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Author Topic: Chase automatically refinances morgages  (Read 401 times)
opebo
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« on: September 11, 2012, 05:59:01 am »
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Without even the debtors requesting it, reducing rates and payments.  This is great, and sensible, but what I would like to know is why doesn't the Fed take over all mortgages on this basis?  They could all be bought by the Fed en mass, refinanced at 0.5-1% interest, and/or the term extended to 50-60 years, thus eliminating a major drag on the economy.
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Beet
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« Reply #1 on: September 11, 2012, 02:53:27 pm »
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There is some merit to this idea but it also hits on my pet peeve, namely that security prices move inverse to interest rates, such that if a house can be thought of as a security, then a decrease in interest rates would only result in an increase in housing prices. And housing inflation, housing being 40 percent of household expenditures, is the mammoth in the room of uncounted inflation that is missed by the CPI.

Further, it is regressive, for the rich (like Torie) benefit from it while the young and the poor who one day aspire to own a home, particularly young families already dealing with the burden of the cost of having children, are hurt the most by it. It never ceases to amaze me when conservatives whine about relatively trivial things such as food and fuel inflation, which although they can hurt the pockets of the poor, are small beans compared to inflation in housing. And house price inflation has other harms, too, as we have seen: what goes up can come down, and when or if it does come down, the damage is tremendous.

That's the only thing I don't like about this proposal. 0.5-1% mortgage rates would simply lead to another housing boom, which in turn would force poor, young, household formers (the very people we want to help, both for moral and economic reasons) to take on proportionally more debt.

Of course, one way to address this may be a cap on the price of the home that the Fed will buy the mortgage off of. Perhaps, for instance, homes under a quarter million, the Fed will subsidize fully, those between a quarter million and half million, they will subsidize a little, and those over a half million, none at all. That would still have an inflationary impact, but not as much.
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opebo
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« Reply #2 on: September 12, 2012, 07:15:04 am »
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And housing inflation, housing being 40 percent of household expenditures, is the mammoth in the room of uncounted inflation that is missed by the CPI.

But Beet! The story of housing is massive, catastrophic deflation!  This is precisely what has collapsed the economy.  We need to reflate house prices, by having the government take over the mortgage market.

That's the only thing I don't like about this proposal. 0.5-1% mortgage rates would simply lead to another housing boom, which in turn would force poor, young, household formers (the very people we want to help, both for moral and economic reasons) to take on proportionally more debt.


Nonsense! It would merely lead to a reflation to non-depression conditions.  And for those poor young workers - the current deflation has done nothing to help them - they simply don't buy because who would buy a falling asset?  They rent.  Only a reflation can allow anyone to buy reasonably.  (that said I believe there is a severe problem about inadequate incomes to pay for everything including housing, but inadequate incomes are an argument for reflation of working class wages, not deflation of housing).

Of course, one way to address this may be a cap on the price of the home that the Fed will buy the mortgage off of. Perhaps, for instance, homes under a quarter million, the Fed will subsidize fully, those between a quarter million and half million, they will subsidize a little, and those over a half million, none at all. That would still have an inflationary impact, but not as much.

Well, I agree we should only subsidize the lower-income home-owners.  Your idea of penalizing the wealthy is excellent - another way to do this would be to nationalize all mortgages, but institute a surtax on incomes above $200,000 - say 10%.  

However, regardless, inflationary impact is precisely the goal of this program - to end and reverse deflation, which is our number one problem.
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Link
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« Reply #3 on: September 12, 2012, 12:59:47 pm »
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But Beet! The story of housing is massive, catastrophic deflation!  This is precisely what has collapsed the economy.  We need to reflate house prices, by having the government take over the mortgage market.

But the problem is how do you turn it off so you don't overshoot?  If we "nationalized" mortgage debt tomorrow people that want to buy a house a year from now would want the same deal and which politician is going to say no?  Then we are right back to where we started.  Easy money sending house prices into the stratosphere.  The problem is the US economy is too heavily based on luxuries... the real problem is 99% of Americans don't even realize it.  They honestly think it's reasonable to own a four bedroom house in the suburbs with an SUV and full sized car parked in the driveway and a flat panel TV in every room.  You do not see that level of rampant consumerism in other countries and it is ridiculous that the average person regardless of party thinks the government should implement measure to perpetuate that kind of nonsense.  Look at gas prices.  People moan about them but I don't see young stay at home moms zipping around in Toyota Yarises.  No, they want Obama to make gas $1.50 a gallon and drive around in a suburban or SUV.
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opebo
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« Reply #4 on: September 12, 2012, 02:24:12 pm »
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But the problem is how do you turn it off so you don't overshoot?  If we "nationalized" mortgage debt tomorrow people that want to buy a house a year from now would want the same deal and which politician is going to say no?

You don't say no, you say 'yes'. 

Then we are right back to where we started.  Easy money sending house prices into the stratosphere.  The problem is the US economy is too heavily based on luxuries... the real problem is 99% of Americans don't even realize it.  They honestly think it's reasonable to own a four bedroom house in the suburbs with an SUV and full sized car parked in the driveway and a flat panel TV in every room.

It is precisely reasonable and necessary, Link.   We need to make sure that all workers can live in this style, by reflating their incomes as well as their borrowing capacity.  If every adult male made a proper 'union wage' of $35-50/hour as was the case during more reasonable economic eras, and bought three cars, a four bed-room house with pool, a second house at the lake or shore, a boat, and sent 2-3 children to university, we would have no problems about recession or - more crucially - long term social problems.

You do not see that level of rampant consumerism in other countries and it is ridiculous that the average person regardless of party thinks the government should implement measure to perpetuate that kind of nonsense.  Look at gas prices.  People moan about them but I don't see young stay at home moms zipping around in Toyota Yarises.  No, they want Obama to make gas $1.50 a gallon and drive around in a suburban or SUV.

Your argument is rather beside the point, but I will consider it.  Most economists expect 'innovation' to provide a way around scarcity of certain resources, and even if it does not, what is our super-powerful military for if not to seize those resources from other nations?
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« Reply #5 on: September 12, 2012, 03:10:29 pm »
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But the problem is how do you turn it off so you don't overshoot?  If we "nationalized" mortgage debt tomorrow people that want to buy a house a year from now would want the same deal and which politician is going to say no?

You don't say no, you say 'yes'. 

Then we are right back to where we started.  Easy money sending house prices into the stratosphere.  The problem is the US economy is too heavily based on luxuries... the real problem is 99% of Americans don't even realize it.  They honestly think it's reasonable to own a four bedroom house in the suburbs with an SUV and full sized car parked in the driveway and a flat panel TV in every room.

It is precisely reasonable and necessary, Link.   We need to make sure that all workers can live in this style, by reflating their incomes as well as their borrowing capacity.  If every adult male made a proper 'union wage' of $35-50/hour as was the case during more reasonable economic eras, and bought three cars, a four bed-room house with pool, a second house at the lake or shore, a boat, and sent 2-3 children to university, we would have no problems about recession or - more crucially - long term social problems.

You do not see that level of rampant consumerism in other countries and it is ridiculous that the average person regardless of party thinks the government should implement measure to perpetuate that kind of nonsense.  Look at gas prices.  People moan about them but I don't see young stay at home moms zipping around in Toyota Yarises.  No, they want Obama to make gas $1.50 a gallon and drive around in a suburban or SUV.

Your argument is rather beside the point, but I will consider it.  Most economists expect 'innovation' to provide a way around scarcity of certain resources, and even if it does not, what is our super-powerful military for if not to seize those resources from other nations?
Wouldn't it be much simpler to fire the military and create union jobs building trains and solar panels in Arizona? Maybe someday the market can "innovate" us an electric SUV.
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opebo
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« Reply #6 on: September 12, 2012, 03:14:17 pm »
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Wouldn't it be much simpler to fire the military and create union jobs building trains and solar panels in Arizona? Maybe someday the market can "innovate" us an electric SUV.

Fair enough.  But regardless of what we do about the eventual end of the world, we need reflation now.
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Link
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« Reply #7 on: September 12, 2012, 04:01:32 pm »
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The problem is the US economy is too heavily based on luxuries... the real problem is 99% of Americans don't even realize it.  They honestly think it's reasonable to own a four bedroom house in the suburbs with an SUV and full sized car parked in the driveway and a flat panel TV in every room.  You do not see that level of rampant consumerism in other countries and it is ridiculous that the average person regardless of party thinks the government should implement measure to perpetuate that kind of nonsense.  Look at gas prices.  People moan about them but I don't see young stay at home moms zipping around in Toyota Yarises.  No, they want Obama to make gas $1.50 a gallon and drive around in a suburban or SUV.
It is precisely reasonable and necessary, Link.   We need to make sure that all workers can live in this style, by reflating their incomes as well as their borrowing capacity.  If every adult male made a proper 'union wage' of $35-50/hour as was the case during more reasonable economic eras, and bought three cars, a four bed-room house with pool, a second house at the lake or shore, a boat, and sent 2-3 children to university, we would have no problems about recession or - more crucially - long term social problems.

opebo the average union worker lived in an modest 3 bedroom one bath house, had maybe one car, and perhaps a TV.  They did not have two gas guzzling SUVs, flat panel TVs everywhere, broadband, laptops, desktops, ipods, ipads, xbox 360, home theater system, go on a cruise every couple of years, and send their kid to a $50,000 year.

Here are the facts...

Quote from: www.npr.org
The average American house size has more than doubled since the 1950s; it now stands at 2,349 square feet. Whether it's a McMansion in a wealthy neighborhood, or a bigger, cheaper house in the exurbs, the move toward ever large homes has been accelerating for years.

Link.

You know if we all lived in domiciles half the current size and dumped all the expensive tech, ate out less, downsize to one car tops, and refused to spend $50K/yr for each kids college... sure, I'm sure a lot of us could afford a lake house... a half size lake house.
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opebo
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« Reply #8 on: September 12, 2012, 04:14:42 pm »
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Well, Link, we should really use the years around 1969-1973 as the benchmark because that was when the American worker reached his peak of well-being.  And I think our primary focus should be on removing the powers and privileges of the owning class rather than being too concerned about 'excessive consumption' on the part of workers.
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« Reply #9 on: September 12, 2012, 04:31:10 pm »
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Well, Link, we should really use the years around 1969-1973 as the benchmark because that was when the American worker reached his peak of well-being.

Cherry pick whatever year you need to to make your point.  It doesn't change anything...

Quote from: infoplease.com
According to the National Association of Home Builders, the average home size in the United States was 2,700 square feet in 2009, up from 1,400 square feet in 1970.

Link.

And I think our primary focus should be on removing the powers and privileges of the owning class rather than being too concerned about 'excessive consumption' on the part of workers.

No one is putting a gun to anyone's head.  When at&t told me an outdated iphone 4s would cost me $200 plus some ridiculous amount a month for two years I balked.  I opted for a free phone with a discounted plan.  Plenty of sheepeople opt for the iphone 4s.  Why should the government get involved?  It's not the government's responsibility to cause class warfare simply to provide iphones to idiots that don't know how to budget.  The owning class is getting weatlhy partly because of the stupidity of the workers.  Apple does not become the largest company in the world because they sell to rich people.  Go to all those coffee shops for "broke" hippy students and you will see overprice Apple garbage everywhere.  How is that the fault of the "owning class?"  And why should the "owning class" be penalized if the buy apple stock instead of an apple phone.  My mom and dad make six figures.  They do not own iphones.  Why should they subsidize some college student's luxury phone?
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opebo
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« Reply #10 on: September 12, 2012, 04:36:39 pm »
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No one is putting a gun to anyone's head.

Yes, they are.  Our society is built on coercion. 

Quote
My mom and dad make six figures.

This isn't really relevant to the discussion, Link.  One mustn't get to bogged down in this fantasy of 'individual people' and consider more the structure and operation of society as a whole - as a system.

That said, I don't even know what an 'I-phone' is.
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Link
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« Reply #11 on: September 12, 2012, 05:08:45 pm »
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No one is putting a gun to anyone's head.  When at&t told me an outdated iphone 4s would cost me $200 plus some ridiculous amount a month for two years I balked.

Yes, they are.  Our society is built on coercion.

My how times have changed.  When Hoover ran for president the slogan was "a chicken in every pot."  Now we have people saying, "an iphone in every hand."

My mom and dad make six figures.  They do not own iphones.  Why should they subsidize some college student's luxury phone?

This isn't really relevant to the discussion, Link.  One mustn't get to bogged down in this fantasy of 'individual people' and consider more the structure and operation of society as a whole - as a system.

That said, I don't even know what an 'I-phone' is.

If you don't know what an iphone 4s is then why are you arguing that it is reasonable for broke people to clamor for them... and more importantly why are you arguing the US government should facility or accommodate that activity?

Anyway my family and I are not a "fantasy."  It is possible for everyone to make a household budget regardless of their income.  If people can't budget then instead of having the government intervene so they can spend recklessly why not have the government intervene to prohibit them from buying.  They already do it for some things when the average person doesn't have the cash.
« Last Edit: September 12, 2012, 05:29:19 pm by Link »Logged

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« Reply #12 on: September 13, 2012, 02:47:38 pm »
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Well, Link, we should really use the years around 1969-1973 as the benchmark because that was when the American worker reached his peak of well-being.

Cherry pick whatever year you need to to make your point.  It doesn't change anything...

Quote from: infoplease.com
According to the National Association of Home Builders, the average home size in the United States was 2,700 square feet in 2009, up from 1,400 square feet in 1970.

Link.

And I think our primary focus should be on removing the powers and privileges of the owning class rather than being too concerned about 'excessive consumption' on the part of workers.

No one is putting a gun to anyone's head.  When at&t told me an outdated iphone 4s would cost me $200 plus some ridiculous amount a month for two years I balked.  I opted for a free phone with a discounted plan.  Plenty of sheepeople opt for the iphone 4s.  Why should the government get involved?  It's not the government's responsibility to cause class warfare simply to provide iphones to idiots that don't know how to budget.  The owning class is getting weatlhy partly because of the stupidity of the workers.  Apple does not become the largest company in the world because they sell to rich people.  Go to all those coffee shops for "broke" hippy students and you will see overprice Apple garbage everywhere.  How is that the fault of the "owning class?"  And why should the "owning class" be penalized if the buy apple stock instead of an apple phone.  My mom and dad make six figures.  They do not own iphones.  Why should they subsidize some college student's luxury phone?
Precisely, apple should be nationalized to provide $30-50 an hour union jobs. The success of apple should not go to the shareholders, all of it needs to go to the worker.
« Last Edit: September 13, 2012, 02:49:56 pm by ModerateCoward »Logged
Yelnoc
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« Reply #13 on: September 13, 2012, 04:02:40 pm »
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Precisely, apple should be nationalized to provide $30-50 an hour union jobs. The success of apple should not go to the shareholders, all of it needs to go to the worker.
Jesus F. Christ that is a lot of money.
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opebo
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« Reply #14 on: September 13, 2012, 06:22:55 pm »
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Precisely, apple should be nationalized to provide $30-50 an hour union jobs. The success of apple should not go to the shareholders, all of it needs to go to the worker.
Jesus F. Christ that is a lot of money.

No, its just $60,000-100,000/year.  Paying adults in their peak earning years anything less just guarantees social ills, and the fabled union wages of yesteryear were in that range, plus benefits.
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« Reply #15 on: September 13, 2012, 07:42:48 pm »
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Precisely, apple should be nationalized to provide $30-50 an hour union jobs. The success of apple should not go to the shareholders, all of it needs to go to the worker.
Jesus F. Christ that is a lot of money.

No, its just $60,000-100,000/year.  Paying adults in their peak earning years anything less just guarantees social ills, and the fabled union wages of yesteryear were in that range, plus benefits.
Well opebo it would be slightly less if proper working hour(less than 1800 a year) were instituted, by getting rid of redundant (micro)-managers.
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opebo
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« Reply #16 on: September 14, 2012, 11:48:42 am »
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$30-50 an hour union jobs.
Jesus F. Christ that is a lot of money.

No, its just $60,000-100,000/year.  Paying adults in their peak earning years anything less just guarantees social ills, and the fabled union wages of yesteryear were in that range, plus benefits.
Well opebo it would be slightly less if proper working hour(less than 1800 a year) were instituted, by getting rid of redundant (micro)-managers.

I agree we need to move toward a 20 hour work week.
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