing up 1.1% from April to May of 2010 and up 12.4% from May ‘09 to May ‘10.

Even with the increase in pricing, the fall in mortgage rates has increased Affordability Ratios for home buyers. Daniel Kelley is the lead real estate analyst and portfolio manager of the Fidelity Select Construction and Housing Portfolio, he believes these are some of the best affordability ratios we have seen in the last 30 years!

Add to this wonderful mix of consumer news, that the State of California is still offering up to $10,000 of State Tax Credit for buying a new home. So far, through July 20, 2010, new home purchasers have only requested $66 million of the $100 million tax credit allocation in the form of a tax credit request or the reservation of a tax credit. At the current rate, the $100 million tax credit allocation for new homes should last through the month of August!

Do you need more facts to help you get into a buying mode? How about a 21.9% drop in the inventory of unsold homes? That’s correct, 21.9% decrease from April to May of 2010. Buyers are snapping up the available inventory. Add to that fact, that the relative increase in rental rates and the tremendous increase in affordability ratios has now pushed the rent vs own debate into the ownership category. For many people, it is more financially beneficial to own a home instead of renting one. This will continue to push up the demand for home sales.

[kcal09]

This is a brief article published yesterday. Would appreciate your opinions…

To buy or not to buy?

That is the question, right? When you are bombarded by headlines that scream at you … “Historic Low Mortgage Rates” …”All Time Affordability Ratios” … “Pricing is Climbing from Recessionary Lows“…”Tax Credits for Home Buyers”… doesn’t that make you want to run out and buy a home?

Well, it should! But, in many places, like San Diego, buyers are sitting on the sidelines. They are waiting for something, someone or some reason to get into the home buying mode. What could be keeping them from taking advantage of what is, without a doubt, some of the best conditions for buying a new home in the last 10, maybe 15 years? Let’s explore the possibilities.

Mortgage rates are at historic lows. 4.56% for a conforming, fixed rate, 30 year loan, with 0.7 points for an origination fee. This is from the posted Freddie Mac Primary Mortgage Rate Survey, as of July 22, 2010. 15 year loans and adjustable loans have even lower rates!

Pricing continues to climb, evidencing that the pricing pendulum swung too far from the norm and we are seeing a recovery in home pricing. The S&P/Case-Shiller index shows San Diego pricing up 1.1% from April to May of 2010 and up 12.4% from May ‘09 to May ‘10.

Even with the increase in pricing, the fall in mortgage rates has increased Affordability Ratios for home buyers. Daniel Kelley is the lead real estate analyst and portfolio manager of the Fidelity Select Construction and Housing Portfolio, he believes these are some of the best affordability ratios we have seen in the last 30 years!

Add to this wonderful mix of consumer news, that the State of California is still offering up to $10,000 of State Tax Credit for buying a new home. So far, through July 20, 2010, new home purchasers have only requested $66 million of the $100 million tax credit allocation in the form of a tax credit request or the reservation of a tax credit. At the current rate, the $100 million tax credit allocation for new homes should last through the month of August!

Do you need more facts to help you get into a buying mode? How about a 21.9% drop in the inventory of unsold homes? That’s correct, 21.9% decrease from April to May of 2010. Buyers are snapping up the available inventory. Add to that fact, that the relative increase in rental rates and the tremendous increase in affordability ratios has now pushed the rent vs own debate into the ownership category. For many people, it is more financially beneficial to own a home instead of renting one. This will continue to push up the demand for home sales.

[kcal09]

This is a brief article published yesterday. Would appreciate your opinions…

To buy or not to buy?

That is the question, right? When you are bombarded by headlines that scream at you … “Historic Low Mortgage Rates” …”All Time Affordability Ratios” … “Pricing is Climbing from Recessionary Lows“…”Tax Credits for Home Buyers”… doesn’t that make you want to run out and buy a home?

Well, it should! But, in many places, like San Diego, buyers are sitting on the sidelines. They are waiting for something, someone or some reason to get into the home buying mode. What could be keeping them from taking advantage of what is, without a doubt, some of the best conditions for buying a new home in the last 10, maybe 15 years? Let’s explore the possibilities.

Mortgage rates are at historic lows. 4.56% for a conforming, fixed rate, 30 year loan, with 0.7 points for an origination fee. This is from the posted Freddie Mac Primary Mortgage Rate Survey, as of July 22, 2010. 15 year loans and adjustable loans have even lower rates!

Pricing continues to climb, evidencing that the pricing pendulum swung too far from the norm and we are seeing a recovery in home pricing. The S&P/Case-Shiller index shows San Diego pricing up 1.1% from April to May of 2010 and up 12.4% from May ‘09 to May ‘10.

Even with the increase in pricing, the fall in mortgage rates has increased Affordability Ratios for home buyers. Daniel Kelley is the lead real estate analyst and portfolio manager of the Fidelity Select Construction and Housing Portfolio, he believes these are some of the best affordability ratios we have seen in the last 30 years!

Add to this wonderful mix of consumer news, that the State of California is still offering up to $10,000 of State Tax Credit for buying a new home. So far, through July 20, 2010, new home purchasers have only requested $66 million of the $100 million tax credit allocation in the form of a tax credit request or the reservation of a tax credit. At the current rate, the $100 million tax credit allocation for new homes should last through the month of August!

Do you need more facts to help you get into a buying mode? How about a 21.9% drop in the inventory of unsold homes? That’s correct, 21.9% decrease from April to May of 2010. Buyers are snapping up the available inventory. Add to that fact, that the relative increase in rental rates and the tremendous increase in affordability ratios has now pushed the rent vs own debate into the ownership category. For many people, it is more financially beneficial to own a home instead of renting one. This will continue to push up the demand for home sales.

[kcal09]

This is a brief article published yesterday. Would appreciate your opinions…

To buy or not to buy?

That is the question, right? When you are bombarded by headlines that scream at you … “Historic Low Mortgage Rates” …”All Time Affordability Ratios” … “Pricing is Climbing from Recessionary Lows“…”Tax Credits for Home Buyers”… doesn’t that make you want to run out and buy a home?

Well, it should! But, in many places, like San Diego, buyers are sitting on the sidelines. They are waiting for something, someone or some reason to get into the home buying mode. What could be keeping them from taking advantage of what is, without a doubt, some of the best conditions for buying a new home in the last 10, maybe 15 years? Let’s explore the possibilities.

Mortgage rates are at historic lows. 4.56% for a conforming, fixed rate, 30 year loan, with 0.7 points for an origination fee. This is from the posted Freddie Mac Primary Mortgage Rate Survey, as of July 22, 2010. 15 year loans and adjustable loans have even lower rates!

Pricing continues to climb, evidencing that the pricing pendulum swung too far from the norm and we are seeing a recovery in home pricing. The S&P/Case-Shiller index shows San Diego pricing up 1.1% from April to May of 2010 and up 12.4% from May ‘09 to May ‘10.

Even with the increase in pricing, the fall in mortgage rates has increased Affordability Ratios for home buyers. Daniel Kelley is the lead real estate analyst and portfolio manager of the Fidelity Select Construction and Housing Portfolio, he believes these are some of the best affordability ratios we have seen in the last 30 years!

Add to this wonderful mix of consumer news, that the State of California is still offering up to $10,000 of State Tax Credit for buying a new home. So far, through July 20, 2010, new home purchasers have only requested $66 million of the $100 million tax credit allocation in the form of a tax credit request or the reservation of a tax credit. At the current rate, the $100 million tax credit allocation for new homes should last through the month of August!

Do you need more facts to help you get into a buying mode? How about a 21.9% drop in the inventory of unsold homes? That’s correct, 21.9% decrease from April to May of 2010. Buyers are snapping up the available inventory. Add to that fact, that the relative increase in rental rates and the tremendous increase in affordability ratios has now pushed the rent vs own debate into the ownership category. For many people, it is more financially beneficial to own a home instead of renting one. This will continue to push up the demand for home sales.

[kcal09]

This is a brief article published yesterday. Would appreciate your opinions…

To buy or not to buy?

That is the question, right? When you are bombarded by headlines that scream at you … “Historic Low Mortgage Rates” …”All Time Affordability Ratios” … “Pricing is Climbing from Recessionary Lows“…”Tax Credits for Home Buyers”… doesn’t that make you want to run out and buy a home?

Well, it should! But, in many places, like San Diego, buyers are sitting on the sidelines. They are waiting for something, someone or some reason to get into the home buying mode. What could be keeping them from taking advantage of what is, without a doubt, some of the best conditions for buying a new home in the last 10, maybe 15 years? Let’s explore the possibilities.

Mortgage rates are at historic lows. 4.56% for a conforming, fixed rate, 30 year loan, with 0.7 points for an origination fee. This is from the posted Freddie Mac Primary Mortgage Rate Survey, as of July 22, 2010. 15 year loans and adjustable loans have even lower rates!

Pricing continues to climb, evidencing that the pricing pendulum swung too far from the norm and we are seeing a recovery in home pricing. The S&P/Case-Shiller index shows San Diego pricing up 1.1% from April to May of 2010 and up 12.4% from May ‘09 to May ‘10.

Even with the increase in pricing, the fall in mortgage rates has increased Affordability Ratios for home buyers. Daniel Kelley is the lead real estate analyst and portfolio manager of the Fidelity Select Construction and Housing Portfolio, he believes these are some of the best affordability ratios we have seen in the last 30 years!

Add to this wonderful mix of consumer news, that the State of California is still offering up to $10,000 of State Tax Credit for buying a new home. So far, through July 20, 2010, new home purchasers have only requested $66 million of the $100 million tax credit allocation in the form of a tax credit request or the reservation of a tax credit. At the current rate, the $100 million tax credit allocation for new homes should last through the month of August!

Do you need more facts to help you get into a buying mode? How about a 21.9% drop in the inventory of unsold homes? That’s correct, 21.9% decrease from April to May of 2010. Buyers are snapping up the available inventory. Add to that fact, that the relative increase in rental rates and the tremendous increase in affordability ratios has now pushed the rent vs own debate into the ownership category. For many people, it is more financially beneficial to own a home instead of renting one. This will continue to push up the demand for home sales.

[sdduuuude]

All this regulation talk is interesting. Would have chimed in earlier but I have been travelling.

I’m all for regulation that focuses on eliminating criminal activity and punishing those who breach a contract, defraud others, or violate property rights. This kind of regulation is needed in the world.

However, many – like brian – get this confused with regulation that is designed merely to force a market in a desired direction, with no regard for personal rights. This kind of regulation creates disasters and is the result of control freaks who don’t like it when a free market behaves a certain way. Just because a market is doing wierd things doesn’t mean regulation is needed. Just “let it be” and if the market doesn’t appeal to you – stay away from it instead of calling the government to “help.”

In other words – the housing market really isn’t a a public entity, there for the common good. It is a private matter, and those partaking in it are doing so voluntarily and the gov should stay the hell out, even if it becomes hosed up.

Just because the housing market isn’t acting the way you want it to doesn’t mean you have the right to force others to act in a way you want.

Problem is – the gov has made it a public matter by bailing out the banks with our money. Thus, we have some right to suggest regulations on the banks, since we are backing them. However, I would rather see the banks unregulated and not bailed out instead of regulated and bailed out.

Forcing people to put 30% down is exactly this kind of “regulation to an outcome.” No private individual or government entity has any clue what the “correct” amount of a down payment is. Picking the wrong number can kill the market by stagnation or bubble. Greenspan tried to pick the right number and failed, for example.

Secondly, does the gov really have any right to dictate how two private parties interact? I think not.

If I ask sdr for a loan on a house and I only want to put down %3 and he says that’s OK, who on the planet has the right to restrict us from doing that deal ? Nobody, that’s who.

If you are going to regulate a market to a particular outcome, you will be violating people’s personal freedoms all over the place. To me, that just isn’t acceptable. So, it isn’t about whether or not the free market can do a better job than regulation. It is about keeping the gov. out of people’s personal decisions. It is about letting people make their own decisions in private matters and keeping private markets private.

This isn’t to say that certain regulations prior to 2004 wouldn’t have helped prevent the rise and fall of housing. Certrainly, criminal behavior was allowed by the gov without punishment. Most notably, the ratings agencies were the truly fraudulent parties that made this mess possible.

Also, I have to consider Greenspan’s actions of keeping rates low as a form of “regulation to an outcome” that failed us miserably.

Sadly, the most effective regulation has been repealed. That is the law that says if you are a bank and you loan money to people who can’t repay it, then you go out of business. If that were in effect, we would have this problem solved by now.

Regulate transactions, not outcomes, I say.

[sdduuuude]

All this regulation talk is interesting. Would have chimed in earlier but I have been travelling.

I’m all for regulation that focuses on eliminating criminal activity and punishing those who breach a contract, defraud others, or violate property rights. This kind of regulation is needed in the world.

However, many – like brian – get this confused with regulation that is designed merely to force a market in a desired direction, with no regard for personal rights. This kind of regulation creates disasters and is the result of control freaks who don’t like it when a free market behaves a certain way. Just because a market is doing wierd things doesn’t mean regulation is needed. Just “let it be” and if the market doesn’t appeal to you – stay away from it instead of calling the government to “help.”

In other words – the housing market really isn’t a a public entity, there for the common good. It is a private matter, and those partaking in it are doing so voluntarily and the gov should stay the hell out, even if it becomes hosed up.

Just because the housing market isn’t acting the way you want it to doesn’t mean you have the right to force others to act in a way you want.

Problem is – the gov has made it a public matter by bailing out the banks with our money. Thus, we have some right to suggest regulations on the banks, since we are backing them. However, I would rather see the banks unregulated and not bailed out instead of regulated and bailed out.

Forcing people to put 30% down is exactly this kind of “regulation to an outcome.” No private individual or government entity has any clue what the “correct” amount of a down payment is. Picking the wrong number can kill the market by stagnation or bubble. Greenspan tried to pick the right number and failed, for example.

Secondly, does the gov really have any right to dictate how two private parties interact? I think not.

If I ask sdr for a loan on a house and I only want to put down %3 and he says that’s OK, who on the planet has the right to restrict us from doing that deal ? Nobody, that’s who.

If you are going to regulate a market to a particular outcome, you will be violating people’s personal freedoms all over the place. To me, that just isn’t acceptable. So, it isn’t about whether or not the free market can do a better job than regulation. It is about keeping the gov. out of people’s personal decisions. It is about letting people make their own decisions in private matters and keeping private markets private.

This isn’t to say that certain regulations prior to 2004 wouldn’t have helped prevent the rise and fall of housing. Certrainly, criminal behavior was allowed by the gov without punishment. Most notably, the ratings agencies were the truly fraudulent parties that made this mess possible.

Also, I have to consider Greenspan’s actions of keeping rates low as a form of “regulation to an outcome” that failed us miserably.

Sadly, the most effective regulation has been repealed. That is the law that says if you are a bank and you loan money to people who can’t repay it, then you go out of business. If that were in effect, we would have this problem solved by now.

Regulate transactions, not outcomes, I say.

[sdduuuude]

All this regulation talk is interesting. Would have chimed in earlier but I have been travelling.

I’m all for regulation that focuses on eliminating criminal activity and punishing those who breach a contract, defraud others, or violate property rights. This kind of regulation is needed in the world.

However, many – like brian – get this confused with regulation that is designed merely to force a market in a desired direction, with no regard for personal rights. This kind of regulation creates disasters and is the result of control freaks who don’t like it when a free market behaves a certain way. Just because a market is doing wierd things doesn’t mean regulation is needed. Just “let it be” and if the market doesn’t appeal to you – stay away from it instead of calling the government to “help.”

In other words – the housing market really isn’t a a public entity, there for the common good. It is a private matter, and those partaking in it are doing so voluntarily and the gov should stay the hell out, even if it becomes hosed up.

Just because the housing market isn’t acting the way you want it to doesn’t mean you have the right to force others to act in a way you want.

Problem is – the gov has made it a public matter by bailing out the banks with our money. Thus, we have some right to suggest regulations on the banks, since we are backing them. However, I would rather see the banks unregulated and not bailed out instead of regulated and bailed out.

Forcing people to put 30% down is exactly this kind of “regulation to an outcome.” No private individual or government entity has any clue what the “correct” amount of a down payment is. Picking the wrong number can kill the market by stagnation or bubble. Greenspan tried to pick the right number and failed, for example.

Secondly, does the gov really have any right to dictate how two private parties interact? I think not.

If I ask sdr for a loan on a house and I only want to put down %3 and he says that’s OK, who on the planet has the right to restrict us from doing that deal ? Nobody, that’s who.

If you are going to regulate a market to a particular outcome, you will be violating people’s personal freedoms all over the place. To me, that just isn’t acceptable. So, it isn’t about whether or not the free market can do a better job than regulation. It is about keeping the gov. out of people’s personal decisions. It is about letting people make their own decisions in private matters and keeping private markets private.

This isn’t to say that certain regulations prior to 2004 wouldn’t have helped prevent the rise and fall of housing. Certrainly, criminal behavior was allowed by the gov without punishment. Most notably, the ratings agencies were the truly fraudulent parties that made this mess possible.

Also, I have to consider Greenspan’s actions of keeping rates low as a form of “regulation to an outcome” that failed us miserably.

Sadly, the most effective regulation has been repealed. That is the law that says if you are a bank and you loan money to people who can’t repay it, then you go out of business. If that were in effect, we would have this problem solved by now.

Regulate transactions, not outcomes, I say.

[sdduuuude]

All this regulation talk is interesting. Would have chimed in earlier but I have been travelling.

I’m all for regulation that focuses on eliminating criminal activity and punishing those who breach a contract, defraud others, or violate property rights. This kind of regulation is needed in the world.

However, many – like brian – get this confused with regulation that is designed merely to force a market in a desired direction, with no regard for personal rights. This kind of regulation creates disasters and is the result of control freaks who don’t like it when a free market behaves a certain way. Just because a market is doing wierd things doesn’t mean regulation is needed. Just “let it be” and if the market doesn’t appeal to you – stay away from it instead of calling the government to “help.”

In other words – the housing market really isn’t a a public entity, there for the common good. It is a private matter, and those partaking in it are doing so voluntarily and the gov should stay the hell out, even if it becomes hosed up.

Just because the housing market isn’t acting the way you want it to doesn’t mean you have the right to force others to act in a way you want.

Problem is – the gov has made it a public matter by bailing out the banks with our money. Thus, we have some right to suggest regulations on the banks, since we are backing them. However, I would rather see the banks unregulated and not bailed out instead of regulated and bailed out.

Forcing people to put 30% down is exactly this kind of “regulation to an outcome.” No private individual or government entity has any clue what the “correct” amount of a down payment is. Picking the wrong number can kill the market by stagnation or bubble. Greenspan tried to pick the right number and failed, for example.

Secondly, does the gov really have any right to dictate how two private parties interact? I think not.

If I ask sdr for a loan on a house and I only want to put down %3 and he says that’s OK, who on the planet has the right to restrict us from doing that deal ? Nobody, that’s who.

If you are going to regulate a market to a particular outcome, you will be violating people’s personal freedoms all over the place. To me, that just isn’t acceptable. So, it isn’t about whether or not the free market can do a better job than regulation. It is about keeping the gov. out of people’s personal decisions. It is about letting people make their own decisions in private matters and keeping private markets private.

This isn’t to say that certain regulations prior to 2004 wouldn’t have helped prevent the rise and fall of housing. Certrainly, criminal behavior was allowed by the gov without punishment. Most notably, the ratings agencies were the truly fraudulent parties that made this mess possible.

Also, I have to consider Greenspan’s actions of keeping rates low as a form of “regulation to an outcome” that failed us miserably.

Sadly, the most effective regulation has been repealed. That is the law that says if you are a bank and you loan money to people who can’t repay it, then you go out of business. If that were in effect, we would have this problem solved by now.

Regulate transactions, not outcomes, I say.

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