Tax Break Contributed to Bubble

CMU;

I agree 100% with you. These tax breaks are nothing more than a subsidy for a type of consumption: home ownership. The sooner this country gets over the notion that owning a home is an "investment", the sooner we'll get our economic house in order.

A home is nothing more than a hard asset that depreciates over time - akin to a car. The amount of capital that we throw at this sector to prop up the value of this asset is ill-advised.

I travel to Japan often, and I believe that they have the better economic model for home ownership. In their system, the only thing of long-term value is the land itself (which in Japan especially, is a scarce commodity). The housing structure is not viewed as an "investment", but as a depreciating asset - again, like we view a car.

I believe, therefore, that it is no accident that Japan has retained much more of its industrial infrastructure than us. They deploy more of their capital there.

Posted by: benson at December 19, 2008 10:12 AM

Whuh;

The NYT ran a story about one month ago about the lack of regulation in the derivatives market. It highlighted one of the key events: the head of the government agency that regulates the commodity markets (a woman whose name escapes me no) was raising the alarm that derivatives trading was a time bomb waiting to explode. She was paid a "visit" by none other than Alan Greenspan, Robert Rubin and Larry Summers (together) who stared her down on it.

Trying to pin this all on one side might make for great politics. in much the same way as blaming the auto mess all of one side. It does not conform to reality, however.

Posted by: benson at December 19, 2008 11:15 AM

Whuh;

I see. Excuse me, but didn't Greenspan serve under another president? I seem to recall that this other president thought so highly of the guy, he made him sit next to his wife during the state of the union address.

Yes, we can all see that you don't have any ax to grind in this matter.

Posted by: benson at December 19, 2008 11:34 AM

BRG;

OK, here is something we can agree on wrt Fedders housing. I know the type of landlord of which you speak, and agree about that!! How about that?!?! I will say, however, that I think this type of landlord is generally rstricted to the southern parts of the Borough.

Hey, I once was a landlord myself. There is a flip side to the story. My tenant was a "professional New York City tenant", if you know what I mean. She lived in the apartment for 40 years, and acted like SHE owned the place. Her bedroom was right above mine, and if she didn't approve of the way I ran the place, she'd drag her bed across the floor to keep me awake.

DIBS: Johny Carson and Don Rickles: now THAT was entertainment. I went to see Don Rickles about 1.5 years ago out at Westbury, and it was great. He's slowed down alot, but still can rung rings around most folks.

Posted by: benson at December 19, 2008 1:15 PM

Ooops;

Sorry folks, I wrote this comment on the wrong thread.

Posted by: benson at December 19, 2008 1:16 PM

Whuh;

I can see that you are really getting into the holiday spirit!! I also see that do not resort to personal attacks in making your case.

As to your latest statement:

Hmmmmm -let me get this straight. You first invoke Reagan (who left office 20 years ago)and Greenspan as principals in this crisis. When I pointed out that there was an interim president who also fully backed and embraced Greenspan, you inform us that these past precidencies are irrelevant - it's all W's fault.

Nahh - you don't have an ax to grind.

Posted by: benson at December 19, 2008 1:41 PM

Sam;

The next thing that is really going to shock folks is California. There was a unbelievable news item in yesterday's WSJ: starting next month, Califonia is going to start paying its suppliers in IOU's!!! I am amazed that this news has not received more attention.

Posted by: benson at December 19, 2008 1:51 PM

Sam;

Agreed that NYS is not far behind in terms of a fiscal train wreck coming. I'm not much up on Califonia politics, so I don't know what's driving the situation there. As for NYS, there could be some possible good coming from the coming crisis. In my mind, Albany is a poster child for entrenched interest politics. I've mentioned it here before: New York State's Medicaid expenditures is more than California's and Texas', COMBINED. The hospital system in NYS serves a sort of "outsourced welfare" function. Nominally, the hospitals are private, but much of their revenue comes from Medicaid reimbursements. The state builds up this sector to boost employment. This is New York State's own "housing bubble" which is set to collapse. It will not be a fun thing to watch.

Polemecist: WOW!!! I think you need to relax. This country has been through alot of things: a civil war, WWI, WWII, a Great Depression, etc. and has manged to pull through and come back stronger than ever. One of the oft-overlooked strengths of this country is the ability of its systems and people to dynamically adapt. I work for a Japanese company and from this experience I have learned to appreciate this great characteristic of the US. The Japanese leadership is so rigid in its thinking and ability to adapt to changing times. Ditto for Europe. I used to manage our Milan office, and the rigidity of Europe's business and political culture is also a sight to behold. It is no accident that these places HAVE produced these fanatical mass movements, as their system's rigidity doesn't provide for adaptation.

Posted by: benson at December 19, 2008 2:50 PM