[patientrenter]

Concho, you seem to think that the system is rigged so that investors (who lend money to borrowers so they can buy homes) do well out of housing. But investors:

a. Put up almost all the money to buy the house
b. Take on almost all the losses if the price declines
c. Get a return just a tiny amount above the rate on risk-free Treasuries. (Tiny compared to the possible losses.)
d. Take on all the losses if the loan repayments are devalued by inflation

Meanwhile borrowers:

1. Put down very little of the money
2. Can walk away if prices go down
3. Keep all the increases if home prices go up
4. Pay a lower rate than on any other loan they could get from any other fre-market source
5. Make out like bandits if inflation is high, because the loan repayments they have to make shrink in real terms

Help me understand how the system is rigged to help investors, and not the borrowers. As far as I can tell, our system of home financing is the biggest govt wealth redistribution system in the world, taking wealth from savers and giving it to people who borrow to buy homes, in truly mind-boggling amounts.

Patient renter in OC

[patientrenter]

Concho, you seem to think that the system is rigged so that investors (who lend money to borrowers so they can buy homes) do well out of housing. But investors:

a. Put up almost all the money to buy the house
b. Take on almost all the losses if the price declines
c. Get a return just a tiny amount above the rate on risk-free Treasuries. (Tiny compared to the possible losses.)
d. Take on all the losses if the loan repayments are devalued by inflation

Meanwhile borrowers:

1. Put down very little of the money
2. Can walk away if prices go down
3. Keep all the increases if home prices go up
4. Pay a lower rate than on any other loan they could get from any other fre-market source
5. Make out like bandits if inflation is high, because the loan repayments they have to make shrink in real terms

Help me understand how the system is rigged to help investors, and not the borrowers. As far as I can tell, our system of home financing is the biggest govt wealth redistribution system in the world, taking wealth from savers and giving it to people who borrow to buy homes, in truly mind-boggling amounts.

Patient renter in OC

[patientrenter]

Concho, you seem to think that the system is rigged so that investors (who lend money to borrowers so they can buy homes) do well out of housing. But investors:

a. Put up almost all the money to buy the house
b. Take on almost all the losses if the price declines
c. Get a return just a tiny amount above the rate on risk-free Treasuries. (Tiny compared to the possible losses.)
d. Take on all the losses if the loan repayments are devalued by inflation

Meanwhile borrowers:

1. Put down very little of the money
2. Can walk away if prices go down
3. Keep all the increases if home prices go up
4. Pay a lower rate than on any other loan they could get from any other fre-market source
5. Make out like bandits if inflation is high, because the loan repayments they have to make shrink in real terms

Help me understand how the system is rigged to help investors, and not the borrowers. As far as I can tell, our system of home financing is the biggest govt wealth redistribution system in the world, taking wealth from savers and giving it to people who borrow to buy homes, in truly mind-boggling amounts.

Patient renter in OC

[patientrenter]

Concho, you seem to think that the system is rigged so that investors (who lend money to borrowers so they can buy homes) do well out of housing. But investors:

a. Put up almost all the money to buy the house
b. Take on almost all the losses if the price declines
c. Get a return just a tiny amount above the rate on risk-free Treasuries. (Tiny compared to the possible losses.)
d. Take on all the losses if the loan repayments are devalued by inflation

Meanwhile borrowers:

1. Put down very little of the money
2. Can walk away if prices go down
3. Keep all the increases if home prices go up
4. Pay a lower rate than on any other loan they could get from any other fre-market source
5. Make out like bandits if inflation is high, because the loan repayments they have to make shrink in real terms

Help me understand how the system is rigged to help investors, and not the borrowers. As far as I can tell, our system of home financing is the biggest govt wealth redistribution system in the world, taking wealth from savers and giving it to people who borrow to buy homes, in truly mind-boggling amounts.

Patient renter in OC

[patientrenter]

SDR, I agree that govt efforts to support inflated house prices are just warming up, and there is lots more to come. Comparing house prices now to what they were 10 years ago, I see a reduction of 50-65% being very possible in a completely free market economy. But most homeowners, and therefore most voters, would be furious with their pols if the pols allowed this to happen, or anything even close to it.

We assume on this blog that the free market influences will, mostly, win out. But what is there, really, to prevent the pols from opening the throttle all the way, and blowing past any free market influences? For example, simply offer to insure against default any new mortages made to people who can fog a mirror. Just dial down downpayment and income and credit requirements to get home prices as high as voters want them to go. Sure, inflation might result, but most homeowning voters will take inflation any day over declines in home prices as big as the prior home price increases.

Home price increases are what maybe half the population of this country have decided to make the linchpin of their future financial wellbeing, and they will just about kill to prevent it being taken away from them.

Patient renter in OC

[patientrenter]

SDR, I agree that govt efforts to support inflated house prices are just warming up, and there is lots more to come. Comparing house prices now to what they were 10 years ago, I see a reduction of 50-65% being very possible in a completely free market economy. But most homeowners, and therefore most voters, would be furious with their pols if the pols allowed this to happen, or anything even close to it.

We assume on this blog that the free market influences will, mostly, win out. But what is there, really, to prevent the pols from opening the throttle all the way, and blowing past any free market influences? For example, simply offer to insure against default any new mortages made to people who can fog a mirror. Just dial down downpayment and income and credit requirements to get home prices as high as voters want them to go. Sure, inflation might result, but most homeowning voters will take inflation any day over declines in home prices as big as the prior home price increases.

Home price increases are what maybe half the population of this country have decided to make the linchpin of their future financial wellbeing, and they will just about kill to prevent it being taken away from them.

Patient renter in OC

[patientrenter]

SDR, I agree that govt efforts to support inflated house prices are just warming up, and there is lots more to come. Comparing house prices now to what they were 10 years ago, I see a reduction of 50-65% being very possible in a completely free market economy. But most homeowners, and therefore most voters, would be furious with their pols if the pols allowed this to happen, or anything even close to it.

We assume on this blog that the free market influences will, mostly, win out. But what is there, really, to prevent the pols from opening the throttle all the way, and blowing past any free market influences? For example, simply offer to insure against default any new mortages made to people who can fog a mirror. Just dial down downpayment and income and credit requirements to get home prices as high as voters want them to go. Sure, inflation might result, but most homeowning voters will take inflation any day over declines in home prices as big as the prior home price increases.

Home price increases are what maybe half the population of this country have decided to make the linchpin of their future financial wellbeing, and they will just about kill to prevent it being taken away from them.

Patient renter in OC

[patientrenter]

SDR, I agree that govt efforts to support inflated house prices are just warming up, and there is lots more to come. Comparing house prices now to what they were 10 years ago, I see a reduction of 50-65% being very possible in a completely free market economy. But most homeowners, and therefore most voters, would be furious with their pols if the pols allowed this to happen, or anything even close to it.

We assume on this blog that the free market influences will, mostly, win out. But what is there, really, to prevent the pols from opening the throttle all the way, and blowing past any free market influences? For example, simply offer to insure against default any new mortages made to people who can fog a mirror. Just dial down downpayment and income and credit requirements to get home prices as high as voters want them to go. Sure, inflation might result, but most homeowning voters will take inflation any day over declines in home prices as big as the prior home price increases.

Home price increases are what maybe half the population of this country have decided to make the linchpin of their future financial wellbeing, and they will just about kill to prevent it being taken away from them.

Patient renter in OC

[patientrenter]

SDR, I agree that govt efforts to support inflated house prices are just warming up, and there is lots more to come. Comparing house prices now to what they were 10 years ago, I see a reduction of 50-65% being very possible in a completely free market economy. But most homeowners, and therefore most voters, would be furious with their pols if the pols allowed this to happen, or anything even close to it.

We assume on this blog that the free market influences will, mostly, win out. But what is there, really, to prevent the pols from opening the throttle all the way, and blowing past any free market influences? For example, simply offer to insure against default any new mortages made to people who can fog a mirror. Just dial down downpayment and income and credit requirements to get home prices as high as voters want them to go. Sure, inflation might result, but most homeowning voters will take inflation any day over declines in home prices as big as the prior home price increases.

Home price increases are what maybe half the population of this country have decided to make the linchpin of their future financial wellbeing, and they will just about kill to prevent it being taken away from them.

Patient renter in OC

[patientrenter]

Thanks, kewp, you said it better than I did.

Patient renter in OC

[patientrenter]

Thanks, kewp, you said it better than I did.

Patient renter in OC

[patientrenter]

Thanks, kewp, you said it better than I did.

Patient renter in OC

[patientrenter]

Thanks, kewp, you said it better than I did.

Patient renter in OC

[patientrenter]

Thanks, kewp, you said it better than I did.

Patient renter in OC

[patientrenter]

Meteors large enough to destroy life on earth lurk in the outer reaches of the solar system. Carbon dioxide is building to levels that will cause a sudden and catastrophic melting of the ice caps and runaway global warming. North Korea will launch nuclear weapons at LA when the regime collapses. Al qaeda will set off dirty bombs in the 3 largest US cities, rendering them unusable for hundreds of years……. Oh, and the most severe deflation in 100 years will take hold in the US and cause another great depression and political turmoil.

In my opinion, thinking about these things in moderation is entertaining, possibly slightly useful for a few hundred disaster specialists in the world, and a waste of time for most other people and purposes.

For some perspective, look at the economic history of 1973-1984. I think you will find that big bad things happened, lost of people complained a lot, and we all got over it and moved on and, obviously, mostly forgot about it.

Patient renter in OC

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