[jdonn]

[quote name='luke warm' date='Feb 19 2009, 12:40 PM'][quote name='jdonn' date='Feb 18 2009, 06:02 PM'] [quote name='luke warm' date='Feb 18 2009, 05:53 PM'] [quote name='jdonn' date='Feb 18 2009, 04:11 PM'] [quote]When starter homes become affordable the entire home building cycle can restart.[/quote]
I'm not sure why the building cycle should restart. I read that there are something like 2 million perfectly good homes that are unoccupied due to foreclosure. Why would we be building more right now? [/quote]
what happened to the people who were in them? [/quote]
Do you mean why are they no longer in their houses (they couldn't afford to make their payments, often but not always due to job loss) or do you mean where are they literally (relatives houses, living in their cars, homeless shelters)?

Either way, what's the difference. Lots of people need a place to live right now, and there are lots of empty houses. I simply used those two facts to argue that we don't have much reason to be building lots more houses right now. [/quote]
well we do have many homeless, so i guess it would be a good idea to move them into the empty houses.. if any of the homeless are so because they lost a home, and if that house is now empty, we could let them move back in[/quote]
The master of changing the subject from the question/point that was stated to begin with strikes again, surely to vanish into thin air as soon as he's called out on it, as usual...

[quote name='Winstonm' date='Feb 19 2009, 12:46 PM'][quote]But given what I can discern, most of what you said is fine if your goal is 100% economic efficiency and 0% worrying about millions of homeless people. However, my goal is something a lot closer to the reverse of that.[/quote]

Don't make the mistake of equating homeless with shelterless. The fact that people lose their homes and have to rent does not put them out on the street. What puts them out on the street is loss of jobs. The economy is what provides jobs. So to worry about an economy that can provide jobs is to worry about millions of homeless people.[/quote]
Weird, this is the first I am hearing about some apparently huge boon for apartments! And there I was thinking renting was also down.

I'm not making a mistake, you are. It's a fact that people who lose their homes have to rent? It's just as hard to afford rent without a job as it is to afford mortgage without a job! Some people moved in with family or friend, some people started renting, and some people are now homeless.

[quote][quote]Frankly, I find it rather abhorrent that your view seems to be people who lost their homes are all guilty of something and have to pay for the fraud perpetrated by the entire system by having no place to live.[/quote]
I cannot fathom how you come to that conclusion.[/quote]
I'm sure you can fathom it if you try, something about such people having to pay a price due to widespread fraud. But ok, you are simply claiming that they are innocent but have to pay the price to get the system back in tact. Personally I find higher future taxes on the innocent tax-paying public much easier to swallow than homelessness on the innocent home-loser, but that's just me.

[quote name='Winstonm' date='Feb 19 2009, 12:56 PM']This on Yahoo News right after I posted above:

[quote]WASHINGTON – As the economy continues to struggle, [u]the public is growing increasingly concerned about losing jobs, not having enough money to pay the bills [/u]and seeing their retirement accounts shrink, according to an Associated Press-GfK poll.

Nearly half of those surveyed said they worry about becoming unemployed — almost double the percentage at this time last year.

The poll released Wednesday also found public support dipped slightly in the past month for the $787 billion package of tax cuts and government spending President Barack Obama signed into law this week on the promise that it will save or create 3.5 million jobs and re-ignite the economy.[/quote]
I do not see expressed concerns about the falling value of home prices.[/quote]
LOL. Come on. I do not see concerns expressed about the war in Iraq, the AIDS epidemic, or my friend's broken i-phone. I guess no one is worried about any of those things either.

[H_KARLUK]

A few questions about some details :
Do you like rising home prices and why?
Do you agree that property values rising faster than incomes is a sign of economic disaster to come?
Have you ever considered that low property values mean that less money is thrown in th garbage to mortgage interest, property taxes, insurance, etc.
How about low real estate values means that it's much easier to build factories, establish farms, plus other real sources of value ?

[Winstonm]

Quote

The master of changing the subject from the question/point that was stated to begin with strikes again, surely to vanish into thin air as soon as he's called out on it, as usual...

As usual, I try to clarify for you what my words meant after you have misrepresented my statements and then you claim inconsistency?

[Winstonm]

Quote

I'm not making a mistake, you are. It's a fact that people who lose their homes have to rent? It's just as hard to afford rent without a job as it is to afford mortgage without a job!

You are making absolutely no sense.

What did I say? Jobs - that's part of the economy.

However, if I have a job and my mortgage payment is $2500 a month and I cannot afford it, I am NOT REQUIRED to move into a rental house or apartment for the same amount.

[jdonn]

Winstonm, on Feb 19 2009, 01:31 PM, said:

Quote

The master of changing the subject from the question/point that was stated to begin with strikes again, surely to vanish into thin air as soon as he's called out on it, as usual...

As usual, I try to clarify for you what my words meant after you have misrepresented my statements and then you claim inconsistency?

That was not in reply to you. If I find any fault in you at all, changing the subject would be the very last thing, I promise.

[H_KARLUK]

H_KARLUK, on Feb 19 2009, 08:24 PM, said:

A few questions about some details :
Do you like rising home prices and why?
Do you agree that property values rising faster than incomes is a sign of economic disaster to come?
Have you ever considered that low property values mean that less money is thrown in th garbage to mortgage interest, property taxes, insurance, etc.
How about low real estate values means that it's much easier to build factories, establish farms, plus other real sources of value ?

Sorry , hoping rationale people there and await replies.

[Winstonm]

jdonn, on Feb 19 2009, 01:40 PM, said:

Winstonm, on Feb 19 2009, 01:31 PM, said:

Quote

The master of changing the subject from the question/point that was stated to begin with strikes again, surely to vanish into thin air as soon as he's called out on it, as usual...

As usual, I try to clarify for you what my words meant after you have misrepresented my statements and then you claim inconsistency?

That was not in reply to you. If I find any fault in you at all, changing the subject would be the very last thing, I promise.

I am SO confused.

[Lobowolf]

jdonn, on Feb 19 2009, 01:10 PM, said:

Weird, this is the first I am hearing about some apparently huge boon for apartments! And there I was thinking renting was also down.

I'm not making a mistake, you are. It's a fact that people who lose their homes have to rent? It's just as hard to afford rent without a job as it is to afford mortgage without a job! Some people moved in with family or friend, some people started renting, and some people are now homeless.

From what I've heard (and seen), rental markets are rockin'. Not just apartments, but houses. Yup, it's just as hard if you don't have a job, but there are a lot of people who DO have jobs, but couldn't afford their wacked-out adjustable rate mortgages. Their housing values tanked, so they got out without a big chunk of equity, and now they can afford reasonable payments, but not a down payment, particularly in the new credit environment.

[Winstonm]

Quote

Do you like rising home prices and why?
Do you agree that property values rising faster than incomes is a sign of economic disaster to come?
Have you ever considered that low property values mean that less money is thrown in th garbage to mortgage interest, property taxes, insurance, etc.
How about low real estate values means that it's much easier to build factories, establish farms, plus other real sources of value ?

1) If rising at historical norms due to genuine supply/demand then OK.
2) Most likely
3) Yes
4) Correct

[H_KARLUK]

Winstonm, on Feb 19 2009, 08:45 PM, said:

Quote

Do you like rising home prices and why?
Do you agree that property values rising faster than incomes is a sign of economic disaster to come?
Have you ever considered that low property values mean that less money is thrown in th garbage to mortgage interest, property taxes, insurance, etc.
How about low real estate values means that it's much easier to build factories, establish farms, plus other real sources of value ?

1) If rising at historical norms due to genuine supply/demand then OK.
2) Most likely
3) Yes
4) Correct

Thanks. No further questions.

[jdonn]

Winstonm, on Feb 19 2009, 01:42 PM, said:

jdonn, on Feb 19 2009, 01:40 PM, said:

Winstonm, on Feb 19 2009, 01:31 PM, said:

Quote

The master of changing the subject from the question/point that was stated to begin with strikes again, surely to vanish into thin air as soon as he's called out on it, as usual...

As usual, I try to clarify for you what my words meant after you have misrepresented my statements and then you claim inconsistency?

That was not in reply to you. If I find any fault in you at all, changing the subject would be the very last thing, I promise.

I am SO confused.

I quoted lukewarm, made a statement in reply, and you took offense at believing I meant it toward you. If you are still confused by all this then I suggest starting on the ginko pronto!

[mike777]

Winstonm, on Feb 18 2009, 02:04 PM, said:

Hom

Quote

“It will give millions of families resigned to financial ruin a chance to rebuild,” Obama said in remarks prepared for delivery at 10:15 a.m. in Mesa, Arizona.  “By bringing down the foreclosure rate, it will help to shore up housing prices for everyone.”

President Obama has fallen into the trap of listening to advisers whose main constituency is the banking industry - this must be so else he would understand that regardless of what anyone attempts, home prices will fall to historical norms and must do so. Until home prices stabalize, there can be no recovery.

Home prices by all historical norms are still too high. Shoring up prices of housing will not restore anything to anyone other than the banks who made bad loans on overvalued property and will have to write down billions more in bad loans.

When starter homes become affordable the entire home building cycle can restart. Anything that delays the fall in home prices delays the eventual recovery.

I agree with your three main points:
1) no recovery until home prices stabalize
2) Home prices are still high
3) Government trying to delay falling home prices will delay the recovery.

I am not sure what point you are making about banks and the government. I think these advisors are saying the USA and the world needs a functioning and profitable banking system at any and all cost. What form of assistance the government should do is up for debate. My guess is at this point it is all trial and error, throw everything at the system and pray something sticks. Fix whatever new problems it creates later.

From a political standpoint I do not see how the government can bail out banks and car companies and insurance companies and not throw a lifeline to homeowners.


Banks do not want to own these homes. They are not in the business of owning homes. At some point many of them will need to refinance these mortgages at a lower home value. Example they will need to simply write down a 200k face value mortgage to 140,000$ and reset the payments to the lower principal value.

They can do this two ways, foreclose, and resell the house, expensive, or reset the mortagage with the current family in the house, cheaper.

As for the side issue about buying a house and then losing your job, I think we all buy a house knowing this is a very real possibility. We all know it is a real possibility that one can lose a job and in a few short months have no cash for food or shelter. 90% of us live paycheck to paycheck.

[Winstonm]

Quote

I am not sure what point you are making about banks and the government.

Mike,

The only point I am making about banks and the government is that the attempts to prevent home prices from falling futher and forestall foreclosures is not about protecting the innocent homeowner but about protecting the banking system from further write-downs.

I favor simply nationalizing banks rather than propping up failing institutions, wiping out the shareholders, and starting over by selling off the pieces. What the U.S. appears to be trying is to stall the inevitable, and our rescue looks more and more like the Japanese model that produced zombi banks and "the lost decade".

[mike777]

I understand there is more and more talk about nationalizing banks.


If the government is going to wipe out the shareholders who is going to risk buying the new bank if the government may wipe you out in the future? I knew you wanted to raise my taxes in other threads, now you want to take my stocks. At some point I won't have any income to pay taxes on. But then if the government is going to pay my mortgage, education, food and health care, I may not need to work so much anymore. I just hope all you young people keep working so we can raise your taxes to pay for me.

If the government is going to run the banks, who sets the loan policy and is the government really going to be in the business of throwing people of their homes? I assume I can lobby my local congressman for help for a loan.

If the workers now are employed by the government do we get federal health insurance, union benefits, etc?

As Bernanke said if the government runs the banks they lose their franchise value and counterparties don't like to deal with you because of an uncertain future.

Btw the way as an important side note Banks only provide about 20% of the credit/lending in the USA. That means doing something about the other 80%

[Winstonm]

mike777, on Feb 19 2009, 02:33 PM, said:

I understand there is more and more talk about nationalizing banks.


If the government is going to wipe out the shareholders who is going to risk buying the new bank if the government may wipe you out in the future? I knew you wanted to raise my taxes in other threads, now you want to take my stocks. At some point I won't have any income to pay taxes on. But then if the government is going to pay my mortgage, education,  food and health care, I may not need to work so much anymore. I just hope all you young people keep working so we can raise your taxes to pay for me.

If the government is going to run the banks, who sets the loan policy and is the government really going to be in the business of throwing people of their homes? I assume I can lobby my local congressman for help for a loan.

If the workers now are employed by the government do we get federal health insurance, union benefits, etc?

As Bernanke said if the government runs the banks they lose their franchise value and counterparties don't like to deal with you because of an uncertain future.

Nationalization is not a permanent solution - it simply beats continuing to throw money down a black hole. The shareholders of Enron and WorldCom did not receive any government compensation for their loss, yet oil companies and communications companies haven't had problems raising investement money. Why should the shareholders of Ciitgroup be treated differenty simply because they invested in a large bank?

Btw, isn't nationalization is essence what occurs when the FDIC closes a bank and sells it to another bank?

[mike777]

Winstonm, on Feb 19 2009, 02:44 PM, said:

mike777, on Feb 19 2009, 02:33 PM, said:

I understand there is more and more talk about nationalizing banks.


If the government is going to wipe out the shareholders who is going to risk buying the new bank if the government may wipe you out in the future? I knew you wanted to raise my taxes in other threads, now you want to take my stocks. At some point I won't have any income to pay taxes on. But then if the government is going to pay my mortgage, education,  food and health care, I may not need to work so much anymore. I just hope all you young people keep working so we can raise your taxes to pay for me.

If the government is going to run the banks, who sets the loan policy and is the government really going to be in the business of throwing people of their homes? I assume I can lobby my local congressman for help for a loan.

If the workers now are employed by the government do we get federal health insurance, union benefits, etc?

As Bernanke said if the government runs the banks they lose their franchise value and counterparties don't like to deal with you because of an uncertain future.

Nationalization is not a permanent solution - it simply beats continuing to throw money down a black hole. The shareholders of Enron and WorldCom did not receive any government compensation for their loss, yet oil companies and communications companies haven't had problems raising investement money. Why should the shareholders of Ciitgroup be treated differenty simply because they invested in a large bank?

But you miss your own point, you want to treat them differently. You want to treat Citicorp differently from WorldCom.

If you do not want to throw taxpayer money down a blackhole, dont, no one disagrees with you and your money.

I have no disagreement with FDIC taking over a bank per their set of rules.

[Winstonm]

mike777, on Feb 19 2009, 02:46 PM, said:

Winstonm, on Feb 19 2009, 02:44 PM, said:

mike777, on Feb 19 2009, 02:33 PM, said:

I understand there is more and more talk about nationalizing banks.


If the government is going to wipe out the shareholders who is going to risk buying the new bank if the government may wipe you out in the future? I knew you wanted to raise my taxes in other threads, now you want to take my stocks. At some point I won't have any income to pay taxes on. But then if the government is going to pay my mortgage, education,  food and health care, I may not need to work so much anymore. I just hope all you young people keep working so we can raise your taxes to pay for me.

If the government is going to run the banks, who sets the loan policy and is the government really going to be in the business of throwing people of their homes? I assume I can lobby my local congressman for help for a loan.

If the workers now are employed by the government do we get federal health insurance, union benefits, etc?

As Bernanke said if the government runs the banks they lose their franchise value and counterparties don't like to deal with you because of an uncertain future.

Nationalization is not a permanent solution - it simply beats continuing to throw money down a black hole. The shareholders of Enron and WorldCom did not receive any government compensation for their loss, yet oil companies and communications companies haven't had problems raising investement money. Why should the shareholders of Ciitgroup be treated differenty simply because they invested in a large bank?

But you miss your own point, you want to treat them differently.

Mike,

Yes, I see how you could think that. All I am saying is of the offered solutions, nationalization is the one I favor.

Unfortunately, no one is offering the one I support - let them fail or succeed of their own accord.

[mike777]

Yes it seems going through a formal bankruptcy would be a better option.

AGain keep in mind banks only account for 20% of the lending so first it may help to state what precise problem is trying to be solved.

In any event I think I said I agree with your three main points in OP.

[hrothgar]

mike777, on Feb 19 2009, 10:33 PM, said:

If the government is going to wipe out the shareholders who is going to risk buying the new bank if the government may wipe you out in the future?

Lets be clear about a couple things:

1. The government didn't wipe out the shareholders. The managers of the banks wiped out the shareholders.

2. As I understand matters, no one is forcing the mangers of the banks to sell out to the government. This isn't a case where the government is using the military to seize control of the Suez Canal, some oil fields, what have you. Rather, the government is offering the banks an alternative to declaring chapter 11.

If the management of the banks declare to go the chapter 11 route, nothing is stopping them...

Please note: I'm not sure whether Chapter 11 even applies in cases like this one. (There are lots of forms of bankrupcy and I don't have the time of the interest to keep them all separate).

Then again, I don't work in accounting or financial planning or anything like that. As I recall, you actually charge people money for advice on these types of matters, which is part of the reason that I find so many of your posting so very, very scary...

[Al_U_Card]

Recall the "roller coaster" of inflation adjusted house prices over the last century or so

http://www.speculativebubble.com/videos/re...ler-coaster.php

you can see where the "actual" price should be these days. They need just adjust for speculation and voila!