Drew Horn

Will Tax Cuts and Fiscal Stimulus Improve the Real Estate Market?

The writers and commenters in Seeking Alpha seem to ignore the fundamental principals of capitalistic economics. SUPPLY & DEMAND, SUPPLY & DEMAND, SUPPLY & DEMAND !!!

The most important of Clives comments is: "The median price of homes in the US and UK are still essentially not affordable, in terms of their relationship to median income for those economies." Thus demand is rightly dampened because many reasonable buyers cant afford home prices.

SUPPLYof homes is disconnected from demand. The reason for the disconnect is that planning & zoning are LOCAL functions. Increased DEMAND almost totally results from immigration (legal & illegal) and that is totally in the juristiction of the FEDERALgovernment but nearly uncontrolled.

Local government planning/zoning boards often attempt to defend the community from the expense of educating newcomers children by limiting growth using large lot and other similar limits to construction. If you want to verify this, ask a builder about the permiting process.

Getting back to Clives premise, tax cuts and fiscal stimuli may help with credit card and auto loan debt because there is no actual(physical) limit to supply . Tax and fiscal policy wont change the ratio of supply & demand in housing and thus wont, in the long run, fundamentally change size of population or the supply of housing .

What could help is simply to recognize that planning for US housing needs should be connected to wages and population change and to be effective must be done at the SAME LEVEL OF GOVERNMENT.

My hope is that a new federal government will recognize that A and Z have to be connected by the rest of the letters.

Iceland: What It's Like to Live in a World Without Money

There is a need to have a method to differentiate and seperate "investment" from speculation. There are many measures that could be used but they will all depend on gauging the difference between current intrinsic value and prospective value.

It is wrong to allow a few people to gamble with a nations savings without the depositors knowing the actual risks. If Icelanders had such a gauge to measure the risk reward ratio for their deposits, natural caution would have prevented the abuses by their banks.

I am all for speculation by people who know that they are doing it. The role government should play is not to end speculation but to shine light on it!

Misguided Policies

"The economy of the future" is destined to be socialism! The form os it is likely to be more extreme compared with England, France, Germany, etc. The only hope to avoid it is if a great leader who truly believes in capitalism emerges but the only person I can think of who has both common sense and credibility is Warren Buffet but he is a bit long in the tooth for the task.

It seems that selfish hedonism isn't limited to consumers and their credit cards. It started with the financial services industry who seem to be without effective leaders is wholly lost except to follow their normal instinct to exploit all that can be exploited. Their fictional hero, Gordon Geko's motto " GREED IS GOOD" is their only focus. They have forgotten that the reason for business to exist is to provide goods and services. The rest is simply frills.

The Fed Money Machine Gears Up to Print Trillions

It used to be that economists like Ben Bernake counciled that, in a capitalistic economic society, that (business) cycles are normal and necessary to periodically rebalance the system. This remains true but the truth cant make us free of the ignorant people currently in power .

What has happened is that Americans have been sold the idea that they can gratify every hedonistic whim without having to pay the bill. They borrow without any knowlege of or concern for the terms of the loans or much thought about how they will find the money to repay them. The entire finanical /political system has been redesigned to allow Americans to indulge in fantasy.

Now that a few of these problems have been exposed, most of the stake holders, including investors, banks, government, etc are scrambling to save their system that is, in the long run, unsustainable. The people who will pay the highest price to "save" the financial system are those who, paid their bills, and didn't borrow beyond their ability to repay loans and put ny extra money in a bank.

The business cycle has not been repealed. It has been co-opted by a political system only interested in their own short term profit and survival.

If someone leads a revolution to stop this waste of our childrens futures, I will gladly join!

Bloomberg Picks a Fight With the Fed on Disclosure

To re-state what may be obvious but is still very important, a basic principal is that government actions, especially its commitments of taxpayer money, should be open to the public . If the NY Federal Reserve Bank isn't a federal agency then its actions and obligations should not accrue to " the people". If the NY Fed is "creating money", it is perfoming a key function of government and should be a federal agency subject to direct oversight by congress and subject to the FOIA.

The current economic situation is not only a problem but also an opportunity to change for the better. Mayor bloomberg has the resources to pursue this issue through congress and the courts. I hope he has the intestinal fortitude to do so. For good reasons, Americans have little or no trust in government.

ECB Offers More Money at Cheaper Prices

The down pressure is a result of a lack of confidence that stems from an inappropriate high level of leverage. Banks used to have to live with a 20% rediscount rate and the system was stable. There was enough credit to provide growth, lenders had to be prudent, and government social engineers didn't try to use banks as tools for their agendas.

The "good old days" didn't serve the objectives of financial manipulators so they bought some politicians to help them game the system.

Financial "institutions" need to be limited in size and reach so their failure is no longer a threat to our society. Capitalism is built on investors taking risks and getting rewards. Where did it go?

I am for a return to the less glamerous but stable past.

The Right Way to Encourage Home Ownership

Mark, "The Right Way to Encourage Home Ownership" is to forget about the gimmiks and platitudes and go back to the basics of "supply & demand". The average american cant afford to buy the average home! In the long run, the only useful thing to do is to have government do what they are supposed to do 1) control our borders to prevent illegal immigration (the largest cause of population increase) to stabalize populatoin and 2) find a way to coordinate the places where creation of jobs occurs with the availability of homes. Its simple, balance the supply of homes with the demand for them.

All you propose are simply a lame attempts at the "social engineering" that has been tried for 100 years without much success. At this point, we have too many people chasing too few homes. That is the issue. The solution is not tax credits and subsidies.

The Bailout Plan Still Has a Fatal Flaw

True, true, true! But the truth will not make us free of politicians who pander to those who live their lives assuming that what they want and believe is the way things are. The only way I can think of that might change this is if media communicators can find a convincing way to let the populace know that they are, once again, being manipulated for the benefit of those who created their problems. But this assumes the media is smart enough to see the truth.

The Economy Won't Be Ignored

After reading the comments it became clear that the most significant approaching change is a major reduction in consumer credit and spending (75% of all econonomic activity). This change hasn't been recognized as the factor that will have the greatest influence on the US and world economies! In my view, reducing consumer spending and debt is both necessary and will lead to a more sustainable economic balance.

The Next President Will Be Trapped by History

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The Next President Will Be Trapped by History

John, your view of the future is realistic but to me, not sad at all. Once a crisis passes a true leader will see an opportunity to foster a new paradigm.There are lots of fundmental problems that we carry over from the last century and must be changed. We need a new paragigm and I hope Obama can help us find one.

My impression is that McCain isn't a forward thinking leader but a reactionary and opportunist who thinks in slogans.