On the stimulus
So, if I’m reading it right, the two things that would have actually stimulated the falling sectors of the economy (tax credits on houses and cars) did not make the cut. And the DOW dropped immediately and then rebounded quite a bit.
Remember, I do this to entertain me, not you.
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February 12th, 2009 at 5:00 pm
You left out your (monstrously unfair to the oppressed poor) tax cut allowing you to keep $13. per week.
The skf was trading at $143. just a few minutes ago. I should have bought Monday at $110.
Regards,
Rabbit.
February 12th, 2009 at 5:24 pm
From what I’ve read, those tax credits wouldn’t have stimulated shit. They would incent almost no one to buy a house or car who wasn’t going to do so anyway.
February 12th, 2009 at 5:25 pm
Also note that they weren’t truly tax credits. They were loans. You would have been able to write down your taxes this year by a certain amount, but would have had to pay that amount back over the next 3-5 years.
February 12th, 2009 at 5:26 pm
P.S. What’s up with the “Depression Learning” link at the right, between “Search” and “Stuff you want?”
February 12th, 2009 at 5:30 pm
Money. Duh. I am a capitalist.
My banker disagrees with you. He just called to say how screwed they were.
February 12th, 2009 at 6:05 pm
Screwed in what way? (That is, just exactly what part of what I said does your banker disagree with?)
February 12th, 2009 at 6:11 pm
No new loans. He figured tax credits would lead to them. and pestered me about refinancing, which I’ll probably do.
February 12th, 2009 at 6:18 pm
Actually, tgirsch, I am going to have to anecdotally disagree with you – the $15,000 credit (and one incarnation of the 10,000 had it as an actual credit, once upon a time) for home purchases would have helped Better Half and I immensely in our home search, as it would have opened up more expensive alternatives to us. For some odd reason, or geographic location has very few homes in our considered price bracket, and we are adamantly against buying outside of our means, and not too sure about buying something that will need lots of help.
But, hey, letting people keep their own money is always a bad thing, so why start now?
February 12th, 2009 at 6:23 pm
From what I understand, the 15k would of been free towards home buyers. Right now, it stands at 8000. And from what I know, unlike the 7500 it was previously, one does not need to pay it back as a loan.
I got a house last year to coincide with receiving this credit. With 15k, I am certain more people would be willing to invest in a home. Not now, of course.
As it was last year, the 7,500 for the homes was an interest free loan. A great deal with anybody with half a brain.
February 12th, 2009 at 6:47 pm
What they really ought to have done was punished the idiots at Fannie and Freddie, punished the idiots in Congress and the White House who let Fannie and Freddie get so bad. Turf Fannie and Freddie. Turf personal and business income taxes and replace them with a national sales tax. Turf capital gains taxes. Cut government spending.
Then, let the people who made bad and risky decisions sink, and then sit back and wait for the market to earn back the confidence of the consumers. This would take some time, but the economy would be a lot stronger than it was before, and banks and consumers wouldn’t be so gung ho because risk would be de-socialized.
February 12th, 2009 at 7:43 pm
Thompson: “Please help us John. We’ll do anything you say!”
John Galt: “Anything? You want me to be Economic Dictator? And you’ll follow my guidance?”
Thompson: “Yes! Implicitly!”
John Galt: “Ok,then start by eliminating the income tax.”
Thompson: “We couldn’t do that . . . How would we pay government employees?”
John Galt: “Fire your government employees.”
Sound advice in 1957.
Even better advice in 2009.
Regards,
Rabbit.
February 12th, 2009 at 9:38 pm
Linoge:
If I’m reading you correctly, it would help you buy more home, but you’re still going to look at buying a home. Although I still suggest that you’re the exception rather than the rule, based on what home sales figures have looked like over the last year or so. And again, unless I’m misunderstanding things (which is always possible), you were going to have to pay that $15,000 back anyway, which would likely put you right back into the “outside of your means” category starting in a year or two.
But, hey, letting people keep their own money is always a bad thing, so why start now?
I’ve never said any such thing.
ben:
Sorry, but Fannie and Freddie still account for fewer than one in five “bad” mortgages. The private sector did most of the dirty work on its own, without any government insistence or assistance (other than dangerously low interest rates from the Fed). If you’re not watching “House of Cards” on CNBC right now, you should be.
February 12th, 2009 at 10:26 pm
Actually, in our market, it would help us buy a home. I am serious that there appears to be a strange gap in homes on the market, and that gap annoyingly corresponds with what we have determined to be the comfortable buying region for us. It is almost positively geographical, but still annoying.
And, as for the money, as Dan already pointed out, one incarnation of the “stimulus” plan had the $15k as a straight-up, no-strings-attached credit. That would have been quite helpful.
And, no, you have never come out and said just that, but the implications of your words speak for themselves.
February 13th, 2009 at 12:12 am
The ouroboros should have been Obamas’ election symbol.
This ‘stimulus’ plan is just an economic version of a perpetual motion machine, with the added attraction that, unlike classical ‘free energy’ machines, when this machine reaches zero state, the economy explodes.
February 13th, 2009 at 12:52 am
As I recall, the home-buying stimulus was for anyone buying any house. So if you sold your home and bought another, you would get the $15k which would have helped realtors and pretty much no one else. A first time homebuyers loan would have been one thing.
The mortgage interest deduction was heralded as a means of getting people into homes, but I think that in reality it just increased the value of homes, especially in places where people have the deductions to itemize. Personally, when I bought my place I had to calculate the tax savings to make it work financially. However, I have to think that if there were no mortgage interest deduction, the prices would simply be lower.
The same holds for the $15k tax credits..though it would help the seller, it would simply encourage buying and selling for the tax credit. It would be simpler to simply write a check to everyone with a home.
February 13th, 2009 at 2:32 am
Linoge:
I’m not familiar with the various incarnations of the tax credit that may have been bandied about. All I know is that the one that made it into the senate bill, and which got stripped in conference, was one that would require you to pay it back. I don’t recall whether or not it would have been restricted to first-time buyers. (Manish seems to think it wouldn’t have been.)
As to the “strange gap,” that sounds completely plausible to me, based on various places I’ve lived, although in most places a mere $15,000 wouldn’t be enough to make the difference. In my experience, the jump has been more like in the $40-50K range (e.g., from $100K-$150K, without much middle ground).
As for taxes and “letting people keep their money,” we’ve spent the better part of the last three decades shifting more and more of the tax burden onto the working class. In my estimation, it’s time to move that back in the other direction. So basically, I’m in favor of letting a lot of people keep a little bit more of their money, rather than letting a few people keep a lot more of their money. But of course, you could always ask me, rather than just blindly applying your blanket assumptions about liberals to me. Sure, most of them will be true, but not all. 🙂