Are people capable of understanding what their interests are?
May 28, 2008
– Comments (8)
TMF Bent has this to say about Hussein O$ama in a comment to this post:
"He doesn't really want more bank regulation, because if he gets it, home prices will drop even more, loans will be harder to get, and more expensive, and more of his constituency (smug youngsters and urbanites who believe an inexperienced Chicago politico who's never passed a piece of bipartisan legislation can somehow be the new concensus builder) will be locked out of home debtorship than before -- at least until they manage to scrape together a down payment and a credit history.
He's probably smart enough to realize that this plan is worth zilch as far as fixing anything, and its only worth is as a way for him to pretend he cares more than McCain, and just as much as bailout Hillary -- whose poorer, blue-collar fans would be even worse off if banks actually asked for down payments and proper compensation for credit risk. (The end of subprime is going to put those folks back into renting forever, which is good, because there will be plenty to rent.)"
Well, the truth is that everybody who wants to become a homedebtor should be PRAYING for tougher bank regulation. A 20% down payment is good, but 30% would be better, and 100% would be still better. 6% mortgages is affordable enough, but 9% would be more affordable than 6% and 12% would be more affordable than 9%, and (infinity sign)% would be the most affordable. Why is it so? For the same reason that a marathon runner does not get any advantage when new better shoes appear on the market for $100. If EVERYBODY can buy these shoes, the list of winners will be unchanged, except EVERY participant will now be $100 poorer. The same goes for mortgages. Whatever advantage you think you're getting from lax qualification standards and low rates is imaginary because every other buyer is getting the same advantage. And this means the price of houses will rise until they become unaffordable to the same number of people as before. So who will be able to afford a house with better mortgage availability? The answer: exactly the same people that were able to afford it when mortgages were not available. But now both the winners and the losers are screwed because the winners get the same house for a higher price, and the losers see the gap between prices and their purchasing power get even wider in dollar terms. If "smug youngsters and urbanites" and "blue-collar fans" are REALLY going to ask Hussein O$ama and Billary for easy mortgages, that defienes the average American voter as someone who is always ready to tighten the noose around his neck.
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