Posted on 01/03/2011 3:12:31 PM PST by jazusamo
."Housing Market Setback Forecast," the newspaper headline said. A recently released report on housing says that home sales are down more than 25 percent and the inventory of unsold homes is about 50 percent higher than it was the same time last year. This is just one of innumerable stories about the woes of the housing market. We all understand about human beings having woes. But how can a housing market have either setbacks or woes? Moreover, why should politicians be riding to the rescue of the housing market with the taxpayers' money? We hear all sorts of sad stories about people whose homes are "underwater" or who are facing foreclosure. But why should our attention be arbitrarily focused on these particular people, rather than on the many other people who would benefit from being able to buy those same houses, if the prices came down?
The government is artificially keeping the prices up with subsidies and with pressures on lenders to accommodate the current occupants.
Can we not walk and chew gum at the same time? Is our attention span so limited that we can only think about one set of people that the media and the politicians have chosen to highlight?
Do other people count for less just because the media don't put their pictures in the paper or on the TV screen? Or because politicians are ignoring them?
Sometimes we are more concerned about some people because they are especially deserving. But this cannot be said about those who borrowed money to buy homes that they could not afford, or who borrowed against the equity in their homes, and now find that what they owe is more than the home is worth.
If anyone is especially deserving, it is those who had the common sense to avoid taking on bigger financial obligations than they could handle, but who are now expected to pay as taxpayers for other people's irresponsibility.
No doubt some people who are facing foreclosures might have been able to continue making their mortgage payments if they had not lost their jobs. But since when were we all guaranteed never to lose our jobs? People used to put money aside "for a rainy day." But now people who have spent like there are no rainy days are supposed to have the taxpayers pay to give them an umbrella.
What about the people who saved and put their money in a bank? Those who blithely say that the banks ought to modify the mortgage terms to accommodate people who are behind in making their monthly payments forget that, however "rich" a bank may be, most of its money actually belongs to vast numbers of depositors, most of whom are not rich.
Those depositors deserve to get the best return on their money that supply and demand can offer. Why should people who save be sacrificed for the benefit of those who spent more than they could afford?
Why are politicians so focused on one set of people, at the expense of other people? Because "saving" one set of people increases the chances of getting those people's votes. Letting supply and demand determine what happens in the housing market gets nobody's votes.
If current occupants are put out of their homes and the prices come down to a level where others can afford to buy those homes, nobody will give politicians credit -- or, more to the point, their votes. Nor should they.
Rescuing particular people at the expense of other people -- whether the others are taxpayers, savers or prospective home buyers -- produces votes. It also produces dependency on government, which is good for politicians, but bad for society.
That is why politicians give what Adam Smith called "a most unnecessary attention" to things that would sort themselves out better and faster without heavy-handed government intervention.
Why do the media fall in with this arbitrary focus on particular people who are having trouble holding on to homes they cannot afford? Partly because it makes a good story and partly because too many people in the media simply go with the politicians' talking points. That is a lot easier than thinking.
But the rest of us have no excuse for not thinking -- or for letting ourselves be stampeded by rhetoric about "saving" the housing market.
As clear and concise an argument for free markets you will not find.
You can’t “save” any market. You can only get out of the way and let folks make their mistakes or killings, and live with the results.
The demand for housing will rebound when people are sure they have employment.
And it will rebound when the banks are sure their loans can be repaid.
That will happen when the economy as a whole rebounds. In the meantime, low prices are an opportunity for some that won’t happen again in their lifetimes.
The quickest way to bring the economy back is to quit monkeying with it. Investment requires the kind of certainty you can never have as long as the government keeps changing the rules of the road. Once the rules stop changing, investment will pick up and employment will pick up and the housing market will come back.
The “other” quickest way to bring the economy back is to make a focused effort to make this country energy independent. Steam-roll any regulations that get in the way of energy projects. We spend half a trillion a year buying transportation fuels from overseas. When we start spending a bigger chunk of that here, this economy will turn around so fast our heads will spin.
“If anyone is especially deserving, it is those who had the common sense to avoid taking on bigger financial obligations than they could handle, but who are now expected to pay as taxpayers for other people’s irresponsibility.”
Amen!
“Why should people who save be sacrificed for the benefit of those who spent more than they could afford?”
Money quote.
home sales are down more than 25 percent and the inventory of unsold homes is about 50 percent higher than it was the same time last year. This is just one of innumerable stories about the woes of the housing market
http://www.youtube.com/watch?v=-qRDg9WS7fk
I’ll take it a step further than Sowell
All this talk of recovery but no one ever asks:
RECOVER WHAT ?
The economic system we had never made sense and was unsustainable no matter who was in charge.
An economy based on unsustainable levels of consumer spending, based on unsustainable levels of consumer debt, fed by unsustainable exectation of real estate valuation rise is .... can you guess? .... NOT SUSTAINABLE.
So, why are we trying to ‘recover’ ourselves back into an unsustainable economic system and why are both parties subscribing to that notion?
The most terrifying words known to man:
“I’m from the government and I’m here to help”
Really?
Hands off and let housing take care of itself. Thanks.
One problem is many people have too much debt.
I agree with you.
And I agree with you. Well said.
Because FASB suspended mark to market on the assumption(lie) that stuff on the books was really worth more.
I keep hearing that people are saving instead of spending. Paying down their debt instead on consuming. That is why the administration was talking about using inflation to get people to shake loose some of that money they have been saving.
I agree there are those still with a lot of debt.
Easy-peasey. Just put it in the lockbox next to the Social Security.
LOL!
You've solved the problem. Now the Congress-critters can use one for a collateral loan to save the other and vice versa. ;-)
If it finds Jesus?
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