Thursday, Feb 19, 2009
Buiter rants at home owners - yay
FT: Biggest-racket-since-al-capone
Willem Buiter (he of the excellent good bank proposal) takes aim at homeowners. This is preaching to the choir but good to read nonetheless.
Posted by alphabetzoo @ 12:06 PM (501 views) Add Comment
4 Comments
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1. stillthinking said...
Interesting but he doesn't make any conclusions about pricing in the future. From this though,
"Those who won’t be able to get a home loan in the future because of these measures will probably blame the banks rather than the politicians that brought in these inane laws."
the only conclusion is that the equilibrium level of housing prices will be lower. Not being able to get a home loan is the same as not needing one.
2. 51ck-6-51x said...
Good find alphabetzoo, it makes for good reading.
"Are we going to give tenants special rights and financial assistance because the place they rent is worth more to them than it is to their landlord?"
3. Alphabetzoo said...
The 'equilibrium' price of house in the US is, in many exurbs and suburbs and in a post peak-oil world, ZERO. A large part of the US economic system is non-viable when oil prices are larger than around $80-100 dollars per barrel. That isn't some doomsday scenario from environmental wackos, that's from Bush's and Cheney's oil men. The "End of Suburbia" film interviews them and others. Whenever the good times reappear (no time soon) and oil prices go back up, then the real cataclysm will hit the US real estate market.
4. rm96696 said...
Excellent article. Confirms my belief that the bank bailout u.s. taxpayers are paying for is simply the accumulated freddie mac/fannie mae subsidy. Freddie and Fannie allow people to get mortgages at much lower rates than would be the case if they were to pay one the basis of their risk since the u.s. government guarantees the mortgages. But this doesn't make the risk go away, it simply transfers it to the government. The bill has simply come due as it will every time there is a housing bust.
I can't imagine how people could buy shares in freddy and fannie. They are simply there to act as a cushion absorbing part of the losses.