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government interference in business: Housing: The Little Engine That Can't - 01/28/12 12:54 PM
Housing, the force that has lifted the economy from almost all previous recessions, now appears to have become the little engine that can’t, as the nation seeks to find another means of raising the U.S. from economic stagnation. One only has to look at the graphs (courtesy of Calculated Risk Blog) to see just how far housing has to go in order to stimulate the economy as it has done following previous recessions. And a look at the unemployment situation shows that “full employment” is still years away.
 
Instead of seeking ways to artificially stimulate housing—efforts to date have … (44 comments)

government interference in business: Are You Nuts? An FHA Program For Builders? - 05/28/10 07:36 AM
Legislation introduced this week and supported by The National Association of Homebuilders, NAHB, has proposed establishing a loan guarantee program for builders and developers that would be administered by the Treasury Department. According to the bill’s sponsors, the program would help “unfreeze credit for small home building firms.”
 
As a former home builder I understand the credit crunch many builders are facing, and I'm aware that continued building will create jobs, a task our "leaders" have committed to resolve; however, building more homes when there is already a significant supply and a weak market would merely open the door for … (16 comments)

government interference in business: Repeat Buyer Tax Credit Offering Little Stimulus To Market - 02/28/10 08:44 PM
An article on Yahoo Finance provides yet another example of why artificial attempts to stimulate the housing market are a bad idea. When offered on a grand scale, as in the easy money of the last decade, they only serve to create bubble markets which at some point must collapse. And we’ve all experienced the disasters created by the bursting of such bubbles. And when the offer is more limited, as in the First Time Buyer Tax Credit or Cash for Clunkers, they do little more than “steal” future sales.
 
According to the article, Realtors® around the country are reporting … (11 comments)

government interference in business: Eminent Domain Disaster - 02/04/10 09:52 AM
Nine years ago a landmark Supreme Court ruling opened the doors for an eminent domain disaster in a ruling upholding the seizure of a 90 acre tract in New London, Connecticut known as the Fort Trumbull neighborhood. Many recall the controversy, known as Kelo v New London, and the neighborhood’s battle to protect its homes and businesses.
 
In a sweetheart deal with Pfizer Pharmaceuticals, the city had agreed to use the power of eminent domain to condemn the property for a development that was to include an expansion of Pfizer’s research headquarters, a hotel, condos, and office space. Additionally, the … (13 comments)

government interference in business: The Cash For Clunkers Numbers Are In, And It’s Not Pretty - 10/28/09 04:02 PM
An article today in the Wall Street Journal reported that the per car cost of the additional sales generated by the Cash For Clunkers program was approximately $24,000 per car. Wow! Perhaps it would have been better if we just gave each of the participants a car. We could have given them an American car, which would certainly have made a difference to the American auto industry.
 
Why bother with setting up a cumbersome program that stimulates foreign auto sales and costs enough to give the cars away. And the argument that we removed a greater number of older, polluting … (28 comments)

government interference in business: Government Isn’t The Solution To Our Problems - 10/26/09 06:38 AM
The following is in response to a thoughtful, but I believe misguided post by James Wells, entitled “Our country is broke (in more ways than one), so how do we fix it?” In his post, James seems to think that more government control is what we need to solve the problems we face. I strongly disagree.
 
While I’m pleased to see that people are becoming more aware of our problems, I’m concerned at the number who seem to look to the government for solutions. I’m not an anarchist; I believe in a strong government, just not one that “strong arms” … (70 comments)

government interference in business: There Are More Serious Concerns Than The Home Buyer Tax Credit - 10/22/09 08:03 AM
While we debate the relative merits of recent attempts to stimulate the housing market, there are more serious concerns that the home buyer tax credit. In fact, a far more serious issue looms with the potential to bring home sales and the economy to a screeching halt. Oil. The price of oil has been inching upwards for months and has now passed the $80 mark. And if this trend continues, the “green shoots” some have reported will wither and die.
 
The cause of the rise in oil prices is an influx of speculative money looking for a safe haven.  As … (14 comments)

government interference in business: Think The "Fat Cats" Got The Message? Think Again! - 09/27/09 12:41 PM
Following the financial meltdown and the government’s infusion of billions of dollars into banks and “wanna-be” banks, the government promised oversight of executive bonuses and loose business practices of those businesses receiving taxpayer funds. And with public disclosure and ridicule of executive’s use of private jets, frivolous corporate junkets, and other irrational business adventures, most would have expected that the spotlight on government and business leaders would have brought an end to corporate idiocy. Such is the stuff of dreams, however, and expectations of logic and prudence from our corporate and political leaders appears little more than fantasy.
 
In … (42 comments)

government interference in business: The Surprising Cost Of The First Time Buyer Tax Credit - 09/03/09 06:26 AM
Many see the $8,000 first time buyer tax credit as an excellent stimulus for an ailing housing market; and some are seeking an expansion that would extend the credit to all home buyers. Others have proposed increasing the amount to $15,000. After all, spending such small amounts is insignificant when measured against the stimulus and bailout packages that have cost trillions.
 
The first time buyer tax credit was intended to stimulate housing, to bring in more buyers; and it has succeeded. Just like the Cash for Clunkers program stimulated new car sales, the housing stimulus has brought in more home … (94 comments)

government interference in business: The Government Wants To Be Your Landlord - 07/14/09 05:21 PM
In an article today on Reuters, it is reported that the Obama Administration is considering allowing those unable to make mortgage payments to remain in their homes as tenants. The homeowners would surrender their ownership under one version of a plan under consideration.
 
While the administration has realized the failure of its current attempts to aid struggling homeowners, proponents of the new plan would have many obstacles to overcome. And while the government has readily assumed ownership of Fannie Mae, Freddie Mac, AIG, auto manufacturers and others, I doubt they truly want to become landlords of millions of private homes.
… (11 comments)

government interference in business: Can the Bubble be Patched? - 06/16/09 08:49 PM
We’ve probably all at one time or another poked a bit of fun at our government, its inefficiency, and its proclivity towards bureaucratic solutions for every problem; and the responses to the current financial crisis are certainly no different. And while it’s easy for the public to criticize mortgage lenders for their sometimes reckless lending habits during the past decade, it’s sheer hypocrisy for the government to do so. The worst lending standards of all belong to the FHA, which now boasts a delinquency rate of 1 of every 8 of its loans.
 
And it’s this same government that is … (3 comments)

 

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