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Should be burn excess homes in an effort to stabilize the economy?
Posted by: Justin ()
Date: April 10, 2009 12:57PM

In the Great Depression, FDR, relying on Keynesian ideas, decided that paying farmers to burn their crops would help keep prices from falling.

Should we apply this same principle to housing?

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Re: Should be burn excess homes in an effort to stabilize the economy?
Date: April 10, 2009 12:58PM

Justin Wrote:
-------------------------------------------------------
> In the Great Depression, FDR, relying on Keynesian
> ideas, decided that paying farmers to burn their
> crops would help keep prices from falling.
>
> Should we apply this same principle to housing?


Yes. Starting with yours.

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Re: Should be burn excess homes in an effort to stabilize the economy?
Posted by: tinfoil hat ()
Date: April 10, 2009 01:00PM

WashingTone Locian Wrote:
-------------------------------------------------------
> Justin Wrote:
> --------------------------------------------------
> -----
> > In the Great Depression, FDR, relying on
> Keynesian
> > ideas, decided that paying farmers to burn
> their
> > crops would help keep prices from falling.
> >
> > Should we apply this same principle to housing?
>
>
> Yes. Starting with yours.



ha ha exactly, forget about the homeless people and everything, just burn them! all that Co2, your a genuis

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Re: Should be burn excess homes in an effort to stabilize the economy?
Posted by: Justin ()
Date: April 10, 2009 01:02PM

tinfoil hat Wrote:
-------------------------------------------------------
> WashingTone Locian Wrote:
> --------------------------------------------------
> -----
> > Justin Wrote:
> >
> --------------------------------------------------
>
> > -----
> > > In the Great Depression, FDR, relying on
> > Keynesian
> > > ideas, decided that paying farmers to burn
> > their
> > > crops would help keep prices from falling.
> > >
> > > Should we apply this same principle to
> housing?
> >
> >
> > Yes. Starting with yours.
>
>
>
> ha ha exactly, forget about the homeless people
> and everything, just burn them! all that Co2, your
> a genuis


I am being slightly sarcastic.

But FDR (relying on the incorrect theories of Keynes) did something just as stupid.

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Re: Should be burn excess homes in an effort to stabilize the economy?
Posted by: Gravis ()
Date: April 10, 2009 01:07PM

WashingTone Locian Wrote:
-------------------------------------------------------
> Justin Wrote:
> --------------------------------------------------
> > In the Great Depression, FDR, relying on Keynesian
> > ideas, decided that paying farmers to burn their
> > crops would help keep prices from falling.
> >
> > Should we apply this same principle to housing?
>
>
> Yes. Starting with yours.


+1

LOL!


"the wisdom of the wise will perish, the intelligence of the intelligent will vanish."095042938540

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Re: Should be burn excess homes in an effort to stabilize the economy?
Posted by: Justin ()
Date: April 10, 2009 01:27PM

Gravis Wrote:
-------------------------------------------------------
> WashingTone Locian Wrote:
> --------------------------------------------------
> -----
> > Justin Wrote:
> >
> --------------------------------------------------
>
> > > In the Great Depression, FDR, relying on
> Keynesian
> > > ideas, decided that paying farmers to burn
> their
> > > crops would help keep prices from falling.
> > >
> > > Should we apply this same principle to
> housing?
> >
> >
> > Yes. Starting with yours.
>
> +1
>
> LOL!


I LOL at FDR/Keynes trying to combat falling prices by paying farmers to burn crops (despite record #s of unemployed people going hungry). I LOL at FDR/Keynes enacting minimum wage laws that forced employers to cut more jobs and didn't allow for the market to self correct. I LOL at the lengths Keynesians will go to in order to keep the free market from disproving their flawed ideas. LOL!

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Re: Should be burn excess homes in an effort to stabilize the economy?
Date: April 10, 2009 01:38PM

Justin Wrote:
-------------------------------------------------------

>
>
> I LOL at FDR/Keynes trying to combat falling
> prices by paying farmers to burn crops (despite
> record #s of unemployed people going hungry). I
> LOL at FDR/Keynes enacting minimum wage laws that
> forced employers to cut more jobs and didn't allow
> for the market to self correct. I LOL at the
> lengths Keynesians will go to in order to keep the
> free market from disproving their flawed ideas.
> LOL!

Keynes' "flawed ideas"...massive government spending during an economic contraction, got us out of the Great Depression. Most of that massive spending occurred during WWII.

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Re: Should be burn excess homes in an effort to stabilize the economy?
Posted by: Justin ()
Date: April 10, 2009 01:51PM

WashingTone Locian Wrote:
-------------------------------------------------------
> Justin Wrote:
> --------------------------------------------------
> -----
>
> >
> >
> > I LOL at FDR/Keynes trying to combat falling
> > prices by paying farmers to burn crops (despite
> > record #s of unemployed people going hungry).
> I
> > LOL at FDR/Keynes enacting minimum wage laws
> that
> > forced employers to cut more jobs and didn't
> allow
> > for the market to self correct. I LOL at the
> > lengths Keynesians will go to in order to keep
> the
> > free market from disproving their flawed ideas.
> > LOL!
>
> Keynes' "flawed ideas"...massive government
> spending during an economic contraction, got us
> out of the Great Depression. Most of that massive
> spending occurred during WWII.

You misunderstood the point of my post (and basic economics / history)

Keynes didn’t believe the market could self-correct. He said prices and wages wouldn’t adjust downward in a contraction. When they did, FDR enacted price controls and minimum wage laws which made the contraction even worse.

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Re: Should be burn excess homes in an effort to stabilize the economy?
Posted by: tubby ()
Date: April 10, 2009 02:39PM

Yes, we are indeed fortunate to have had that great economic thinker, G Bush, to plot our way out of this depression.

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Re: Should be burn excess homes in an effort to stabilize the economy?
Posted by: Justin ()
Date: April 10, 2009 02:53PM

tubby Wrote:
-------------------------------------------------------
> Yes, we are indeed fortunate to have had that
> great economic thinker, G Bush, to plot our way
> out of this depression.


You're kidding right? G Bush didn't even know supply from demand!!

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Re: Should be burn excess homes in an effort to stabilize the economy?
Posted by: Senor Winces ()
Date: April 10, 2009 04:12PM

Yes we should burn them. First fill them with Mexicans though.

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Re: Should be burn excess homes in an effort to stabilize the economy?
Posted by: Bonfire ()
Date: April 10, 2009 04:18PM

Seems like anytime in the 20th century, that the economy showed signs of souring, we always managed to go to war. WW2 was an economic superboom for this nation!

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Re: Should be burn excess homes in an effort to stabilize the economy?
Posted by: The Keynes in Spain ()
Date: April 10, 2009 04:41PM

Justin Wrote:
-------------------------------------------------------

>
> You misunderstood the point of my post (and basic
> economics / history)
>
> Keynes didn’t believe the market could
> self-correct. He said prices and wages wouldn’t
> adjust downward in a contraction. When they did,
> FDR enacted price controls and minimum wage laws
> which made the contraction even worse.

You're an idiot. Deflation was in full force well before FDR took office, so how was Keynes proven wrong when his policies weren't even in place before deflation?

Keynesian theory held that when the economy was in a deflationary spiral, cutting government budgets only added fuel to the downward spiral. In these situations, the government MUST spend more, being the spender of last resort.

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Re: Should be burn excess homes in an effort to stabilize the economy?
Posted by: John Maynard Keynes ()
Date: April 10, 2009 05:15PM

If I weren't dead I'd advocate government intervention, or demand-side management of the economy, to achieve full employment and stable prices. But I am so I won't.

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Re: Should be burn excess homes in an effort to stabilize the economy?
Posted by: formerhick76 ()
Date: April 12, 2009 03:12PM

Yes, 'doing nothing' was working so well between 1930 and 1933.

Wages and prices were going down in that timeframe, so why wasn't employment going back to normal?

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Re: Should be burn excess homes in an effort to stabilize the economy?
Posted by: Junes ()
Date: April 12, 2009 04:44PM

Banks donating some of these houses to the Fire Departments for controlled burns wouldn't be such a bad idea.

Many (way too many) of the homes (especially McMansions) were gutted for private and yard sales, making the houses unsuitable for a mortgage. Others have such extensive mold issues the houses are considered a serious health hazard.

If any of you were out and about this past summer, there were some pretty impressive yard sales with top of the line plumbing and fixtures, counter tops and appliances (both free standing and installed)

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Re: Should be burn excess homes in an effort to stabilize the economy?
Date: April 12, 2009 05:26PM

Justin Wrote:
-------------------------------------------------------

>
> You misunderstood the point of my post (and basic
> economics / history)
>

You have no point except to parrot what Bill O'Reilly or Sean Hannity is parroting from Eric Cantor. You're a brainless idiot.

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Re: Should be burn excess homes in an effort to stabilize the economy?
Posted by: Justin ()
Date: April 13, 2009 11:42AM

WashingToneLocian Wrote:
-------------------------------------------------------
> Justin Wrote:
> --------------------------------------------------
> -----
>
> >
> > You misunderstood the point of my post (and
> basic
> > economics / history)
> >
>
> You have no point except to parrot what Bill
> O'Reilly or Sean Hannity is parroting from Eric
> Cantor. You're a brainless idiot.


This is a typical response from you once you reach the limits of your intellectual ability. If you have nothing intelligent to offer please refrain from posting-- you just end up ruining the discussion for everyone else who is actually capable of higher thought.

And please, quit it with the labeling crutch-- I am not a Republican and I haven't even seen those shows in over 4 years.

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Re: Should be burn excess homes in an effort to stabilize the economy?
Posted by: quantum ()
Date: April 13, 2009 12:13PM

ToneLocian - you actually are failing to engage in debate, and I think Justin's tongue in cheek reference to burning houses is a good kickstart.

Here's the score. We have had years (20 years) of artificially cheap credit - lots of blame to go around, but Government policy pushing mortgages (and home equity loans) to large groups of people that never should have been borrowers certainly didn't help. And one can argue politics - but who cares? We didn't take proper credit of the commodity called money - letting it rot, so to speak, as with old wheat in the silos. And that shoddy treatment of money had led to the exact opposite result of what anyone would want from a housing policy. Yes, home ownership was "increased", but that was illusory since the default rate amongst those "new" homeowners is sky high. They are experiencing foreclosure and even if they somehow escape that, are entering into loan modifications that will make them stuck in zombie loans worse than being a permanent renter. And giving them massive write-downs of principal amounts is unworkable too - the banks are not prepared to take the drastically reduced marks (many of them are insolvent). And even worse, housing prices are unrealistically high, still way above any reasonable asset price to income ratios (which should not exceed 3.5 or so to 1). We have a bubble, and the only way to get a sane housing policy and get the housing market going is to deflate that sizable bubble.

So would I would look for the Government to do is indeed "let the fire burn' by permitting asset prices to sink to levels at which responsible owners and investors can buy. This means no furtive monkeying around with interest rates to keep "prices" up, no keeping people in homes that never should have been there to avoid foreclosure - these people are not losing equity, but frankly months of free rent, and letting the market hit asset prices where people can once again buy. To some extent Obama's plan gives this idea lip service but because it really wants to inhibit and slow the deflation of the bubble it will likely cause a drag on the economy. To be fair - this is a tough thing to do - getting the pain over with quickly and in an intense way.

In many areas of the country the deflation is starting to happen, so likely a good thing is before us.

But the low income areas are so challenging. Not only is the default rate (and the fraud rate) high, the recovery rate in foreclosure is appallingly low because the residents take such awful care of the homes once behind on the loans, and the neighborhoods really begin to decline (our buddy Barney Frank ought to remember this when he starts pushing naive mortgage subsidies again). And because the recovery rate is so low, the banks have more pain in store than they ever have modeled. I am not sure what to do in these communities - our mortgage policies could cause a rapid and devastating ghettoization of these places - with real negatives and dangers associated with it. This may justify economically irrational Government intervention because the alternatives are just too grim.

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Re: Should be burn excess homes in an effort to stabilize the economy?
Posted by: formerhick76 ()
Date: April 13, 2009 01:03PM

Justin Wrote:
-------------------------------------------------------
> And please, quit it with the labeling crutch-- I
> am not a Republican and I haven't even seen those
> shows in over 4 years.

Yep, lots of 'Libertarians' have popped up over the past few years.

Maybe you can explain why falling wages and prices didn't make things better between 1930 and 1933 (the first year Keynesian stimulus was tried in any real amount.)

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Re: Should be burn excess homes in an effort to stabilize the economy?
Posted by: bigsuit84 ()
Date: April 13, 2009 01:30PM

Yes, we should burn down homes to stabilize the economy. See my presentation below.

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Re: Should be burn excess homes in an effort to stabilize the economy?
Posted by: Justin ()
Date: April 13, 2009 01:36PM

formerhick76 Wrote:
-------------------------------------------------------
> Justin Wrote:
> --------------------------------------------------
> -----
> > And please, quit it with the labeling crutch--
> I
> > am not a Republican and I haven't even seen
> those
> > shows in over 4 years.
>
> Yep, lots of 'Libertarians' have popped up over
> the past few years.
>
> Maybe you can explain why falling wages and prices
> didn't make things better between 1930 and 1933
> (the first year Keynesian stimulus was tried in
> any real amount.)

I'm not a Libertarian either, but nice try.

Not to be mistaken as being solely critical of FDR/Keynes, I must agree that Hoover did a pretty good job at resisting the free market correction as well. A few of the miscalculations to occur on his watch: Smoot-Hawley tariffs, one of the largest tax hikes in US history, increased interest rates, Emergency Relief Act, and legal strengthening of the Labor Unions.

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Re: Should be burn excess homes in an effort to stabilize the economy?
Posted by: Justin ()
Date: April 13, 2009 02:44PM

quantum Wrote:
-------------------------------------------------------
> ToneLocian - you actually are failing to engage in
> debate, and I think Justin's tongue in cheek
> reference to burning houses is a good kickstart.
>
> Here's the score. We have had years (20 years) of
> artificially cheap credit - lots of blame to go
> around, but Government policy pushing mortgages
> (and home equity loans) to large groups of people
> that never should have been borrowers certainly
> didn't help. And one can argue politics - but
> who cares? We didn't take proper credit of the
> commodity called money - letting it rot, so to
> speak, as with old wheat in the silos. And that
> shoddy treatment of money had led to the exact
> opposite result of what anyone would want from a
> housing policy. Yes, home ownership was
> "increased", but that was illusory since the
> default rate amongst those "new" homeowners is sky
> high. They are experiencing foreclosure and even
> if they somehow escape that, are entering into
> loan modifications that will make them stuck in
> zombie loans worse than being a permanent renter.
> And giving them massive write-downs of principal
> amounts is unworkable too - the banks are not
> prepared to take the drastically reduced marks
> (many of them are insolvent). And even worse,
> housing prices are unrealistically high, still way
> above any reasonable asset price to income ratios
> (which should not exceed 3.5 or so to 1). We have
> a bubble, and the only way to get a sane housing
> policy and get the housing market going is to
> deflate that sizable bubble.
>
> So would I would look for the Government to do is
> indeed "let the fire burn' by permitting asset
> prices to sink to levels at which responsible
> owners and investors can buy. This means no
> furtive monkeying around with interest rates to
> keep "prices" up, no keeping people in homes that
> never should have been there to avoid foreclosure
> - these people are not losing equity, but frankly
> months of free rent, and letting the market hit
> asset prices where people can once again buy. To
> some extent Obama's plan gives this idea lip
> service but because it really wants to inhibit and
> slow the deflation of the bubble it will likely
> cause a drag on the economy. To be fair - this is
> a tough thing to do - getting the pain over with
> quickly and in an intense way.
>
> In many areas of the country the deflation is
> starting to happen, so likely a good thing is
> before us.
>
> But the low income areas are so challenging. Not
> only is the default rate (and the fraud rate)
> high, the recovery rate in foreclosure is
> appallingly low because the residents take such
> awful care of the homes once behind on the loans,
> and the neighborhoods really begin to decline
> (our buddy Barney Frank ought to remember this
> when he starts pushing naive mortgage subsidies
> again). And because the recovery rate is so low,
> the banks have more pain in store than they ever
> have modeled. I am not sure what to do in these
> communities - our mortgage policies could cause a
> rapid and devastating ghettoization of these
> places - with real negatives and dangers
> associated with it. This may justify economically
> irrational Government intervention because the
> alternatives are just too grim.


Thanks for the comments quantum. I wouldn't expect Locian to respond anytime soon though...

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Re: Should be burn excess homes in an effort to stabilize the economy?
Posted by: KeepOnTruckin ()
Date: April 13, 2009 06:52PM

In the 1930-40's, we were in economic distress, went to war, and got out of said economic distress. In the 2000's, we were in a war, and got into economic distress. wtf?

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