Does this make any sense at all? We bought a house about two years ago. We are now deep under water -- the house is worth about $100,000 less than we owe, after subtracting gains that we caused by making improvements.
If I assume that we paid more than it is worth because valuations were based in part on sub-prime loans (which ours isn't) that were over-valued and that today's value is closer to a real market-based valuations (although who knows, the voodoo is still out there)... then haven't we contributed about $100,000 toward a bailout? That's assuming that prices stabilize around where they are, of course. Or are we part of the problem because we bought a house at a time when we "should have known" that valuations were absurd. Trouble is, that's a large part of what kept me from buying a house here in Silicon Valley for a long. And I always said that I knew that if I bought a house here, the market would promptly go south. Not that I'm arguing causality. How could we have known what we apparently "should" have known about valuations? How much research should a non-real estate professional be expected to figure out when buying a house? If financial professionals can't make sense of the value of sub-prime paper, how could the rest of us be expected to? Until I wrote that, I hadn't really thought about the effect of complexity on a market... the idea that complex derivatives, subordination and such can create a market in which nobody, least of all ordinary people, can know the value of goods. For those among us who oppose government regulation, does this include opposition to regulation whose purpose is to limit complexity? (Which I'm thinking would also help avoid chaotic -- in the mathematical sense -- behavior in the markets.) Nick _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
