In short, government has been the principal factor preventing the “affordable housing” that politicians talk about so much.
SamT
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Why so many foreclosures? Maybe because more people are buying houses than ever before? Interest is down, the economy is good? If you increase the number of people exposed to the overzealous lenders, the more you have who believe they can afford more than they really can. It takes discipline to tell a lender you only want to borrow half of what he's offering. I did, I'm glad.
In a "supply-driven" equation, prices would not have risen; no, this was a demand-side problem.
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According to the article, it wasn't the lenders who were overzealous.SamT
Its a combination of multiple issues. The Fed reduced the interest rates to prompt the economy during Bush's first term. That let to banks/mortgage brokers giving away money like it was candy because borrows could get more at lower interest rates.
However, as soon as there was a rise in the interest rates, the mortgage brokes created a sceme to get more money to buyers that wanted bigger houses. They offered interest only or ARMs mortgages for the first five years. They sold it by dealing with homebuyers that were in "awe" of the new houses they could afford because they could borrow more money. Most didn't read the fine print that said in five years your rate was going to go through the roof.
Most new home buyers with these types of mortgages started to live higher than their economic means because their mortgages were "affordable". Then the got hit with the night interest rates once the economy started to turn and the fed started to raise the rates.
Next thing you know, your ARM went from 4.5%-5% to 6.5%-7%, or higher in some cases, and now you have to come up with potentially a couple hundred to thousands of dollars extra a month that you didn't bank on.
So, basically there are so many foreclosures because buyers did not have the ability to separate desires for extrevigant items from affordability. As well as banks/mortgage brokers paying on the buyers greed.
When banks and other lending institutions lend that much money to people who were previously living paycheck-to-paycheck and not saving much, this will happen, especially when they sign up for ARM loans at insanely attractive rates. Throw in 0% down, rapid increases in assessed value and the associated property tax increase and homeowner's insurance and the "I wanna go A-hole and applecart in debt" mentality that is America, and you have a lot of people who can no longer afford to pay for that house. When I bought my house, 10% was pretty much required, 15% was preferred. 20% was recommended so PMI was eliminated as an unnecessary expense. Friends who already had homes said that, whatever amount I was told to bring to the closing, bring more. They always forget something and it'll have to be paid at that time. Now, they build just about everything into the loan. Lending that way doesn't even look good on paper, why are they actually doing it? Commissions, that's why. Sell the bad loans at a discount and loss is reduced. Banks don't want to own these homes, the people who are being foreclosed often trash the place because they know they won't be held responsible and then we have shows about flipping homes and now, demand is slowing so much that even flipping isn't working anymore. Sure, if it was a real down-and-dirty bargain it may happen but the extremely low and extremely high priced houses are the ones that still move, not the mid-priced ones that most people need.
"I cut this piece four times and it's still too short."
"Lending that way doesn't even look good on paper, why are they actually doing it? Commissions, that's why."Stupid politicos made them do it.SamT
"Stupid politicos made them do it."How were they made to do it? It wouldn't surprise me if they did, I just haven't seen anything that said they made anyone lend money to people who couldn't afford it. Unless it was to buoy a flagging economy but even that wouldn't make sense, because there's always an end to every bubble that's worse than what was at the beginning."I cut this piece four times and it's still too short."
Edited 9/12/2007 10:12 am by highfigh
How were they made to do it?
Not just the lending, but the fact that housing prices (esp here in Seattle area) are driven more by inane prescriptive codes and "urban growth boundaries" than actual building costs. Add to that up to $15,000 school impact fees, permits, road impact fees, etc, etc. All that $$$$ goes to the politicians egos one way or another, dont see much road improvement here, all goes to 'special projects' "Taj Macschools", etc.
In own case, having own land, etc., permits and other 'fees' would be OVER 50% of my building costs were I to build another house here.
How can you say that? That's all part of great urban planning!I would bet that a lot of the people who decided that these would be good measures have as much urban planning experience as I do, and that's exactly one class, which I lost interest in about mid-term (I was young). I remember quite a bit of it but it just wasn't where my interest was at the time.
"I cut this piece four times and it's still too short."
A letter to editor in today's local paper describes the gridlock on the only 2 roads from the West and South onto the plateau where I live.
Seems 2 sets of urban planners did not even talk to each other - both routes down to one lane, mile long backups, while sewers are being extended for the glory of urban growth!
How were they made to do it
If I remember rightly, the lenders were audited to see if they were discriminating by not lending to people with either no money or were poor credit risks. The presumption being that minorities, QED, had little money or had poor credit histories.
Now, the article I saw the other day (which I can't find right now, naturally) indicated that most of the foreclosures were upon over-extended "flippers"--who live, and now, die, by the RE market. And too many of which use 100% and all-on-paper financing. Another hard hit area was the get-rich-quick-in-RE market that bought up previous foreclosures, to then turn into saleable rental properties (another group beholden to a riing tide in RE prices).Occupational hazard of my occupation not being around (sorry Bubba)
>>If I remember rightly, the lenders were audited to see if they were discriminating by not lending to people with either no money or were poor credit risks.Sorry, you don't remember right. The community reinvestment act is very different from that description.I used to be involved in 2 large bank's CRA compliance.I've actually read the Act and read the regulations and implemented policies with those banks to ensure compliance.
May your whole life become a response to the truth that you've always been loved, you are loved and you always will be loved" Rob Bell, Nooma, "Bullhorn"
"We Live" http://www.youtube.com/watch?v=7kuBgh0VCqI&mode=related&search
And Annie Ross's "Twisted" http://www.youtube.com/watch?v=8lqivrCIRGo&mode=related&search=
It wasn't the banks being greedy. They were just trying to CYA from politicians idiocy.SamT
Barney,
While what you say is true it's far from complete.. The fundamental reason for foreclosing is loss of job, followed by medical illness and divorce.. Living beyond your means is number 5 at best.. I've seen studies that place it lower than that..
It's not unusual for a young couple to stretch everything to buy a home. the loss of a job by either of them means foreclosure.
Gas prices also have an impact.. when you paid $2.00 a gallon or less for gas a months worth of gas would be under $100.00 raise the price over $3.00 and suddenly your monthly gas bill is over $150.00 Except the need for two cars so both can work..
$50.00, even $100. seems like something that you should be able to overcome but add other cost increases and suddenly young couples start to really struggle and solve it with credit cards.. Major OOP's!!!
In my case the gas prices meant I was spending $50 a day compared to $35, that's nearly $4000 more per year with nothing to increase the income side..
I didn't got bankrupt only because I'm old, established, and have some large reserves.. My retirement is taking a hit though!
Edited 9/12/2007 9:23 pm ET by frenchy
government has been the principal factor preventing the "affordable housing" that politicians talk about so much.
Affordable here is defined as somewhere around $200k, which is a problem unless you can build that house for well under $100k (plus the land).
Today's paper has 2 articles, one where the county rejected a developer's offer to give Habitat $2.9m instead of building some of the required affordable units (which raises the price for the other units, contributing to the inbalance). The other article was about them prohibiting driveways across slopes 25% or greater, which will remove roughly 100,000 acres (25%) from housing potential, "preserving" it.
While they complain about housing prices. And trip over themselves to get new businesses to locate here.
PAHS Designer/Builder- Bury it!
You got it. Dogbones 2ya.SamT
My bad:
From:http://www.townhall.com/columnists/ThomasSowell/2007/08/08/sub-prime_politicians?page=full&comments=true
In short, government has been the principal factor preventing the "affordable housing" that politicians talk about so much.
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PS: who is <!-- edit=LUKA17 9/12/2007 2:07:40 AM --> and what did he edit?
SamT
It is such a big issue. One sentence statements just don't begin to define what "affordable housing " is. Houses put up quickly/cheaply on the edge of town just make matters worse. People in those houses have to drive every time they need something. Where are the jobs that support this house? Far away across town?
Families are stretched thin already. It just keeps getting harder for lower income families to keep it together.
Hey, everybody, it was a quote from an article by Thomas Sowell that has a pretty good explanation for the question asked in the title.I guess I didn't make that clear in post number one so I repeated it in # 7 with the link very obvious to make it clear.SamT
I didn't read the article. My statement wasn't aimed at you specifically SamT.
>>it was a quote from an article by Thomas Sowell that has a pretty good explanation for the question asked in the title.It has an explanation that is pretty good according to Sowell.But "good?"LOL
May your whole life become a response to the truth that you've always been loved, you are loved and you always will be loved" Rob Bell, Nooma, "Bullhorn"
"We Live" http://www.youtube.com/watch?v=7kuBgh0VCqI&mode=related&search
And Annie Ross's "Twisted" http://www.youtube.com/watch?v=8lqivrCIRGo&mode=related&search=
That was a two page article, not a one sentence definition.SamT
Edited 9/12/2007 9:54 am by SamT
"We have met the enemy and he is us." Pogo
Commissioned sales people committed their share of sins. A large factor was that the folks who were actually invested in mortgages were far removed (by Wall Street) from the loans so they relied on other folks opinion that it was a good loan. Some borrowers were fooled. Some thought if they bought a $400,000 house they could sell it for $600,000 in 12 months. If you don't have any equity nor any assets it is easy to walk away. When we do away with the fools there won't be anyone left.
>>so they relied on other folks opinion that it was a good loan.Yep: see my msg just above as to who actually formed the opinion and the cold white light of waking reality.
May your whole life become a response to the truth that you've always been loved, you are loved and you always will be loved" Rob Bell, Nooma, "Bullhorn"
"We Live" http://www.youtube.com/watch?v=7kuBgh0VCqI&mode=related&search
And Annie Ross's "Twisted" http://www.youtube.com/watch?v=8lqivrCIRGo&mode=related&search=
Alot of the forclosures are stemming from bad loans.
People took out interest only / interest differed loans because they were told that there houses would increase in value to cover the negative ammoritzation, of course the market changed so now many people have found themselves upside down in their mortgages.
Now the variable rate periods have ended and they're stuck with mortgages they can no longer afford and more debt than their house is worth. Because of this no one will even think about refi'ing them and they are now stuck.
IMO, most did it to themselves. They may have been duped by lender with a poor set of ethics, but they signed the papers.
MSA1
Most did it to themselves. It's called entrapment when done by cops.
There is a reason cops aren't allowed to bait criminals.. the reason is most people do not have the ability to think long term, think things thru.. show someone something that sounds reasonable, toss in a little credibility and it's easy to get people to be greedy and sign something that with some forethought they'd never sign..
Being greedy isn't a crime.. making commitments that you aren't sure you can fullfill isn't one either.. (otherwise nobody would ever be allowed to get married) 50% of marriages fail.
The banks didn't get hurt making the deal but the deal went bad so shouldn't the bank return the fees it got for the deal? The bank is protected.. the people who eventually bought the loan paper are protected the only one hurt in the deal is the person who believed something they shouldn't have believed.. yet he's the only one who's punished..
Frenchy,
I have to disagree with you. I dont think its entrapment I think its a case of not doing your homework.
I speak from experience.
One of my rentals has an interest only loan. On every statement I get it warns me that if I only pay the minimum I stand the risk of losing equity and owing more than I originally borrowed.
Every month i'm givin the choice to make a normal payment or lose equity, I choose the normal payment with the knowledge that if I have a bad month I can pay less. That was the original purpose of those loans to begin with.
I had a lender tell me they were designed for people with varing incomes (throughout the year). This way they could buy a house but still get through their bad months.
Interestingly, the FTC is starting investigations into fraudulent advertising and lending practices on the part of some of the mortgage loan originators.
May your whole life become a response to the truth that you've always been loved, you are loved and you always will be loved" Rob Bell, Nooma, "Bullhorn"
"We Live" http://www.youtube.com/watch?v=7kuBgh0VCqI&mode=related&search
And Annie Ross's "Twisted" http://www.youtube.com/watch?v=8lqivrCIRGo&mode=related&search=
I agree they're are alot of questionable lenders out there.
IMO a mortgage is a pretty big step in most peoples lives. You need to do your homework.
These lenders that tell people to refi their houses to pay off credit debt or take a trip should be prosecuted. Why would you take short term debt and turn it into a 30 year loan against your house? The problem with that (also IMO) is that people would refi, pay off credit cards, then go back to using the credit cards.
The way I see it, people simply need a better financial education.
MSA1
You may have the exception that proves the rule.. My credit union sends out no such information. What you don't figure out by closing I'm certian goes right over the head of some less experianced buyers.. Because I have a lot of experiance with my credit union and I don't need things explained to me I make it a game to see just how fast I can sign all the paperwork required and leave. My record thus far is 4 minutes..
I'm the exception..
What a aggressive realitor and a careless or less than honest banker/loan broker could do to at the closing would have the head spinning of many people..
Not doing your homework? well selling fraudlent stocks or bonds can be the same thing.. however there are laws to protect the novice or person with minimal experiance.. there are laws that protect you from buying many defective things, a loan should be no differant..
What a aggressive realitor and a careless or less than honest banker/loan broker could do to at the closing would have the head spinning of many people..
Once again, you have the right to stop procedings at any time. You can read every word on every doc if you want. You are supposed to receive a copy of closing docs before closing so that if you wish a lawyer can look them over.
I view a closing same as you do, but like you, i've been through it more times in the last 5 years than most will in their lives. There are however sometimes even now when i'll stop a closing to have somthing explained to me.
I still feel a good financial education would go along way.
MSA1
You are absolutely correct in that a good finical education would have prevented some of the repossessions. I say some because the last numbers I looked at, losing a job, Divorce, and medical reasons were the #1  reason for foreclosure..
Circumstances occur that prevent even the smartest and best educated people from succeeding.. When a person loses a home under the circumstances that are present now instead of blaming the person you need to really look carefully at the whole picture.. not just jump on some overly simple reason and make the bold statement that applies to all..
Please look at things objectively, businesses, even big business fail regularly.. Look at all the bank/ savings and loan failures that the American tax payer bailed out not so long ago as a prime example of where even superb education didn't prevent failure.
Just recently the federal government was required to fundamentally change the rules to allow The major banks to violate banking regulations to forestall a collapse of the system.. That certainly isn't a lack of education.
And people want to deregulate the banking industry! Oh wait, that's been tried by our republican friends, can you say savings and loan scandle?
My credit union sends out no such information
Check your statement. Obviously i've never seen your statement, but mine has four options for payment with explanations of each on the front and back of the statement.
MSA1
It's true you haven't seen my statement. If you had you'd realize I'm really not speaking out of my hat. Some banks and credit institutions simply do not provide all the information possible..
In addition some banks and credit institutions mislead people deliberately..
I think it cuts both ways.Were this type of loan put in front of most borrowers, complete with all the caveats and warnings, I suspect many more would steer clear. Failing to disclose the details and pitfalls is akin to entrapment IMO.On the flip side, I believe that many folks knew deep down that these types of loans were not intended for them and that they were too good to be true, yet bought in regardless. Greed ran rough shot over common sense.
Pino, I guess I can only speak for myself. Because I took a little time to read, I knew going in what I was getting into.
It simply doesnt take a genius to figure out somthing is amiss if their borrowing 150000 and paying 200/month.
If it sounds too good to be true.........
Edited 9/13/2007 10:00 pm ET by MSA1
"If it sounds too good to be true......... "My sentiments exactly.
I will be the first to agree that the individuals involved also had a large role in creating the mess. I was certainly a target of some pretty aggressive pressures to join the mania. I spent nearly two years being treated like I was the village idiot for not buying. I was told, endless times, how property values only went up, up, up ... and how the equity I would build would somehow cover any ridiculous mortgage terms. After the bubble burst, I witness another 18 months of all manner of experts denying that there was / had been a bubble, or that it burst. In a like manner ... second mortgage vendors were pretty aggressive. There were ads touting equity loans for - ready for this - buying nice clothes! Various government programs, presented to aid first time buyers, were presented as ways to provide your down payment. In truth, all these tax dollars did was cover all the added fees the lender / realtor / broker / etc. piled on top of the mortgage. The presence of the money only served to increase the cost of the transaction. Let them go bust. They chose to take a chance ... now it's karma time. Yet, we cannot overlook the effects of government on a market. Once you start adding money, prices go up. Once you restrict choice, prices go up. Once you remove accountability - or the opportunity to fail - you creat a handicap for the responsible person.
renosteinke,
While I certainly share your sentiment about how the banks created this mess and they should suffer because of it, it's foolish to ignore what will happen if banks fail.
Without banks who will provide the money to lend for a home to be built for even a well quailified borrower? Without banks home construction, remodeling, would wait for the rare individual who could pay cash for everything..
1/5 of the nations economy depends on this industry you take that 1/5 out of the piture on top of the lost of manufacturing and the competition our farmers face from other nations and this country would suffer like we haven't since the great depression..
I maintain it is NOT the role of any government to cover our tails if we screw up. Competition, and the weeding out of the foolish or incompetent, is the only method that ensures that things continually improve. Subsidies only enshrine errors. Moreover, as Sowell points out, various well intentioned governmental actions had a part in creating this mess. Asking government to fix it is something like asking the iceberg to rescue the Titanic. As Reagan said ... government is not the solution; government is the problem.
renosteinke,
I could agree with that sentiment if it weren't for the fact that the government can screw up far bigger than the individual. when the government screws up people suffer.. So the reverse should be true..
Now I certainly agree that there are limits.. For example every little thing that can happen should be the responsibility of the individual.. however big stuff can and properly should be the role of the government..
We can discuss for a long time where that line should properly be drawn.. However when the government is willing to bail out the bankers who fail and major defence contractors etc. who fail they have a similar obligation to those of us who pay for the government..
The government is the solution and Reagan was wrong.. the differance is that there is good government and bad government.. Please remember we live in a complex society of 300 million, without rules set by the government there would be anarchy..
>>As Reagan said ... government is not the solution; government is the problem.Yep, he sure did. One of the most radical ideas since, well, the "New Left" said it in the 60's.
May your whole life become a response to the truth that you've always been loved, you are loved and you always will be loved" Rob Bell, Nooma, "Bullhorn"
"We Live" http://www.youtube.com/watch?v=7kuBgh0VCqI&mode=related&search
And Annie Ross's "Twisted" http://www.youtube.com/watch?v=8lqivrCIRGo&mode=related&search=
pino,
If it sounds too good to be true,, well how do you explain the millions who spend money on lottery tickets, or even get married..
Hope springs eternal for some people..smart people were telling them this is a way to get rich.. less sophisticated people rely on bankers and others to provide them with advice.. When those bankers mislead people it's the bankers who are at fault not the poor schmucks who followed their advice..
IN case you believe that bankers are paragons of virtue, consider the savings and loan scandle, do you remember the farm crisis of a few decades ago? that was fundamentally caused by exactly the same thing, banks telling farmers to get bigger, the number of banks that fail per year, I realize that it's beyond your experiance but if you do a little reading about the great depression you'll find that it was fundamentally caused by banks making unwise investments in the stock markets.
I agree with you Frenchy.As I stated earlier, some people knew better but were either too greedy or just plain willing to take the risk on these subprime loans. For these folks, I have little sympathy.Others were purposefully mislead by mortgage brokers and the like, more interested in making a fat commission than in serving their clients needs.This is why I stated earlier that Failing to disclose the details and pitfalls of the risky loans in very clear and obvious language is akin to entrapment.In the end, there needs to be a better balance of federal regulation and personal education / responsibility. I'm not willing to hang this one on any one entity as there is plenty of blame top go around.
pino,
Well we certainly agree that there is plenty of guilt to go around.. In part much of it was due to greed.. greed on the part of banks becuase if they didn't describe these subprime loans as risky then they could sell them on the secondary market as AAA legally..
Greed on the part of the individuals who wanted to grab a ripe plumb without worring if the branch they stood on was safe.
Greed on the part of the governemnt who needed the housing sector to perform well in order to pay for it's adventures in Iraq..
The reality is that even in the strongest market people lose homes due to job loss divorce and illness. add the added risk factor of undocumented loans (sub Prime) and you have a recipe for distaster..
Most folks seem to forget that you cannot separate business from risk. In short, you invest your time and money .... and you take your chances.
The way lenders deal with this is to charge more on loans that have a higher risk. Or, the refuse to take the risk at all. The same place that will gladly let you have a million dollar mortgage could quite possible refuse you a nickel to try out your 'method' to succeed at blackjack.
We were in the midst of a 'bubble,' 'spiral,' call it what you will. Person "A" sold to Person "B" who sold to ... Person "A" all over again. Like a game of musical chairs, the music had to stop ... and some folks will not have seats. Too bad for them. Those who have seats are quite happy.
Remember: for everyone who got 'stuck' when the bubble burst, there is a seller who sold 'just in time.' THOSE folks aren't complaining.
The lenders took the chance. Despite having the credit deck so heavily stacked in their favor, they're going to take some big losses. Well, if you can't scratch with the cats - stay out of the sandbox.
The point about government is valid. Introduce government into any market operation, and the laws of the market suffer. The effect is ALWAYS to let you fly higher ... and fall further.
Affordable housing? Would the White House qualify as suitable housing? How about the 1900 White House? Yet, you could not build that mansion today. Codes would neither let it be built, or let you occupy it. The same well intentioned rules probably account for half of the cost of building a home these days.
You can be sure of one thing: Government is not the answer; government is the problem.
everybody trying to make money, all these show on TV that used to be improved your house are now, what it worth or how to sell, flipping house. The county and realtor are pushing the higher prices so they get more tax money and income. Hurricanes has driven prices up 100%But the *0k house is till only worth 80k but sells for 170k, it get to a point that affordable housing aint affordable no more..Haga su trabajo de fricken
What do you mean,>>Introduce government into any market operation, and the laws of the market suffer.???THERE IS NO MARKET WITHOUT GOVERNMENT INTERVENTION!!!There are no "natural" laws of the marketplace. They are all man-made. Markets require property rights. Remember the old adage about 9/10ths of the law being property rights? You must have government intervention to have a market.If you don't understand that, then let's get rid of patents, trademarks, copyrights. And see what happens to the so-called "free market".Once you have property rights, an eternal struggle exists between those who have more and those who have less. Then the gov't acts in an attempt to keep those with less from formenting revolution, or at a minimum, theft.
THERE IS NO MARKET WITHOUT GOVERNMENT INTERVENTION!!!That is SOooo mistaken.Any time two people come together to exchange something, there is a market.There is one very large and all natural marketplace we can compare the Government regulated marketplace.The illegal cannabis market is several billions large and, withn the exception of one government law passed to eliminate two businessmens' competitor for, of all things, newspaper, is totally without government regulation. Driven soley by natural market forces, the cost of, say, three hours of inebriation from cannabis is about 1/3 the cost of the same three hours achieved by a very strictly government regulated alcohol.Now, you might wonder about how self governance compares to civil governance. If, for the sake of this debate, we consider that a murder in the natural cannabis marketplace is the equivalent of a million dollars lawsuit in the civily governed marketplace, I believe the price is thousands of time greater in the Civil markets.I do not consider any deaths involving civil agents to be relevant to that statment.SamT
SamT
I'm in a quandry here. Your statement is wrong but you are right.. sort of..
We live in a complex society.. there are rules.. I certainly don't agree with all those rules but because I live in that complex society I accept even the ones I don't approve of..
We simply cannot pick and choose which rules to obey and which to ignore.. what if I choose to ignore stoplite rules and your child is crossing the street? It's not a free society anymore but it's not totally restricted either..
Even in the most restricted country there are still freedoms.. drink coffee or tea sort of freedoms..etc..
This government has restrictions so to a degree our freedoms are lost. however we have more freedoms than say a Chineese citizen has.
ON the other hand we have social pressures that some societies never experiance. Go to church or risk osterization by fundamentalists,, belong to the "right" church. For example Clinton was burned by a lot of fundamentalists even though he was a southern Babtist and accepted many of the same "Rules" they lived by.. Basically he was the right religion but the wrong political party.. and the restrictions go on..
The fundamental problem is that rules are applied differantly to the rich and poor..
"That is SOooo mistaken."That statement?The only way I can see it being wrong is if we take the other possible meaning of the statement I am commenting on, to wit: No market in existance is free of government intervention.SamT
QUOTE
THERE IS NO MARKET WITHOUT GOVERNMENT INTERVENTION!!!That is SOooo mistaken.Any time two people come together to exchange something, there is a market.There is one very large and all natural marketplace we can compare the Government regulated marketplace.The illegal cannabis market
END QUOTEAnd you don't think government intervention has affected the cannabis markets?Really?Really and truly, you don't think the fact grass is illegal doesn't affect the weed market?Rolling On The Floor And Laughing As Loudly As Possible.SamT, you really need to rethink that one.There are few markets which are more affected by government intervention.
May your whole life become a response to the truth that you've always been loved, you are loved and you always will be loved" Rob Bell, Nooma, "Bullhorn"
"We Live" http://www.youtube.com/watch?v=7kuBgh0VCqI&mode=related&search
And Annie Ross's "Twisted" http://www.youtube.com/watch?v=8lqivrCIRGo&mode=related&search=
Edited 9/13/2007 3:17 pm ET by rjw
Bob, are you OK?Seriously, if there is something going on, your welcome to PM me. It might help to talk about it.SamT
LOL.Yeah, the drug markets are free of government influence.Right.That's why drug syndicates never bother to try to bribe government officials, right?
May your whole life become a response to the truth that you've always been loved, you are loved and you always will be loved" Rob Bell, Nooma, "Bullhorn"
"We Live" http://www.youtube.com/watch?v=7kuBgh0VCqI&mode=related&search
And Annie Ross's "Twisted" http://www.youtube.com/watch?v=8lqivrCIRGo&mode=related&search=
Well, Bryan, yours is certainly an interesting perspective. Since it does not appear to be confirmed by any historical or religious doctrine that I am aware, I must give you credit for being an original thinker. The opposite case has been made, many times, in countless variations. Indeed, just last week some 'think tank' made the news with their 'study' and asserted that licensing, etc., were little but trade restrictions. Keeping things in a more local context, the "West" had a thriving market of furs, blankets, and knives in the centuries of exploration, before the establishment of any government. You know, the 'mountain men," the Hudson Bay Trading Company, etc. We will have to agree to disagree on this topic.
>>Well, Bryan, yours is certainly an interesting perspective. Since it does not appear to be confirmed by any historical or religious doctrine that I am aware, I must give you credit for being an original thinker.????Perhaps you should have tried common sense and a basic understanding of what government is and has been throughout recorded history.Perhaps the Code of Hammarubi would be a good place to start, especially as it has a number of points dealing with commercial interactions.http://www.wsu.edu/~dee/MESO/CODE.HTM Start with numbers 7 & 9, and keep reading.As do both the Old and New Testaments.
May your whole life become a response to the truth that you've always been loved, you are loved and you always will be loved" Rob Bell, Nooma, "Bullhorn"
"We Live" http://www.youtube.com/watch?v=7kuBgh0VCqI&mode=related&search
And Annie Ross's "Twisted" http://www.youtube.com/watch?v=8lqivrCIRGo&mode=related&search=
I'm sorry Brian, but all of the references you cite are clear examples of government, or religion, intruding on, and attempting to regulate, already existing markets. You assert that markets cannot exist without government- yet your citations prove otherwise. This is not a 'chicken or egg' conundrum ... markets clearly came first. There has been much debate, and millions murdered, to advance economic theories. Sowell may be a 'hack' in your view ... but he never murdered, enslaved, or starved those who he felt did not share his views. The same cannot be said for the "left." Our country was once an economic backwater, considered suitable for only misfits and bankrupts. Following the inspiration of Adam Smith, in less than a hundred years our emphasis on the free market, and the right to contract, propelled into the ranks of the worlds' most prosperous and progressive nations. Meanwhile, in that same time frame, other countries that adopted differing ideas stagnated - at best. Even in our recent memory, countries that successfully fed themselves for millennia succumbed to the worst of famines almost immediately upon adopting more 'state oriented' economic models. It seems pretty clear: Government, by it's nature produces nothing - and can only get in the way of prosperity. Perhaps that is why we place so much emphasis on limiting government. Now, of you visit Nevada, you will find yourself surrounded by endless miles of empty, vacant, ownerless, and essentially useless land. You will also find a severe shortage of real estate. Why? Because we have deliberately refused to allow 89% of the land in Nevada be developed. Inner city Chicago has better conditions for building than Nevada. I can't imagine a more clear example of government driving up housing costs. So- it should be no surprise that Nevada leads the nation in foreclosures.
>>It seems pretty clear: Government, by it's nature produces nothing - and can only get in the way of prosperity.===============================
"We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity, do ordain and establish this Constitution for the United States of America."===============================
"Ever since the remote day when human beings began to live together in society, official organs of the state have been charged with the responsibility of deciding disputes between individuals .... From the beginning of social time there have been institutions like courts which have generated or excreted law or something like law. In all societies beyond the most primitive a professional class of lawyers and judges has emerged and maintained itself. In most societies at most periods the legal profession has been heartily disliked by all non-lawyers: a recurrent dream of social reformers has been that the law should be (and can be) simplified and purified in such a way that the class of lawyers can be done away with. The dream has never withstood the cold light of waking reality."Grant Gilmore, "Ages of American Law"
May your whole life become a response to the truth that you've always been loved, you are loved and you always will be loved" Rob Bell, Nooma, "Bullhorn"
"We Live" http://www.youtube.com/watch?v=7kuBgh0VCqI&mode=related&search
And Annie Ross's "Twisted" http://www.youtube.com/watch?v=8lqivrCIRGo&mode=related&search=
For the folks who didn't notice, concepts of human interaction and of human action within a society and of government didn't spring to man's awareness at approximately the same time folks around here developed awareness of the world around them.
May your whole life become a response to the truth that you've always been loved, you are loved and you always will be loved" Rob Bell, Nooma, "Bullhorn"
"We Live" http://www.youtube.com/watch?v=7kuBgh0VCqI&mode=related&search
And Annie Ross's "Twisted" http://www.youtube.com/watch?v=8lqivrCIRGo&mode=related&search=
>>The point about government is valid. Introduce government into any market operation, and the laws of the market suffer.LOL.In other words, the markets have been sufferig from government intervention since Lord Mansfield carved out the rules of negotiable instruments in the 1700's.
May your whole life become a response to the truth that you've always been loved, you are loved and you always will be loved" Rob Bell, Nooma, "Bullhorn"
"We Live" http://www.youtube.com/watch?v=7kuBgh0VCqI&mode=related&search
And Annie Ross's "Twisted" http://www.youtube.com/watch?v=8lqivrCIRGo&mode=related&search=
>> But why were housing prices going up so fast, in the first place? A number of studies of communities across the United States and in countries overseas turned up the same conclusion: Government restrictions on building.
ROFLOL.
Say you put a bid on on a house.
1.Your realtor advises you as to a "good price."
2. Even when well intentioned, the agent's fee is a percentage of the selling price. (Hmm, is s/he going to work hard to keep the price you pay as low as possible? Do we need studies from around the US and around the world to tell us?)
3. You ask your mortgage for some dollars to pay for it.
4. "Well, we have to be sure the house is worth that much. We'll get an appraisal to make sure."
5. "Mr Appraiser, is this house worth the selling price of $####,####?"
6 ("BTW, Mr Appraiser, we only make money if we make loans, so if you come in low too many times- say, more than once or twice - don't hold your breath waiting for any more business from us.)
Gee, I wonder why housing prices escalate?
Yeah, it's the darned government, business interests are always good fro everyone.
May your whole life become a response to the truth that you've always been loved, you are loved and you always will be loved" Rob Bell, Nooma, "Bullhorn"
"We Live" http://www.youtube.com/watch?v=7kuBgh0VCqI&mode=related&search
And Annie Ross's "Twisted" http://www.youtube.com/watch?v=8lqivrCIRGo&mode=related&search=
If you look deeply into the figures on foreclosures there are some interesting tidbits. 1/3 of all current foreclosures are in four states: California, Arizona, Nevada & Florida. 34.6% of all the subprime loans made were made in these four states. 42.5% of all the arm's made were made in these four states. Most of these loans went to non-owner occupied borrowers, i.e-speculators. Now that the market has turned, they are just walking away. Take these figures away from the national figures & foreclosures are actually down from last year. Interesting. Biggest blame for the speculative mess: Rating Agencies. Without the AAA ratings that most of this debt got, many institutional investors could not have bought the paper to begin with.
Thomas Sowell is yet another right wing hack attempting to pigeonhole every problem in the country by shifting blame to suit his extremist ideology. In this case it's his hate for our government that he's miscast as the culprit behind the current foreclosure crisis.
The idea that smart growth and urban planning are primarily responsible for this recent upswing in home foreclosures is simply not borne out in the facts, facts which Sowell eludes to yet fails to provide. (there's a surprise)
"times and places where housing prices doubled, tripled, or quadrupled within a decade shows that restrictions on building have been the key."
The irrational exhurberance that overpriced the stock market in the 90s has done much the same to housing in many markets, fueled by an insane belief that everybody could flip a few houses and end up living in a McMansion of there very own.
If, as Sowell suggests, it is the restrictions brought on by land use and smart growth policies that are driving foreclosures why then is it my home state of Indiana that ranks so high in home foreclosures? We are known for being anything but smart growth and for having extremely liberal zoning and land use laws.
seekingalpha.com/article/26319-a-look-at-foreclosures-per-state - 35k
The fact is that we as a people have become greedy and stupid. People started buying houses with no money down, houses that were too big and too luxurious for their levels of income, and now they are paying the piper.
I'm sure urban planning and smart growth have played some role in some areas of the country with regard to home foreclosures, but trying to pin the broader problem on these policies is intellectually dishonest - a Sowell trademark.
The subprime loan market looked too good o be true and guess what - it was too good to be true.
I find it pathetic that conservatives like Sowell, who scream about taking personal responsibility, are now so willing to try and pin the foreclosure crisis on anyone but the folks most at fault - the greedy home buyers that should have known better in the first place.
Edited 9/13/2007 4:38 pm by pino
Thomas Sowell (1930- )
"Economist, born in Gastonia, North Carolina, USA. He studied at Harvard, Columbia University, and the University of Chicago, and taught at Rutgers (1962–3), Howard (1963–4), and Brandeis universities (1967–70). He left the University of California, Los Angeles (1972) to direct the Ethnic Minorities Research Project at the Urban Institute in Washington, DC. His books include Black Education: Myths and Tragedies (1972) and Race and Economics (1973)."
You can disagree with the ideas the man has, but please don't call him a hack.
Dr. Sowell, along with Dr, Freedman, Dr. Hayek and many other contrarian Economists, were leaders in the development of truth in Economics. Until they had the courage to stand up and present facts, the world of economics, finance and foreign affairs were operated on whims, theories and emotions.
We in this world owe much fo our wealth to these thinkers... whether you believe them or not.Troy Sprout
"A free people ought not only to be armed and disciplined, but they should also have sufficient arms and ammunition to maintain a status of independence from any who might attempt to abuse them, which would include their own government." -- George Washington
I am quite familiar with Sowell's background and achievements and will still refer to him as a hack. His past achievements aside, the man repeatedly casts aside common sense and honest, intellectual debate in order to driver home his narrow, right-wing idealogical point of view. The article Sam posted is evidence to that effect. Trying to pin the bulk of the blame for the current foreclosure trends on urban planning and smart growth policies is intellectually dishonest and flies in the face of both common sense and the statistics.Just as he did with his feable attempt at mainstream writing with the book Basic Economics, Sowell here has applied an overly simplistic and one sided approach to explaining the rising problem of foreclosures and he does so to make a partisan, ideological point. The man long ago stopped any real pursuit of academic or intellectual honesty.
Edited 9/13/2007 5:42 pm by pino
You need to review the laws of supply and demand. Limiting supply shifts the supply curve and brings equilibrium prices to a higher point on the demand curve.
In business, a monopoly act of restricting supply to prevent competition (and result in higher prices/profits)will result in jail time. Government actions of the same nature are called such things as "smart planning".Troy Sprout
"A free people ought not only to be armed and disciplined, but they should also have sufficient arms and ammunition to maintain a status of independence from any who might attempt to abuse them, which would include their own government." -- George Washington
Don't patronize me. I am well aware of the laws of supply and demand. And there is simply no evidence that those laws have played anything but a geographically limited, minor role in bringing about the current foreclosure crisis.Now let me repeat this for you nice and slow. If the current foreclosure crisis was driven exclusively or even primarily by restrictive housing policies, the rates of foreclosure would be highest only in those places with said policies.The facts simply do not support Sowell's right wing rhetoric.He's trying to shove a big, broad problem into his very narrow right wing ideological hole. And in doing so he proved himself a hack.
Did you read the article?
"The growth in risky "sub-prime" mortgage loans by people buying homes they could not really afford has been a key factor in the collapse of housing markets, when the risks caught up with both borrowers and lenders."
"Attractive and heady phrases like "open space," "smart growth" and the like have accompanied land use restrictions that made the cost of land rise in many places to the point where it greatly exceeded the cost of the homes built on the land."
"The Community Reinvestment Act lets politicians pressure lenders to lend to people they might not lend to otherwise -- and the same politicians are quick to cry "exploitation" when the interest charged to high-risk borrowers reflects that risk."Troy Sprout
"A free people ought not only to be armed and disciplined, but they should also have sufficient arms and ammunition to maintain a status of independence from any who might attempt to abuse them, which would include their own government." -- George Washington
Yes, I read the article including it's title "Sub-Prime Politicians", the first clue as to Sowell's ideological indoctrination efforts. And I'm smart enough to know that Sowell is attempting to weave these disconnected statements and premises into a whole that simply does not exist.If "housing prices going up so fast, in the first place" because of "Government restrictions on building" then we wouldn't be seeing such high foreclosure rates in areas where said restrictions are not in place. Yet the facts tell a different story in that the increase is foreclosure rates in occurring throughout the country. If these " Attractive and heady phrases like "open space," "smart growth" were such great contributors to the foreclosure crisis, then we'd see an abnormally high rate of foreclosure inside of the very developments that embody these principles. A quick call to a colleague living in the Chicago area's Prairie Crossing simply does not support Sowell's argument. Of course, that is admittedly anecdotal evidence, but it's more than Sowell has offered.http://www.prairiecrossing.com/pc/site/index.htmlAs for Sowell's statement that ""The Community Reinvestment Act lets politicians pressure lenders to lend to people they might not lend to otherwise", neither he nor you know much about the act or, as I suspect, you are purposefully misrepresent the act to score partisan points.The act in no way "pressures" financial institutions to make loans . It does require them to provide "equal access to lending, investment and services to all those in an institution's geographic assessment area". By the way, if the CRA were such an egregious factor in the current foreclosure crisis, we'd of seen its effects long ago. You are aware that the act is nearly three decades old, aren't you.Like I said, Sowell is a hack more interested in enriching himself by playing partisan politics than he is in academic and intellectually honesty.It doesn't take much effort to debunk this latest round of ideological gibberish.
>>"The Community Reinvestment Act lets politicians pressure lenders to lend to people they might not lend to otherwise -- and the same politicians are quick to cry "exploitation" when the interest charged to high-risk borrowers reflects that risk."Maybe that's how it looks to him, but his vision and reality have little in common.The main "influence effects" of the CRA is to let neighborhood/community associations pressure lenders for financial support in exchange for not tying the bank's regulatory applications up in red tape.As has been noted, academicians (especially those who make big bucks stirring up the waters) often substitute their own imaginations for the cold bright light of waking reality.
May your whole life become a response to the truth that you've always been loved, you are loved and you always will be loved" Rob Bell, Nooma, "Bullhorn"
"We Live" http://www.youtube.com/watch?v=7kuBgh0VCqI&mode=related&search
And Annie Ross's "Twisted" http://www.youtube.com/watch?v=8lqivrCIRGo&mode=related&search=
>>You need to review the laws of supply and demand. Limiting supply shifts the supply curve and brings equilibrium prices to a higher point on the demand curve.>>In business, a monopoly act of restricting supply to prevent competition (and result in higher prices/profits)will result in jail time. Government actions of the same nature are called such things as "smart planning".But you need to understand that you are looking at one small part of a complex situation.Your elephant is long and skinny like a snake.
May your whole life become a response to the truth that you've always been loved, you are loved and you always will be loved" Rob Bell, Nooma, "Bullhorn"
"We Live" http://www.youtube.com/watch?v=7kuBgh0VCqI&mode=related&search
And Annie Ross's "Twisted" http://www.youtube.com/watch?v=8lqivrCIRGo&mode=related&search=
>>Dr. Sowell, along with Dr, Freedman, Dr. Hayek and many other contrarian Economists, were leaders in the development of truth in Economics. Until they had the courage to stand up and present facts, the world of economics, finance and foreign affairs were operated on whims, theories and emotions.LOLChicago School of Economics: extremely logical - their conclusions follow their premises as night follows the sun.Unfortunately, their premises are pretty skewed.
May your whole life become a response to the truth that you've always been loved, you are loved and you always will be loved" Rob Bell, Nooma, "Bullhorn"
"We Live" http://www.youtube.com/watch?v=7kuBgh0VCqI&mode=related&search
And Annie Ross's "Twisted" http://www.youtube.com/watch?v=8lqivrCIRGo&mode=related&search=
Hackinatit, It does not matter what Sowell's accomplishments are, the leftist on this board more then likely will find him repulsive.
stinky
Stinky, you're letting your own blind partisan views cloud your vision.I've never criticized Sowell's academic endeavors, credentials and accomplishments. The trash he peddles over at Town Hall is neither academic, nor much of an accomplishment.Now perhaps you've something resembling reason and thought that refutes my critique of Sowell's right wing rant over at Town Hall. If so, please have at it. If as I suspect not, then please spare us all your tired partisan rhetoric.
Edited 9/13/2007 7:54 pm by pino
>>It does not matter what Sowell's accomplishments are, the leftist on this board more then likely will find him repulsive.You're absolutely right on the first point: his accomplishments are basically irrelevant.We have taken issue with specific points he made in his argument.Care to try to defend him on those specifics?
May your whole life become a response to the truth that you've always been loved, you are loved and you always will be loved" Rob Bell, Nooma, "Bullhorn"
"We Live" http://www.youtube.com/watch?v=7kuBgh0VCqI&mode=related&search
And Annie Ross's "Twisted" http://www.youtube.com/watch?v=8lqivrCIRGo&mode=related&search=