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Source link: http://archive.mises.org/8193/speculation-and-the-housing-market/

Speculation and the Housing Market

June 13, 2008 by

Reminiscent of a juvenile accepting a dare to do something stupid, the chairman of the Senate Banking Committee, Senator Christopher Dodd, crowed to reporters the other day that committee members had done what many thought would be impossible: the committee agreed to legislation that would rescue homeowners facing foreclosure. Mark Pribonic writes not not to disappoint the senator from Connecticut, but few of us ever doubted the ability of politicians to dilute the risks and rewards of voluntary exchange. FULL ARTICLE

{ 12 comments }

mark June 13, 2008 at 9:35 am

Fortunately, i think this whole issue is dead due to the fall in the dollar and inflation.

But one of the great attributes of politicians is to promise something they know will never pass.

As Archie Bunker used to say ” i’m all for being generous especially if it doesn’t cost me anthing.”

fundamentalist June 13, 2008 at 9:42 am

Good analysis of the situation. It seems that Congressmen want the Federal Government the mimic a failing style of parenting. Many parents today (often called “helicopter” parents) strive to shield their child from all negative consequences of their actions. As a result, the child grows up without a sense of his actions having any consequences, negative or positive. They’re raising a generation of dysfunctional young people who depend upon their parents to make every major decision and shield them from the consequences. Congress wants to be a helicopter parent, too.

But as Mises wrote, civilization requires cause and effect, decision and consequences. People must suffer from the consequences of poor decisions and enjoy rewards for good decisions. Someone has said that wisdom is the outcome of years of poor decisions. Helicopter parents, and helicopter states, destroy the civilizing results of natural cause and effect, and guarantee the death of civilization.

N. Joseph Potts June 13, 2008 at 12:34 pm

This makes especially rich reading in view of today’s disclosures involving bribes Sen. Dodd took from Countrywide Mortgage.

Houses would be built even if their ownership weren’t financed (as by mortgages). Perhaps many more of them would be rented rather than owned by their occupants compared with the present situation, but there would be about as many of them as there are now. The author is (speculatively) mistaken in saying otherwise.

Brad June 13, 2008 at 12:37 pm

I really, really, really, really, really, really have to start wondering who the stupid one is. The one who blows all their income and then some, knowing they will be bailed out, or one who lives a modest life style in an attempt to be self sufficient only to be tapped to do the bailing out? When you KNOW this is how the system works, even as you hope that it won’t, who is the stupid one? I could be living one hell of a lifestyle right now if a I wanted to, if I didn’t have some grasp of equity and how it is maintained. Why live so modestly? We’re all going to go into the collective crapper anyway, so why not live it up now? When I’m digging for worms one way or another, it will have been nice to have lived the champagne wishes and caviar dreams lifestyle, for a while anyway.

Eric June 13, 2008 at 12:46 pm

When I was a child, I thought adults were honest and the government was good – at least in America.

Today I believe the opposite of what I believed as a child. I am truly amazed that our society functions at all with the level of dishonesty that reeks from our political class. Grandstanding political leaders who promise to solve all our problems, if only we’d vote them back in next election, are a disease for which I can see no cure.

There must be something in our genes that selects for dishonesty for it to be so widespread. We must also have a gene for big government too. I am not optimistic about my grand children’s future.

Robert June 13, 2008 at 7:12 pm

Now we’re getting somewhere. It should come as no surprise that the hired goons of the monied class work diligently to rescue the simpleton commoners from their self-inflicted plight (using tax dollars no less). From the very inception our government was designed to favor the landed gentry and wealthy merchant classes. One need only do a little reading on the Constitutional Convention to ascertain the true intent. To get a sense of more modern consequences of the design, I would suggest Nock’s Our Enemy, The State.

In his clear-eyed analysis he concludes “This regime was established by a coup d’Etat of a new and unusual kind, practicable only in a rich country. It was effected, not by violence, like Louis- Napoleon’s, or by terrorism, like Mussolini’s, but by purchase. It therefore presents what might be called an American variant of the coup d’Etat. Our national legislature was not suppressed by force of arms, like the French Assembly in 1851, but was bought out of its functions with public money; and as appeared most conspicuously in the elections of November, 1934, the consolidation of the coup d’Etat was effected by the same means; the corresponding functions in the smaller units were reduced under the personal control of the Executive. This is a most remarkable phenomenon; possibly nothing quite like it ever took place; and its character and implications deserve the most careful attention.”

The likes of Dodd and the other fools on the hill are mere mob men, performing tyrannical deeds at the behest of their masters. Oh yeah, lest I forget, their masters are NOT those who carry one vote a piece. Their masters are the money men and merchants in our times. Go figure!

Bobcat June 14, 2008 at 1:40 pm

Mr. Pribonic writes, “…lenders would agree to write down loan balances that are below the appraised value of the house.”

Does he not mean, loan balances that are ABOVE the appraised value?

r

Mark Pribonic June 16, 2008 at 11:01 am

Bobcat,

Thanks for pointing out my word reversal. Yes, banks would be required to write down balances that are currently above so-called market values

Mark Pribonic June 16, 2008 at 11:01 am

Bobcat,

Thanks for pointing out my word reversal. Yes, banks would be required to write down balances that are currently above so-called market values

Mark Pribonic June 16, 2008 at 11:01 am

Bobcat,

Thanks for pointing out my word reversal. Yes, banks would be required to write down balances that are currently above so-called market values

Mark Pribonic June 16, 2008 at 11:01 am

Bobcat,

Thanks for pointing out my word reversal. Yes, banks would be required to write down balances that are currently above so-called market values

marvin July 6, 2009 at 6:24 pm

The current Obama Bailout plan is working. The news about the profit of $1.8 billion in interest payments on the first set of bank loans that were repaid is a good indication to it.

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