Do You Want to be a Millionaire?

Paul Krugman identifies a real level of discrimination against Renting, in favor of Home Ownership. I agree with his sentiment, but fear Students will not grasp the essentials of the Argument. The Mortgage Tax Credit propelled the subprime Mortgage Crisis, led to an over-evaluation of Rental Capital and extreme Rent formulations, effectively put a hidden Tax upon normal Savings, and only helps financial agents to sell Paper. It brings an over-expansion to the Construction sector, which is later plagued by under-financed Development having lost their initial negligent financing. Much Income and Profits have been extracted from high-Risk paper which held together only sufficiently long enough to present Gain for the Paper Preparers. Paul is correct to state that the number of Homeowners will be lower than when Bush took Office by the Bush Leave-Taking. It will probably take a decade for Economists to admit that the entire American economy has been scammed by the fraudulent Paper-Makers, but it will come after the American Public loses interest in Prosecutions.

Mike Shedlock expends good effort in the description of the backside of the Hurricane caused by the Mortgage Crisis. Everything was great when the Paper was being Sold; People gaining listed Equity, and therefore increased ability to borrow, Banks were still receiving Income from Debt repayment and Equity refinancing, and the Government could finance from Overseas borrowing because the Dollar was strong. The Merry-Go-Round has stopped: Property-Holders are losing Equity, regional Banks are losing both Debt Repayments and Paper Profits, Debtors have lost both their ability to Pay and to Borrow, and the Dollar is beginning to strengthen after a long degradation. We could start working out of the Mess, except that so much of the Economy has lost necessary Credit extensions on which they depend for normal operations. The worst aspect of the Situation states that regional Banks and normal financial Institutions have already reached the limits of their Loan extensions, and cannot provide further Credit without Risk to their own stability.

I must say that I agree with this Post, but I use it mainly for its description of Milton Friedman’s Thought. Friedman always shorted his categories through his lack of identification of whether the Expenditures brought Personal gratification in the Expenditure. Spending other Peoples’ Money on Others is far more creative, if the Expenditure Decision was made because of a personal profit to Oneself. A fellow Blogger likes to portray Markets in Everything, but I would always revert to the old adage: Follow the Money. A Voter casting a Sentiment to help Others remains at great distance from an Office-Holder collecting a Salary and Incentives for distributing Funds. I have often thought how wealthy I could become if I Tax-farmed the Medicare Payment structure: I would cut Medicare payments by 17-18%, listen to the Screams of the Health Care industry, and award myself a 5% Bonus of the total Savings; using obstructive measures to ensure I could keep the Position for 10 years. lgl