RedRiver

The WSJ Is Wrong on the Housing Crisis

In the past only 6% of retirees will have moved more than 50 miles away from where they raised their children. I am sure that the coming baby boomer retirement wave will increase that percentage but not by the implied amount I constantly see in these types of articles (both bull and bear stances). Also, 85% of baby boomers will need their social security benefits to make "retirement" possible. Combine that with the fact that most then will have to sell their current homes in order to purchase a new one in a different location leads me to believe that the baby boomer rescue concept is about as well conceived or thought through as the housing bailout plan. All written as if Peter Pan was the intended reader. Less is indeed the new More and they'll be sure to make it as hip as possible so that they can stomach the taste.

Homebuilder Bailout: An Updated Analysis

A better summary of the coming fiasco has not been said, so I will print it again:

"Be aware that if this provision becomes law, it will incentivize builders to dump assets at levels and prices that were previously imprudent and economically unfeasible in an attempt to reclaim cash in the form of back taxes. This will exacerbate the strain on the financial sector since it is the devalution of real assets that triggered much of this mess in the first place. Property values will drop faster, property value led defaults will accelerate, and MBS and related securities, products and pools will get hit that much faster and harder as well."

From Reggie himself.

My father doesn't think this will pass the house, "its pretty easy to get the senators to vote this way but its harder to get through the house since there are just so many more of those pinheads. This should work in our favor."

TWT