http://www.intheagora.com/archives/2008/09/fanny_packs/?source=rss current events, culture, faith, science and more Fri, 30 Jul 2010 17:20:59 -0700 http://wordpress.org/?v=2.8.2 hourly 1 http://www.intheagora.com/archives/2008/09/fanny_packs/comment-page-1/#comment-16824 CJ Sat, 20 Sep 2008 00:09:27 +0000 http://intheagora.com/2008/09/fanny_packs.html#comment-16824 We're about to see the definition of a boondoggle come out of capital hill. We’re about to see the definition of a boondoggle come out of capital hill.

]]> http://www.intheagora.com/archives/2008/09/fanny_packs/comment-page-1/#comment-16823 Jerry Doodle Thu, 18 Sep 2008 15:40:43 +0000 http://intheagora.com/2008/09/fanny_packs.html#comment-16823 Oops. here's the link to the op-ed by Stephen Roach in the NY Times: http://www.nytimes.com/2008/03/05/opinion/05roach.html?_r=1&ref=opinion&oref=slogin Oops. here’s the link to the op-ed by Stephen Roach in the NY Times: http://www.nytimes.com/2008/03/05/opinion/05roach.html?_r=1&ref=opinion&oref=slogin

]]> http://www.intheagora.com/archives/2008/09/fanny_packs/comment-page-1/#comment-16822 CJ Thu, 18 Sep 2008 15:40:16 +0000 http://intheagora.com/2008/09/fanny_packs.html#comment-16822 I believe that the most appropriate thing that could be done is to dismantle them into smaller organizations and to regulate the system in a way that prevents it from becoming hyperdominated by overly large organizations. This regulates a system more than I would like to do so in theory, and it caps out the top of the system through losses in efficiency gained by scale, but whenever a company gets "too large to fail" then we are in affect practicing social capitalism. The risk is borne by the taxpayers, while the return is wholly given unto the company. That's a ridiculous imbalance. I believe that the most appropriate thing that could be done is to dismantle them into smaller organizations and to regulate the system in a way that prevents it from becoming hyperdominated by overly large organizations.
This regulates a system more than I would like to do so in theory, and it caps out the top of the system through losses in efficiency gained by scale, but whenever a company gets “too large to fail” then we are in affect practicing social capitalism. The risk is borne by the taxpayers, while the return is wholly given unto the company. That’s a ridiculous imbalance.

]]> http://www.intheagora.com/archives/2008/09/fanny_packs/comment-page-1/#comment-16821 Jerry Doodle Thu, 18 Sep 2008 15:38:38 +0000 http://intheagora.com/2008/09/fanny_packs.html#comment-16821 Maybe the question should be what caused the mess before we start asking who caused it. A lot about this crisis is way over my head, but I do know it didn't come out of nowhere. I've been aware of warnings for well over a year by various analysts who had been eerily comparing our housing/credit bubbles to the 1980's era bubbles in Japan. Japan's property and stock market bubbles burst in the early '90s and their economy is still struggling to get back. Here's a prescient March 2008 op-ed in the NY Times from one of those analysts, Stephen Roach, former chief economist of Morgan Stanley, now chairman of its Asian operations. Roach thinks our U.S. economic crisis is rooted in sustained over-consumption (ie: shifting from income to asset-based saving). In the op-ed he warns against forestalling "the endgame of post-bubble adjustments. Government aid is being aimed, mistakenly, at maintaining unsustainably high rates of personal consumption. Yet that's precisely what got the United States into this mess in the first place - pushing down the savings rate, fostering a huge trade deficit and stretching consumers to take on an untenable amount of debt." He proposes instead: 'A more effective strategy would be to try to tilt the economy away from consumption and toward exports and long-needed investments in infrastructure." He adds a caution: "That's not to say Washington shouldn't help the innocent victims of the bubble's aftermath - especially lower and middle-income families. But the emphasis should be on providing income support for those who have been blindsided by this credit crisis rather than on rekindling excess spending by overextended consumers." A note on Freddie Mac and Fannie Mae, taxpayers. Here's their charter: <i> the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation have an affirmative obligation to facilitate the financing of affordable housing for low- and moderate-income families in a manner consistent with their overall public purposes, while maintaining a strong financial condition and a reasonable economic return.</i> In 2006, Tishman Speyer and BlackRock Realty purchased a large residential apartment complex in NYC from Metropolitan Life for $5.4 billion, in what is considered the most ever paid for a single residential property. At the time, the purchase was considered an extremely rich, top-of-the-market transaction. Barron's thought the debt was way too much (based on too agressive income projections). A large chunk of that debt is held by Fannie Mae and Freddie Mac, despite a charter that states that are required to make housing more affordable, not to bet $$$ on risky, hugely expensive projects that require rents to triple to break even. Maybe the question should be what caused the mess before we start asking who caused it.
A lot about this crisis is way over my head, but I do know it didn’t come out of nowhere. I’ve been aware of warnings for well over a year by various analysts who had been eerily comparing our housing/credit bubbles to the 1980’s era bubbles in Japan. Japan’s property and stock market bubbles burst in the early ’90s and their economy is still struggling to get back.
Here’s a prescient March 2008 op-ed in the NY Times from one of those analysts, Stephen Roach, former chief economist of Morgan Stanley, now chairman of its Asian operations. Roach thinks our U.S. economic crisis is rooted in sustained over-consumption (ie: shifting from income to asset-based saving).
In the op-ed he warns against forestalling “the endgame of post-bubble adjustments. Government aid is being aimed, mistakenly, at maintaining unsustainably high rates of personal consumption. Yet that’s precisely what got the United States into this mess in the first place - pushing down the savings rate, fostering a huge trade deficit and stretching consumers to take on an untenable amount of debt.”
He proposes instead: ‘A more effective strategy would be to try to tilt the economy away from consumption and toward exports and long-needed investments in infrastructure.”
He adds a caution: “That’s not to say Washington shouldn’t help the innocent victims of the bubble’s aftermath – especially lower and middle-income families. But the emphasis should be on providing income support for those who have been blindsided by this credit crisis rather than on rekindling excess spending by overextended consumers.”
A note on Freddie Mac and Fannie Mae, taxpayers. Here’s their charter:
the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation have an affirmative obligation to facilitate the financing of affordable housing for low- and moderate-income families in a manner consistent with their overall public purposes, while maintaining a strong financial condition and a reasonable economic return.
In 2006, Tishman Speyer and BlackRock Realty purchased a large residential apartment complex in NYC from Metropolitan Life for $5.4 billion, in what is considered the most ever paid for a single residential property. At the time, the purchase was considered an extremely rich, top-of-the-market transaction. Barron’s thought the debt was way too much (based on too agressive income projections). A large chunk of that debt is held by Fannie Mae and Freddie Mac, despite a charter that states that are required to make housing more affordable, not to bet $$$ on risky, hugely expensive projects that require rents to triple to break even.

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