Fixing the Economy with Taxes and Regulation

[brenthutch 388]

How to fix the economy with regulation and taxes (not)


"Stick it to the rich guy."
This is populist, simplistic, dangerous thinking. Please point out the critical regulation that the Republicans rolled back to allow this to happen.
Everyone says this was due to deregulation, but the truth is, this was caused by government insisting that banks give loans to "hard working Americans" (a euphemism for poor lazy and uneducated). The problem was exasperated by a bunch of Harvard MBAs figuring out a way to make money on the deal. In other words, dumb people (the government) deciding even dumber people ("hard working Americans") should have houses that they can't afford, and smart people (rich greedy bastards) find a way to make money on the deal. What a shocker.

I have never had my paycheck signed by a "hard working American." No, quite the contrary. I have made a fair living by working for greedy, pocket lining, selfish, rich bastards. I would rather have a job than a “guv-ment” check.

We have had a wild ride during the last 20 years, financed by stock bubbles, credit cards and lastly, a real estate bubble. We have chased the high and now it is time to crash (a drug metaphor)...(I had to explain because I know that none of you would get it otherwise). :-p The more we do to put off our reckoning the harder the crash will be. It is time to suck it up and deal with a little pain.

All is not bleak, though. If history is any indication, Obama may be able to get America to swallow the bitter medicine that it needs. Looking back it would seem that the one party has been notably successful at getting the other party's agenda fulfilled. For example, only a warmonger like Nixon could have gotten us out of Vietnam and reached out to China without being "soft on commies" or founded the EPA without being called a “tree hugger”. Only "I feel your pain" Clinton could sign off on welfare reform with out being called heartless. Only a government-slashing, black-people-hating, right wing fascist like Bush could pass boondoggles like "Africa Aid" and prescription Medicare without being pilloried as a tax and spend liberal.

If Obama is the pragmatist that some say, all of this spreading the wealth is just fodder for the weak-minded electorate. Obama's "evolving" positions on Georgia, Iraq, Homeland Security, diplomacy and gun control would seem to give this some credence.

[billvon 2,467]

You can't fix a broken economy with taxes _or_ regulation. Taxes keep the government running; that should be their primary purpose. If you want lower taxes, cut spending, then lower taxes. If you want a better economy, your best bet is to get a better job.

Regulation can, at best, prevent extremes of economic idiocy. Hence the laws against monopolies, labor abuse, opacity, fraud etc. Indeed, one of the things that caused this particular downturn was the deregulation of CDSes, leading to overinvestment in a very risky debt instrument.

[kelpdiver 2]

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This is populist, simplistic, dangerous thinking. Please point out the critical regulation that the Republicans rolled back to allow this to happen.
Everyone says this was due to deregulation, but the truth is, this was caused by government insisting that banks give loans to "hard working Americans" (a euphemism for poor lazy and uneducated).

so the thinking is that if this story is repeated enough times, it will become true, eh?

I think we're at 1000 times already, with many more repeats coming.

[rehmwa 2]

Change and hope

Hope and change, and hope

...
Driving is a one dimensional activity - a monkey can do it - being proud of your driving abilities is like being proud of being able to put on pants

[brenthutch 388]

Here is what the Ancient Greeks said about "Hope"

Hope was personified in Greek mythology as Elpis. When Pandora opened Pandora’s Box, she let out al the evils except one: hope. The Greeks considered hope to be as dangerous as all the world’s evils. Without hope however, mans plight was filled with despair and beyond bearing.
Zeus did not want man to throw his life away, no matter how much the other evils might torment him, but rather to go on letting himself be tormented anew. To that end, he gives man hope. In truth, it is the most evil of evils because it prolongs man’s torment. So Pandora revisited her box and let out hope as well.

[livendive 8]

I'm curious what percentage of these increased mortgage failures are coming from the "poor" people who only bought the one home, as opposed to better off people who are losing rentals and "flippers".

Blues,
Dave

"I AM A PROFESSIONAL EXTREME ATHLETE!"
(drink Mountain Dew)

[brenthutch 388]

Poor as in "I cant afford this house but I am going to buy it anyway"

[miked10270 0]

How about:

Fixing the Economy with Tax-Breaks and Regulation...?

Let's say there's a tax break at basic rate for the first $100k of a first mortgage? One per person/home?

Let's say there's regulation capping the interest on secured loans (mortgages) to 2 or 3% above the Fed Rate?

Let's say there was a 12 month moratorium on home repossessions where the reposessee could show it was their sole property?

Would that help stabilise the market?

(Non-Facetious)Mike.

Taking the piss out of the FrenchAmericans since before it was fashionable.

Prenait la pisse hors du FrançaisCanadiens méridionaux puisqu'avant lui à la mode.

[kelpdiver 2]

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Let's say there's a tax break at basic rate for the first $100k of a first mortgage? One per person/home?

Let's say there's regulation capping the interest on secured loans (mortgages) to 2 or 3% above the Fed Rate?

Let's say there was a 12 month moratorium on home repossessions where the reposessee could show it was their sole property?

Would that help stabilise the market?

Currently the tax break is for the first million on your primary home mortage, so dropping it to 100k would severely destabilize matters, as it would depress prices.

Freezing the interest rate will reduce loan activity substantially. The Fed Rate is 1%. People with money don't want to commit to 30 years of 3-4%. That's below inflation right now.

Freezing foreclosures seems to encourage people to stop paying for 12 months. It's already clear to people on the brink that they might as well just stop paying or use that money for other bills. People struggling to stay on top of their mortgage are ignored right now, only those in the default process are being addressed.

[FallingOsh 0]

Quote

How about:

Fixing the Economy with Tax-Breaks and Regulation...?

Let's say there's a tax break at basic rate for the first $100k of a first mortgage? One per person/home?

Let's say there's regulation capping the interest on secured loans (mortgages) to 2 or 3% above the Fed Rate?

Let's say there was a 12 month moratorium on home repossessions where the reposessee could show it was their sole property?

Would that help stabilise the market?

(Non-Facetious)Mike.

Personally, I don't think it would. People are too scared to go out and buy houses like they used to, and rightfully so. Those who have lost 20-30% equity aren't willing to sell and lose their asses. Regardless of what politicians puke up to the media, there is no magic fix to an economic collapse.

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Stay positive and love your life.

[kallend 1,673]

As George Washington himself told us, taxes are necessary but no-one likes them.

... but by vigorous exertion in time of peace to discharge the debts which unavoidable wars may have occasioned, not ungenerously throwing upon posterity the burden which we ourselves ought to bear. The execution of these maxims belongs to your representatives, but it is necessary that public opinion should co-operate. To facilitate to them the performance of their duty, it is essential that you should practically bear in mind that towards the payment of debts there must be revenue; that to have revenue there must be taxes; that no taxes can be devised which are not more or less inconvenient and unpleasant; that the intrinsic embarrassment, inseparable from the selection of the proper objects (which is always a choice of difficulties), ought to be a decisive motive for a candid construction of the conduct of the government in making it, and for a spirit of acquiescence in the measures for obtaining revenue, which the public exigencies may at any time dictate.



Taxes that end up being reinvested in the economy (infrastructure, r&d) aren't especially harmful. Taxes that end up being pissed away on avoidable wars are purely detrimental.

...

The only sure way to survive a canopy collision is not to have one.

[diverborg 0]

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I'm curious what percentage of these increased mortgage failures are coming from the "poor" people who only bought the one home, as opposed to better off people who are losing rentals and "flippers".

Blues,
Dave

I've been wondering this too. I don't have the stats either way, but lets just say its 100% the flippers. The flippers were riding on an unrealistic bubble that the CRA and pressure on banks to finance everyone made. So in a sense, it still wasn't free market economics that brought about this problem. I don't think it matters which group is being foreclosed on, there is blame to pass around to everyone here, and you can hardly blame free market economics. Also to add, every one of the homes forclosed in my neighborhood had families living in them.

If it were just the flippers that were responsible, the govt wouldn't be worrying about ways to keep people in their homes. So yes low-income mortgages played a bigger part than just creating the bubble.

[brenthutch 388]

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This is populist, simplistic, dangerous thinking. Please point out the critical regulation that the Republicans rolled back to allow this to happen.
Everyone says this was due to deregulation, but the truth is, this was caused by government insisting that banks give loans to "hard working Americans" (a euphemism for poor lazy and uneducated).

so the thinking is that if this story is repeated enough times, it will become true, eh?

I think we're at 1000 times already, with many more repeats coming.

So....you are trying to say that it is not true? Just because you dont like to hear it doesn't make it not true

[kallend 1,673]

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I'm curious what percentage of these increased mortgage failures are coming from the "poor" people who only bought the one home, as opposed to better off people who are losing rentals and "flippers".

Blues,
Dave

I can't answer that particular question, but the CRA loans targeted at low income groups (that the Republicans tried to blame for the crisis) turn out to have a foreclosure rate no worse than the historic rate for"regular" mortgages, and far lower than the subprimes targeted at investors and social climbers.

...

The only sure way to survive a canopy collision is not to have one.

[kallend 1,673]

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Poor as in "I cant afford this house but I am going to buy it anyway"

"Poor" means you make less than $5 Million/year.

...

The only sure way to survive a canopy collision is not to have one.

[kelpdiver 2]

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Quote

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This is populist, simplistic, dangerous thinking. Please point out the critical regulation that the Republicans rolled back to allow this to happen.
Everyone says this was due to deregulation, but the truth is, this was caused by government insisting that banks give loans to "hard working Americans" (a euphemism for poor lazy and uneducated).

so the thinking is that if this story is repeated enough times, it will become true, eh?

I think we're at 1000 times already, with many more repeats coming.

So....you are trying to say that it is not true? Just because you dont like to hear it doesn't make it not true

Yes, utter bullshit.

Government didn't force the feeding frenzy in the mortgage business, and it certainly didn't force the derivatives market or the mass leveraging at certain companies that no longer exist. Nor did loans to poor people cause massive deficits, currency devaluation, and high oil prices.

The segment of people you attribute blame just aren't that significant. It reminds me of the joke about the Jew who collects all the Nazi propaganda because it writes about how powerful he is.

[billvon 2,467]

>So....you are trying to say that it is not true?

It is not true. The mortgages that happened under government incentive programs have not been defaulting any more than average.

Now, the more speculative mortgages - the mortgages taken on by investors who wanted to make a quick buck in the explosive housing market - have been defaulting at a rate far higher than average, and have been one of the primary causes of the credit industry collapse.

[brenthutch 388]

I am not blaming poor people, and I am not saying that their default rates are significantly higher.
When the CRA (community reinvestment act) requirements were beefed up under the Clinton administration, it increased the demand for low income housing. Increased demand let to higher prices. Higher prices in low income housing rippled up the housing market. As people saw their house values go up many people taped equity and used their new found equity to buy flat screen tvs and other toys, or got into the buy and flip business or created derivatives that multiplied the effect of increasing real estate values. (if you KNEW that the ball was going to land on red 13 you would go in) And that is just what happened. This bubble and subsequent crash was a result of well intentioned manipulation of the markets

[kallend 1,673]

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I am not blaming poor people, and I am not saying that their default rates are significantly higher.

Good, because as it happens, their default rates are way lower than those of the get-rich-quick-off-the-property-market investors.

...

The only sure way to survive a canopy collision is not to have one.

[brenthutch 388]

Yes I agree but the environment that was created with the good intent of helping the poor, had the unintended consequence of creating the conditions that made all of this mess possible.

[billvon 2,467]

>but the environment that was created with the good intent of helping the
>poor, had the unintended consequence of creating the conditions that
>made all of this mess possible.

So your argument is that government programs are what make speculative bubbles possible? Which government program led to the 1926 Florida real estate bubble or the dot-com bubble?

[kallend 1,673]

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Yes I agree but the environment that was created with the good intent of helping the poor, had the unintended consequence of creating the conditions that made all of this mess possible.

The environment that had the intent of deregulating the financial markets so money manipulators could get even richer without creating any actual wealth had the unintended consequence of making this mess - period.

...

The only sure way to survive a canopy collision is not to have one.

[FallingOsh 0]

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>but the environment that was created with the good intent of helping the
>poor, had the unintended consequence of creating the conditions that
>made all of this mess possible.

So your argument is that government programs are what make speculative bubbles possible? Which government program led to the 1926 Florida real estate bubble or the dot-com bubble?

Neither of which have anything to do with the housing market collapse that he is talking about.

--------------------------------------------------
Stay positive and love your life.

[kallend 1,673]

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Quote

>but the environment that was created with the good intent of helping the
>poor, had the unintended consequence of creating the conditions that
>made all of this mess possible.

So your argument is that government programs are what make speculative bubbles possible? Which government program led to the 1926 Florida real estate bubble or the dot-com bubble?

Neither of which have anything to do with the housing market collapse that he is talking about.

Indeed - that was caused by greed and enabled by deregulation.

...

The only sure way to survive a canopy collision is not to have one.

[rehmwa 2]

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- that was caused by greed and enabled by deregulation.

When you add "de" in front of regulation, it completely reverses the meaning.

Did you know?

...
Driving is a one dimensional activity - a monkey can do it - being proud of your driving abilities is like being proud of being able to put on pants