xssve
Posts: 3589
Joined: 10/10/2009
Status: offline
|
quote:
ORIGINAL: tj444
quote:
ORIGINAL: MrRodgers
quote:
ORIGINAL: tj444
so typical home owners are speculators? 
Hardly and nowhere near my point. The speculation was in the land and in the cost-of-capital. It shot up so quick FDR started Fannie Mae not to help the borrower but to then do exactly the wrong thing...guarantee the mortgagor by buying almost all of them up. This conveniently put the taxpayer ultimately responsible for the vast majority (80-90%) of conventional mortgages.
Then as long as the govt. was along for the ride houses went up exponentially. Tell me why the US govt. is in the business of FHA home loans at anything like $700,000 ? There shouldn't be govt. involvement in the housing for sale market beyond $200,000...in any way.
oh, I dunno.. those crafty slick typical home owners that bought way back when seem to have made out like gangbusters!
$700,000 would buy you a typical, almost first time homebuyer house in Orange County, CA. I cant imagine what you would get for that amount in NY. It really depends on where the property is located, imo.
Imo, now the speculators are the cities and counties that charge several tens of thousands & even up to $100,000 extra (called development fees, impact fees, etc) for anyone that wants to build just a typical house. Its really outrageous that the govt has become the speculators now... they seem to be getting away with it too..
Absolutely, anybody that bought during the inflationary spiral in the Seventies made out like bandits - inflation is typically better for consumers than producers and banks, the opposite of what real is trying to say - I think - at least when the labor market is tight: i.e., workers can demand higher wages as long as it isn't easy to replace them, thus, they can keep up with inflation - meantime, inflation erodes the value of money, including debt, thus fixed interest rates tend to reduce debt relative to income.
Debt, of course, represents income for banks, so the lenders take the hit - which is what happened inthe Seventies, and the entire rationale behind supply side economics and monetarist policy, which is entirely about controlling inflation regardless of what it does to the rest of the economy.
Many of our current problems in manufacturing and the labor market, as well as the decline in family farm and agricultural business (which is traditionally labor intensive, i.e., farm payroll) are the result of the Feds tight control of inflation, by keeping wages down, through control of the money supply - when wages go up, the Fed starts worring about inflation, raises the interest rate, throwing the economy into slowdown (if not recession), people get laid off, the labor market loosens up, wages go back down, inflation is averted.
The logic here is based on the fact that the Kennedy tax cuts started the inflationary spiral of the Seventies, increased demand coupled with stagnant productivity, inflation + stagnant productivity = stagnation, thus cutting taxes on corporations and producers, on the theory that this will result in productivity increases (restructuring, often through hostile takeovers, etc.), but not on consumers for fear of sudden demand increases.
Strengthening the dollar thereby put exporters at a huge disadvantage, thus the decline in manufacturing and agricultural exports, which tend to be export business's.
Part of the problem there with regard to the housing market, is that it simply drives investors out of manufacturing and agriculture and into the housing market which results in distortion and a bubble cycle.
Thing is a lot of things have changed since that time: China has taken over as the manufacturing powerhouse, thus domestic wage increases have a much reduced effect on the consumer price index, but the Fed still acts like it was 1980.
It would take wages in China to increase for the CPI to rise significantly, meantime, wages and compensation in the financial/management sector have remained uncontrolled so we have inflation in that area, banks increasing their fees, companies being run for the sake of their stock value rather than whatever else they're supposed to be doing, etc., etc., all of which is negatively affecting the jobs market - they're gonna squeeze the lemon till there's no more lemon left to squeeze - they're already turning on each other.
Thing is, debt represents future earnings, so if the kids of this country have no serious prospects for earning in order to pay it back, all that money isn't going to be worth the 0.5v, 1's and 0's used to record it's existence - similarly, if the Chinese economy tanks and there is no demand for the stocks in all those 401K's, they ain't gonna be worth piss either.
Something about a Goose and some Golden eggs applies here.
|
RE: Have no fear! US Economy: well on the way to recov... - 
Profile
New Messages
No New Messages
Hot Topic w/ New Messages
Hot Topic w/o New Messages
Locked w/ New Messages
Locked w/o New Messages
Post New Thread