Posted on 09/10/2002 1:49:01 PM PDT by AdamSelene235
Milton's kind of bland to give to kids and was far more relevant when the Reagan Republicans were interested in free market ideas. Reagan was a true conservative/GOP outsider whereas both Bushs have been Keynesian socialists.
Try David Friedman.
Since 1989, one could say that the market indices shot up by a factor of 5 or more, but a current check of my former LA neighborhood reveals home prices near or below their '89 values. What bubble? Currently, my locale in the infamous Bay Area reveals the price of my condo as about twice the selling price when first built in 1991. Again, given the acute shortage of affordable homes in this area and the lack of building, this is not even a bubble, by a longshot.
Now I DO know of homes is certain, specific communities that shot up by a factor of 2 or more in a few years time. Not to mention home prices in outlying communities that are far from work centers and not that desireable to live, have doubled. These areas are the prime dangers zones.
And a non-Keynesian description of inflation/deflation.
"$100 placed at 7 per cent interest compounded quarterly for 200 years will increase to more than $100,000,000 -- by which time it will be worth nothing."
-RAH
This would be more accurately described as forced spending since the money is immediately squandered without ever being put to any productive use.
Ever wonder why our fiscal burden of government is 2X greater than Communist China, well Social Security is the single largest government expenditure.
Ever wonder why our manufacturing base has fled the country?
Good ole Otto Von Bismarck is probably having a good laugh.
This would be true if we were not all using the same source of liquidity: The GSE money pumps.Prior to FDR's creation of the GSEs, homes used to depreciate like cars. The only way for them to appreciate is for 1. supply to outstrip demand, or 2. for the home to be constantly repaired and improved or 3. for banks to distort the capital markets( in this case by pumping money from the bond market into homes thereby evading the multiplier restrictions placed on banks. 40 to 1 debt to equity these days...There is now more GSE debt than publicly held treasury debt )
I think its #1 due to over-regulation and the erosion of American's traditional property rights and a good deal of #3. It aint #2 as the quality of construction in bubble zones is a joke.
Your talking about basic life support at retirement. Everything I've been reading comes to a different conclusion. The average credit card in the US has a balance of $8K. Well over 50% of workers cash out their 401K's when switching jobs. I've been reading that some lenders are putting people into too much home for their overall earnings. Low interest rates won't help if a job loss occurs.
Same here in Colorado. Lots of Californian refugees have moved out here and to avoid a tax hit they insist on building "million dollar" homes.
This too will trickle down.
What would happened to the affordability of Picassos if you created special banks exempt from multiplier restrictions to provide easy credit to those who could not afford a Picasso? Now lets offer tax breaks for Picasso ownership and insist that if you sell one Picasso, you must buy a more expensive Picasso or lose your profits.
Do you think that would make Picassos more or less affordable?
Nothing like government to distort a market beyond all recognition. Tis a pity consumer spending(therefore the majority of the economy) and the stability of the bond market are riding on a real estate Ponzi scheme.
Although the article wouldn't have had the desired fear, doom, and gloom factor that you seem to crave, it would have at least been useful had it bothered to mention that in the last real-estate price-decline in the 1980's, the 30-day-past-due ratio was over 6% instead of today's comparitively low 4.77%.
Presuming that any decline in real estate prices is proportional to past declines under similar conditions, whatever real-estate "bust" that might occur should be 50% less severe than what we saw in the 1980's, with a similar long-term exit trend (i.e. values increase) after that bump has past.
But oh no, the author of your article didn't want to mention anything that might cause people to shrug off his doom-n-gloom warning.
Speaking of which, shouldn't you do a full disclosure and tell the good people on FR that you have a vested interest in scaring home-buyers due to your Short position on FNM??
Its only doom and gloom if you are long housing, MBS's or Fannie. Tell me Southack, how come the Wall Street Journal, Barrons, Cato, MIT's old school bubble expert Charles P. Kindleberger, and even that raving Socialist Larouche agree with me on this one?
Speaking of which, shouldn't you do a full disclosure and tell the good people on FR that you have a vested interest in scaring home-buyers due to your Short position on FNM??
Scaring? How about warning or even giving them an opportunity to profit? But yes, I practice what I preach and my money is where my mouth is. I've said this numerous times on FreeRepublic.
Everything I have seen on the ChiComs, they are the world's number one polluters, massive hand labor industry, but no real "value added" anywhere.
Is our government burden too high? (I won't say, "debt," because that is kind of a loaded term and, in fact, government debt is pretty average in HISTORICAL terms in the U.S.) Yes. Taxes/regulations should take no more than 15% of anyone's check. We could instantly turn the economy around with a massive, and I mean MASSIVE, tax cut. Incentives to save can be much better too. GOvernment spending could be slashed without seriously damaging ANY major problems.
Adam, I don't think any rational person (LIBS are not rational) would disagree with that. But it doesn't help to portray the U.S. as in ANY way worse off than the ChiComs. If you look back 20 years, there were actually people making EXACTLY the same arguments you are advancing here---that our mfg. base is leaving---and some people actually said (Galbraith, for instance) that Russia might soon eclipse us. It was baloney. The only economy in the world that are outperforming our SLUGGISH economy now is IRELAND, which has slashed taxes and cut regulations.
I think gradually, the 'privatization' plan will be enacted. Americans will not turn their backs on the SS recipients, no matter how wrong or flawed the original concept. It's just something we don't do---and it is a contract. So, yes, these savings do exist.
Here is a good example of "forced savings." In WW II, due to restrictions and rations, you simply couldn't spend money. So people saved, often through bonds. When the war ended, they went on a massive consumption spree. That money didn't go anywhere, even though the government had it.
Basic Economics: A Citizen's Guide to the Economy
I read it myself and it's a model of communication.
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