I'm sorry to scare you. I haven't suggested 'going back' to anything. But
having lived in a city during a period which gave rise to a new verb,
perhaps I can view life more objectively.
(See http://en.wiktionary.org/wiki/coventrate)
KSH
00, you wrote:
Perhaps you never had to ride a train boxcar and live in a tent. All of
these things you preach scarred my parents and made it acceptable for me
to grow up in hell. I would rather start a war than go back. I dont
know where you guys get this belief that people wont be hanging from trees
again. I will send you a picture of my grandfathers barn with four men
hanging from the rafters after they cheated the poor.
You scare me to death. I never thought that I would have to contemplate
going back to the days that you seem to wish for.
REH
From: [email protected]
[mailto:[email protected]] On Behalf Of Keith Hudson
Sent: Monday, September 06, 2010 3:00 AM
To: RE-DESIGNING WORK, INCOME DISTRIBUTION, , EDUCATION
Subject: Re: [Futurework] FW: [TriumphOfContent] How to Endthe
GreatRecession (Robert Reich - The NY Times)
The following, in today's New York Times, contains the beginnings of the
wisdom that Robert Reich, and the bunch gathered around Obama, doesn't
have. Governments could then do the same with banks and big business.
Without the moral hazard of knowing that if they're big enough they will
be rescued from foolishness by governments, they'll quickly sort
themselves out just like the Californian '49ers. After all, at bottom they
depend on mass consumer support quite as much as, if not more than,
governments. It was only when governments went hyper-militaristic and
started printing money to buy armies and pay for warfare a century ago
that the rot really started. Both left-wing and right-wing political
ideologues (eager for governmental power for themselves) are still in
denial about this. Now that the major powers can't afford big
nationalistic wars any longer, and can only pick on weak, small nations
(and not very successfully either), perhaps we are actually at the
beginning of a solution.
Keith
------
Housing Woes Bring New Cry: Let Market Fall
By
<http://topics.nytimes.com/top/reference/timestopics/people/s/david_streitfeld/index.html?inline=nyt-per>DAVID
STREITFELD
The unexpectedly deep plunge in home sales this summer is likely to force
the Obama administration to choose between future homeowners and current
ones, a predicament officials had been eager to avoid.
Over the last 18 months, the administration has rolled out just about
every program it could think of to prop up the ailing housing market,
using tax credits, mortgage modification programs, low interest rates,
government-backed loans and other assistance intended to keep values up
and delinquent borrowers out of foreclosure. The goal was to stabilize the
market until a resurgent economy created new households that demanded
places to live.
As the economy again sputters and potential buyers flee July housing sales
sank 26 percent from July 2009 there is a growing sense of exhaustion with
government intervention. Some economists and analysts are now urging a
dose of shock therapy that would greatly shift the benefits to future
homeowners: Let the housing market crash.
When prices are lower, these experts argue, buyers will pour in, creating
the elusive stability the government has spent billions upon billions
trying to achieve.
Housing needs to go back to reasonable levels,said Anthony B. Sanders, a
professor of real estate finance at George Mason University. If we keep
trying to stimulate the market, thats the definition of insanity.
The further the market descends, however, the more miserable one group
important both politically and economically will be: the tens of millions
of homeowners who have already seen their home values drop an average of
30 percent.
The poorer these owners feel, the less likely they will indulge in the
sort of consumer spending the economy needs to recover. If they see an
identical house down the street going for half what they owe, the
temptation to default might be irresistible. That could make the markets
current malaise seem minor.
Caught in the middle is an administration that gambled on a recovery that
is not happening.
The administration made a bet that a rising economy would solve the
housing problem and now they are out of chips,said Howard Glaser, a former
Clinton administration housing official with close ties to policy makers
in the administration. They are deeply worried and dont really know what to do.
That was clear last week, when the secretary of housing and urban
development,
<http://topics.nytimes.com/top/reference/timestopics/people/d/shaun_donovan/index.html?inline=nyt-per>Shaun
Donovan, appeared to side with current homeowners, telling CNN the
administration would go everywhere we canto make sure the slumping market
recovers.
Mr. Donovan even opened the door to another housing tax credit like the
one that expired last spring, which paid first-time buyers as much as
$8,000 and buyers who were moving up $6,500. The cost to taxpayers was in
the neighborhood of $30 billion, much of which went to people who would
have bought anyway.
Administration press officers quickly backpedaled from Mr. Donovans
comment, saying a revived credit was either highly unlikely or flat-out
impossible. Mr. Donovan declined to be interviewed for this article. In a
statement, a White House spokeswoman responded to questions about possible
new stimulus measures by pointing to those already in the works.
In the weeks ahead, we will focus on successfully getting off the ground
programs we have recently announced,the spokeswoman, Amy Brundage, said.
Among those initiatives are $3 billion to keep the unemployed from losing
their homes and a refinancing program that will try to cut the mortgage
balances of owners who owe more than their property is worth. A previous
program with similar goals had limited success.
If last years tax credit was supposed to be a bridge over a rough patch,
it ended with a glimpse of the abyss. The average home now takes more than
a year to sell. Add in the homes that are foreclosed but not yet for sale
and the total is greater still.
Builders are in even worse shape. Sales of new homes are lower than in the
depths of the
<http://topics.nytimes.com/top/reference/timestopics/subjects/r/recession_and_depression/index.html?inline=nyt-classifier>recession
of the early 1980s, when mortgage rates were double what they are now,
unemployment was pervasive and the gloom was at least as thick.
The deteriorating circumstances have given a new voice to the do
nothingchorus, whose members think the era of trying to buy stability
while hoping the market will catch fire called extend and pretendor delay
and prayhas run its course.
We have had enough artificial support and need to let the free market do
its thing,said the housing analyst Ivy Zelman.
Michael L. Moskowitz, president of Equity Now, a direct mortgage lender
that operates in New York and seven other states, also advocates letting
the market fall. Prices are still artificially high,he said. The
government is discriminating against the renters who are able to buy at
$200,000 but cant at $250,000.
A small decline in home prices might not make too much of a difference to
a slack economy. But an unchecked drop of 10 percent or more might prove
entirely discouraging to the millions of owners just hanging on,
especially those who bought in the last few years under the impression
that a turnaround had already begun.
The government is on the hook for many of these mortgages, another reason
policy makers have been aggressively seeking stability. What helped
support the market last year could now cause it to crumble.
Since 2006, the
<http://topics.nytimes.com/top/reference/timestopics/organizations/f/federal_housing_administration/index.html?inline=nyt-org>Federal
Housing Administration has insured millions of low down payment loans.
During the first two years, officials concede, the credit quality of the
borrowers was too low.
With little at stake and a queasy economy, buyers bailed: nearly 12
percent were delinquent after a year. Last fall, F.H.A. cash reserves fell
below the Congressionally mandated minimum, and the agency had to shore up
its finances.
Government-backed loans in 2009 went to buyers with higher
<http://www.nytimes.com/info/credit-score/?inline=nyt-classifier>credit
scores. Yet the percentage of first-year defaults was still 5 percent,
according to data from the research firm CoreLogic.
These are at-risk buyers,said Sam Khater, a CoreLogic economist. They have
very little equity, and thats the largest predictor of default.
This is the risk policy makers face. If home prices begin to fall again
with any serious velocity, borrowers may stay away in such numbers that
the market never recovers,said Mr. Glaser, a consultant whose clients
include the
<http://topics.nytimes.com/top/reference/timestopics/organizations/n/national_association_of_realtors/index.html?inline=nyt-org>National
Association of Realtors.
Those sorts of worries have a few people from the world of finance
suggesting that the administration should do much more, not less.
<http://topics.nytimes.com/top/reference/timestopics/people/g/william_h_gross/index.html?inline=nyt-per>William
H. Gross, managing director at Pimco, a giant manager of bond funds, has
proposed the government refinance at lower rates millions of mortgages it
owns or insures. Such a bold action, Mr. Gross said in a recent speech,
would provide a crucial stimulus of $50 to $60 billion in consumption,as
well as increase housing prices.
The idea has gained little traction. Instead, there is a sense that, even
with much more modest notions, government intervention is not the answer.
The National Association of Realtors, the driving force behind the credit
last year, is not calling for a new round of stimulus.
Some members of the National Association of Home Builders say a new credit
of $25,000 would raise demand but their chances of getting this through
Congress are nonexistent.
Our members are saying that if we cant get a very large tax credit one
that really brings people off the bench why use our political capital at
all?said David Crowe, the chief economist for the home builders.
That might give the Obama administration permission to take the risk of
doing nothing.
Keith Hudson, Saltford, England
Keith Hudson, Saltford, England
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