Housing

Left vs. Right: Programs, People and Plural Nouns

It is interesting to note how liberals, when discussing some problem, often speak in terms of programs in order to fix those problems.  Got a housing problem?  Start an affordable housing program.  Got a hunger problem?  Start a nutrition program.  Got an energy problem?  Start a renewable energy program.  These programs are, of course, intended to fix the problems for which they were designed to address.   Consider housing; specifically, the current problem of high foreclosure rates.  Obama has proposed dealing with foreclosures with his housing program.  If an individual wanted to take advantage of this plan, he/she would have to meet the qualifications.  The intention, of course, is that those needing the help would meet the qualifications.  But that isn't always going to be the case.  Some people who ought to be helped won't qualify, for one reason or another; and some people who oughtn't be helped will still qualify anyway.   To use an analogy, government is attempting to cast a wide net to catch fish; no matter how big the net, government won't be able to catch all the fish, and it will end up catching some turtles too.

But if you think about it, "the housing problem" is really composed of a bunch of little problems.  "The housing problem" includes Bob & Judy and their family who, sadly, are being foreclosed on because Bob just lost his job and Judy was just diagnosed with cancer and now has huge medical bills.  That's sad and these people are worthy of help.  But "the housing problem" also includes Vince the house-flipper who got in over his head and now is looking to be bailed out from his bad choices.  "The housing problem" includes Reginald the owner of beachfront resort housing who is rich enough to weather the housing bubble, but, if the government is going to be handing out free money, is more than happy to take a share of it.  "The housing problem" includes Farmer Joe who, during the days of $4/gal gas, put all his eggs in the ethanol boom, and, now, finds himself and his farm overleveraged and doesn't know if he'll be able to keep his farm that's been in his family for generations.  Will Obama's housing program help all these people?  Will Obama's housing program help any of these people?  Maybe 3 out of 4?  We don't really know.

So, naturally, conservatives complain that Obama's program will end up helping people like Vince and Reginald (possibly), and liberals defend Obama's program pointing out that it will help people like Bob & Judy and Farmer Joe (probably).  Conservatives and liberals scream at each other: "You want to bail out the irresponsible!"  "You want to throw poor people into the streets!"  But this shouting match misses the real problem inherent in Obama's housing program, or any housing program for that matter.  To use the fishing analogy again, it's not that government is casting the net too wide, or is using too fine a mesh of net, to catch aquatic life that shouldn't be caught.  The real problem is that government is using only one net.  It has conceived of the problem in the singular form - "the housing problem" - and has designed a singular solution in order to fix it.  Sure the solution may have different components with different strategies, but it is still conceived in response to a singular problem.

And herein lies the real contrast between conservatives and liberals.  We conservatives are less inclined to view these problems as singular nouns.  We understand that there is no single best solution to any of these problems; what will help Bob & Judy will probably not help Farmer Joe, and vice-versa.

So what is government to do?  Well, government could, in principle, tailor its solution to meet the needs of each individual person who ought to be helped.  With the fishing analogy, it would be equivalent to throwing away the net and individually selecting each fish to be caught.  And this solution, while possible in principle, is just not feasible.  Besides, a government which had this sort of immense power is not one that I care to live with.  So this is why conservatives are knee-jerk opposed to new government programs. It's not that we don't want "the housing problem" to be solved.  It's that the government program won't actually solve the real underlying problems (plural) for which it has been designed to solve.

Ease the Housing Crisis on a Nickel and Build a Lasting American Advantage: Increase H-1B Visas

 

Ease the Housing Crisis on a Nickel and Build a Lasting American Advantage: Increase H1-B Visas
Many politicians are making good-willed attempts to fix the housing crisis through restructuring mortgages. Unfortunately, all grand attempts to refinance homes into payments that are more reasonable have failed. Foreclosure rates are still extremely high and lending has not resumed, in part, because there are simply not enough qualified applicants to buy the millions of homes that are sitting on the market. 1 in 10 homes in America  are behind on payments or in foreclosure. This has resulted in a situation where over 2 million homes are vacant and millions of homeowners want to sell their homes but can’t. Because sub-prime mortgages are no longer available, the demand for housing has fundamentally contracted.
While possibly helpful in the short term, a simple government stimulus will not stop the bleeding in America’s housing market. Only a fundamental change in the structure and expectations in the housing market can do that. For that, we would need a new generation of US homebuyers to come into existence over the next 12 months. There is only one source of this much needed demand: college educated H-1B skilled worker applicants.
I propose that we dramatically increase the number of H-1B skilled worker visas we issue and add a new requirement to these newly available H-1B visas: the recipient must buy either a foreclosed home or a home in a ‘distressed’ (having lost more than 15% of its peak value) housing market. Any purchase of this sort would have to involve a 20% cash down payment to avoid getting people into homes they can’t afford. There are literally millions of people that would jump at the chance to come and experience the American dream. The introduction of this demand into US markets would change the direction of the housing market and allow people who are close to foreclosure to sell their home with dignity rather than destroy their credit and go into foreclosure.
One final advantage to this program is that, unlike the $875,000,000,000 stimulus Congress is considering, this policy costs an extremely small amount. The processing of the visa is paid for by the price of the visa application. The only cost would be the transition costs associated with hiring some new workers for the immigration office before the increase in applicants happens. Beyond that, the addition of immigrants to struggling areas will boost tax revenue dramatically because skilled and legal immigrants will have to pay property, income, and sales taxes.
This is a significant proposal and there are reasonable objections to it. I will briefly deal with the major objections below:
This Will Take American Jobs Away
To protect the American worker in this time of economic hardship, any job given to the recipient of a H-1B visa would have had to have been advertised for at least 90 days prior to giving the job to the immigrant. Failure to post a meaningful public advertisement of these positions for 90 days would result in a $25,000 fine per position, per month that the advertising was insufficient. This would act as a clear incentive for companies to only hire immigrants for positions Americans truly can’t fill.
The Nature of America Will Change
Many people worry that this policy will change the face of America. That also won’t happen because the introduction of 2 million new households of immigrants from around the world would amount to less than 2% of the general US population.
There Aren’t Enough Skilled Immigrants To Bridge The Gap
The number of H-1B skilled worker visas that are currently issued is pitifully small. Last year, over 120,000 applications were received in the first two days for a mere 65,000 spots. A different cap for visas for people with Masters Degrees was also reached last year. In short, the demand for US visas is extremely high.
Additionally, many other countries are suffering right now and there is an increased desire to go to the most stable countries in the world and that includes the US. Beyond that, we only need 1-2 million households to immigrate to fundamentally change the dynamic of decline and despair to hope and optimism in the hardest hit housing markets in America.
There Aren’t Enough Jobs to Allow Enough People To Come
Many tech companies have complained for years that they can’t get enough H-1B visa workers. This limited time opportunity will lead companies that want skilled workers to make every effort possible to make a position for these people. Due to the fact that they will have to advertise these jobs publicly for 90 days, many unemployed workers in the US will have a chance to apply for these new positions and get their lives back on track. Additionally, when skilled laborers join a community, they often create other jobs around them. This can be everything from a new managerial position all the way down to a new secretary.
The US Immigration Office Is Ill-Equipped To Deal With A Massive Increase Of Applicants
The federal government is already in the process of creating a variety of public works projects that would require the hiring of a number of temporary workers. There is no reason immigration processing offices could not be part of this process. Additionally, the 90 day public advertisement period for businesses will give US immigration offices the time that they need to ramp up their operations before a huge number of applicants flood their office.
This Does Nothing To Deal With Illegal Immigration
                Ending illegal immigration is an economic and national security priority of the highest level. There are many good policies to reduce illegal immigration. This proposal has nothing to do with that topic. Refusing to make progress on the housing crisis because the problem of illegal immigration hasn’t been solved will only worsen our economic crisis and jeopardize the chance of a real recovery. 
This Is Unfair To Those Seeking L1B Visas
If the increase in H-1B skilled worker visas is approved, there would be little reason not to apply the same restrictions to an increase in L1B skilled worker visas. This plan is already ambitious and making too many changes may jeopardize its viability. The number of people who desire H-1B visa applications is high enough to help solve our housing crisis and for that reason I advocate changing H-1B rules before any others are changes are made.
The New Skilled Immigrants Will Just Buy A House And Then Sell It Just To Get The Visa
This is a legitimate complaint that warrants an important addition to the policy. People who buy these homes must retain ownership of them for at least 3 years. Three years is the most pessimistic estimate of when the housing crisis will end. At that time, the housing crisis will probably have passed and the housing trade can resume as usual.
This Is A Classic Washington Short Term Fix With No Long Term Benefits
The expertise that H1-B visa skilled workers bring to America in math and science is critical for our long term success. The inability to bring these people over has stopped projects in America dead in their tracks and negatively impact business in America for years. This problem is ridiculous and needs to stop.
Beyond that, this is a unique opportunity for America to gain access to the most skilled workers from around the world. We will probably never see a crisis this severe again in our lifetimes. Why not use the uncertainty in the world to draw the best minds from around the world into America to gain an important structural advantage in the economic competition that will resume after this crisis?

 

The REAL Free Market and Mixed Messages

I must vociferously disagree with Aaron Marks here. He’s right that we must let market forces sort out the mess caused by the distortive practices of government. The problem is, his prescription (a la one Dr. Meltzer) is yet more of the same distortive intervention. In short, what Marks is claim as a “free market solution” is not. Let me explain. 

Marks basically wants more tax-breaks (subsidies) for housing. But anybody who knows anything about this problem (like free market economists) know that it’s not temporary tax breaks, subsidies or any other government-style epicyclical policies that will clean up the mess. It’s about government getting the fundamentals right by NOT privileging industries—including housing. It’s about getting the rules of the game set, normalized and predictable. It’s not about more Keynesian tweaks, which targeted tax breaks most certainly are.

This is exactly how the left is able to demonize free markets. Because partisan Republicans bastardize the concept. Marks’s suggestion is the intellectual equivalent of W's suggestion that the free market be abandoned to save it. Unless we understand free markets, let us not use the term like blunt instrument, applying it to whatever policy suggestion that happens to include a tax break. This is just more attempts to clean up government messes with muddy mops. Or as Peter Klein writes

Another aspect of journalists’ remarkably credulous and fatuous attitude towards policymakers is their view that rhetoric, not substance, is what matters. Hence the constant references to the Bush Administration’s “dedication to free-market principles,” its “aversion to regulation,” its “belief in letting markets work by themselves.” This is of course sheer balderdash and piffle, virtually the reverse of the truth. Bush and Paulson and Greenspan and their clique are “free marketeers” in the same way (to borrow from A. J. Jacobs) that Olive Garden is an Italian restaurant. They adopt the language, and some of the form, of market advocacy without any of the content. The Bush Administration was already, before the “financial crisis,” the most economically interventionist since LBJ; it now ranks with Hoover and FDR as the most aggressively anti-market in US history. 

Aaron Marks, I believe, is merely giving fodder to a confused MSM and lunatic left. It’s no wonder we’re losing. Until our folks understand what free market means from a broadly institutional perspective, we are lost. Jack in Michigan nails it in the comments of Marks's post:

Basic bubble economics 101: The healing only can begin when the bubble-inflated prices return to the level that's in equilibrium with the real economy, ie, that can be justified by actual income levels. Are we there yet? No, not yet, but gettin' there. The temporary tax credit only delays that, and so prolongs the agony. It's like a hard core alcoholic taking a drink the morning after so he doesn't feel so rotten.

Partisan Republicans had best stop wearing the free market hat if they're confused about free markets. That sends real free marketeers into fits. It also confuses the masses and lets lefties blame the market for the goofy government policies. In short, we need to stop subsidizing people to invest in housing. Period. Prices must reflect economic reality and the rules of the game must be established so that the market can adjust. Tweaking the rules to adjust to distortions caused by prior tweaks the the self-same prescription that keeps our economy in rollercoaster business cycles and wacky volatility. (For an antidote to interventionist thinking of all kinds, see this.)

NO MORE HELP! Liberal Fiscal Policies Coming Home To Roost.

I, Mr.L, subscribe to the Newt Gingrich philosophy regarding the bailout plan. That is, simply, I think it sucks. The main reason that I'm against this bill is because there's no proof that the billions will actually solve the problem. A friend of mine recently reminded me of the old saying which applies to this economic problem at hand.

"I'm from the government and I'm here to help"

The punch line to that is, if anyone says that to you, run and don't walk from them.

Help? It's a four letter word.  It is how we got here. The "I gotta help" mentality of liberalism. Jimmy Carter and the Community Reinvestment Act. Bill Clinton and the so called Clinton "changes" in his administration in 1995 which advocated for subprime loans. Liberals like Barack Obama who worked for law firms Miner, Barnhill & Galland who were hell-bent for leather trying to get minorities in homes. These firms "helped" by suing the banks with discrimination charges if they didn't lend money to unqualified black or Hispanic buyers.  You know, the mentality of giving them the home due to the color of their skin and not the color green in their wallets!

The same liberals, Obama, Pelosi, Boxer, Frank, Reid, who wanted to CUT AND RUN in Iraq are now trying to CUT AND RUN from their own irresponsibly horrid ideologies and economic policies. They want to CUT AND RUN from the blame and pawn it off on Bush, Republicans and Wall Street Tycoons. Now, I'm not saying that the Wall Street money honeys and daddies don't deserve the blame, but what about the ordinary irresponsible average asshole? They are not immune from being corrupt. They are just as much to blame for running the country's economy into the ground. They did so by taking bad loans, buying "McMansions", not understanding the terms of loans, having bad credit and then, for some close to 1 million illegal immigrants, literally walked away from their responsibilities and went back to "their country".

None of them are mentioning the average citizen. They keep saying "rich bankers", "wall street tycoons" etc. They're actually advocating for more bad lending practices and offering MORE HELP to distressed homeowners.

Do you personally know anyone who has been forclosed on? I don't. Not only do I not know anyone but, I don't know ANYONE who knows anyone who has.

It's liberals & even Bush who are using fear and leaving behind reason by bascially claiming that, if this bill doesn't pass, the four horsemen of the apocalypse ride up on America. According to them, business won't be able to make payroll, people won't be able to buy cars and home prices will drop. Bullshit!

I would think that actions could be taken to help small business owners make their payroll if need be. I think most will agree with me when I say that home prices NEED to come down. Currently, in the suburbs of New York, a two bedroom co-apt or condo in an good area goes for roughly a cool 300k. That's absurd. And a homeowner can't come and cry to me that they want to sell and "can't get what they want for it" . There's a owner on my block who bought his 2 family house in 1970 for 50k and wants 800k for it. Wake up! The days of "flipping" are over.

And what about liberals like Barney Frank and Nancy Pelosi who, all of a sudden, care about the automotive industry and whether or not you can buy a car? I would think that liberal greenies wouldn't give a crap whether or not the auto industry could go under. After all, that would mean less cars on the road would help global warming, right?

What exactly did people do before credit when they wanted to buy a car or a house? They had to save money. Put their own money into the deal. You know, something called a down payment. It might be that Americans will have to be introduced to an old concept that they don't quite like and that is, fiscal conservatism. You want a car? Well, you're going to have to save for it. If you can't make a down payment, well, you're going to have to buy a shabanger instead of a Lexus and fix that baby up until you can buy a better car.

It's clear that fiscal liberalism has run a muck. Fiscal conservatism will save the nation. It's going to take time. But just like this crisis began took over ten years to come to a head, it will take that long to fix it. No quick fixes. No easy solutions.

No more help.

http://mrltavern.podomatic.com

 

 

 

Strangle the Democrats with Fannie, Freddie, and the Housing crisis

The meltdown of Fannie and Freddie should be a transformative moment in American politics. It should discredit the whole Democratic economic agenda. It is too bad that it happened in the middle of the most interesting Presidential election in a generation because there are lessons to learn from it. Several points.

Let's start with some numbers. Contributions since 1989(!) to ALL members of Congress. Note that this is an aggregate over time. Note how a guy who has been in Congress for 3 years manages to come in 3rd on the list.

Name

Office

Party/State

Total

1. Dodd, Christopher J

S

D-CT

$133,900

2. Kerry, John

S

D-MA

$111,000

3. Obama, Barack

S

D-IL

$105,849

4. Clinton, Hillary

S

D-NY

$75,550

5. Kanjorski, Paul E

H

D-PA

$65,500

First, this is a Democratic scandal. In yesterday's WaPo Al Hubbard and Noam Neusner ask "Where was Senator Dodd?" The answer is clear. On the take. Open Secrets notes who gets money from these guys:

Fifteen of the 25 lawmakers who have received the most from the two companies combined since the 1990 election sit on either the House Financial Services Committee; the Senate Banking, Housing & Urban Affairs Committee; or the Senate Finance Committee. The others have seats on the powerful Appropriations or Ways & Means committees, are members of the congressional leadership or have run for president. Sen. Chris Dodd (D-Conn.), chairman of the Senate banking committee, has received the most from Fannie and Freddie's PACs and employees ($133,900 since 1989). Rep. Paul Kanjorski (D-Pa.) has received $65,500. Kanjorski chairs the House Financial Services Subcommittee on Capital Markets, Insurance and Government-Sponsored Enterprises, and Freddie Mac and Fannie Mae are government-sponsored enterprises, or GSEs.

But they miss the important point. The GSEs give to Democrats primarily.

And this is the second point. These are partisan instituttions. Republicans tried to reform it, but got out lobbied every time. Hubbard and Neusner described how this works:

The administration did not accept half-measures. In 2005, Republican Mike Oxley, then chairman of the House Financial Services Committee, brought up a reform bill (H.R. 1461), and Fannie and Freddie's lobbyists set out to weaken it. The bill was rendered so toothless that Card called Oxley the night before markup and promised to oppose it. Oxley pulled the bill instead.

When there was a Republican Congress, Congressional leadership tried to do the right thing, but Fannie and Freddie's lobbyists picked off some weak Republicans. With a Democratic Congress, Fannie and Freddie just feed at the trough.

Third, these guys are some of the most powerful figures in the Democratic lobbyist-operative firmament. Obama was forced to fire James Johnson, his first VP Vetter. Johnson had been CEO of Fannie Mae.  But it doesn't stop there. Johnson, while a consultant for Fannie and Countrywide, was passing out below market loans to Senator Dodd, among others.

The recent CEO of Fannie was Franklin Delano Raines. (what do you bet his parents politics were?) Raines was a Clinton OMB Director and worked in the Carter White House. Raines was replaced with an actual business guy.

Fourth, it doesn't stop there. Not only that, but the affordable housing racket is also used as a way to launder government money into corrupt Democratic voter registration practices. One of the organizations pushing subprime loans and other "affordable housing" financial vehicles... ACORN, which got a sweet deal in the Housing Bill.

What is the upshot of all of this?  The housing meltdown has both causes and effects that are ideologically aligned with Democratic objectives.  While gutting the regulatory apparatus for a huge segment of our economy, leading Democrats were receiving contributions and below market loans from the very people whose regulations their were gutting. It was used to move money into Democratic grassroots campaign vehicles. And it moved substantial parts of the economy into government control. According to financial analyst Barry Richoltz, "socialism for the rich."

This should be a long-term stain on the credibility of Democratic Party's economic management.  Too bad no one has the attention span to notice.

Obama Masked

Podcast Show Notes

In firing volleys at McCain's number of houses and McCain's Kevin Baconish links to Jack Abramoff opened the door for the McCain campaign to go after the housing finance assistance Obama received from convicted felon Tony Rezko and unrepentant terrorist and longtime Obama Associate William Ayers. (Hat Tip: Sister Toldjah.)

The real reason Obama opposed protecting children born alive during an abortion.

Obama tries to ween himself off the teleprompter ,

Obama supporter Doug Kmiec takes exception to Obama's attack on Justice Thomas at Saddleback. (Hat Tip: Campaign Spot.)

Obama finds moral equivalence between the U.S. invasion of Iraq and the Russian invasion of Georgia. (Hat Tip: Instapundit.)

McCain once again rules out a one-term pledge. (Hat Tip: Outside the Beltway.)

A pro-life mass arrest in Maryland.

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Boehner Fumbles Housing Message

House GOP Leader John Boehner’s statement on the Housing Bill this week, which deserved the no vote he was urging, was utterly tone deaf.  Never, never write a sentence like:

“We must take responsible steps to ensure our financial and housing markets are sound, but the Democrats’ bill represents a multi-billion dollar bailout for scam artists and speculative lenders at the expense of American taxpayers.” 

Boehner later rephrased that same sentence at his press conference which predictably dominated the GOP's message on housing.  Republicans should always craft every message and statement assuming that any individual sentence will be picked out of context.  Period.

Voters who read a sentence like Boehner’s hear: "If you’re having trouble making your mortgage payments, Republicans think you’re scum." 

So how could Boehner and his staff have done this differently?  He should have emphasized the distinction between the thousands of people who were sold a bill of goods by shady mortgage brokers, and the shady mortgage brokers themselves.  For example, he could have said: “Our plan would help the people who have truly been victimized without bailing out the scam artists who earned billions by preying on honest folks’ dreams of homeownership.”

Incidentally, Heritage has some good principles that an effective homeowner relief bill should follow.

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