All of a Sudden People are Making Sense
I had to do a few double takes today as I read things that actually made sense for once! I have no idea if this is a new paradigm, or some veiled attempt to goad action from policy makers (sort of a triple dog dare you thing) but I was impressed.
From CNN Money we have these gems:
Not even record low mortgages rates have boosted home sales or enticed a debt-weary public. Of course, this doesn't seem much of a shocker. Experts say home prices - which have fallen by more than 30% since 2006 -- are still inflated by 15% to 20% in many areas...This is all true and shows a new thinking about government intervention that has been lacking. It does not end there!
But evidence is mounting that government interference in the housing market might be doing the broader economy more harm than good, at least for the long-term. A government tax credit that expired in April to encourage homebuyers did help boost sales, but that proved only to be a temporary crutch...
"We're just putting more people in the trap," Baker says of government policies that basically encourage people to buy or stay in homes beyond their budget. "I don't feel good that we're finding more suckers."
Calculated Risk details the lack of desire among Realtors and home builders for a renewed tax credit. I am not making this up!:
"We are not advocating another one. We think it's important for the market to have time to recover on its own," says Walter Molony, spokesman for the National Association of Realtors.Now I think the jab about costs (increase national debt) was a ruse, but the other statements were huge. These things just pull forward demand, nothing else. If the economy had caught fire and the credit binge part II had started, fine it would have worked. It is a strike out. Move on.
"From a political standpoint, with Congress not wanting to increase the debt, it would be too expensive," [Bernard Markstein, senior economist with the National Association of Home Builders] says. "In terms of advisable, we are bordering on where tax credits become ineffective."
Welcome folks, to reality. The best part is waking up with Folgers in your cup!:
I can only hope this marks a trend.
Over at The Big Picture author Barry Ritholtz gets constructive and asks:
Yesterday, we discussed Infrastructure spending, following the WSJ article on more tax cuts as a stimulus.
We know from history that rather than temporary tax cuts or spending, its been the big infrastructure projects that leave behind usable assets for the private sector are the biggest bang for the tax backed buck.
Think Interstate Highways, Apollo Space Program, Darpanet (internet), Manhattan Project.
Question: What sort of projects should the US be doing in terms of Infrastructure development?
Now I want to leave aside that most of those programs were from like 100 years ago and now most "infrastructure" projects are tax rip offs (Google Boston's "Big Dig" for best example) that are wasted.
Instead let's get constructive! Enough gloom and doom! Put your thinking caps on, add a big smile and try and come up with some items in the comments. I know you are all very able. From a scan of TBP comments some stand outs:
-100% Internet access in the US and its territories, either through broadband or Wi-Fi, as applicable. Universal free Wi-Fi access in all major urban areas
-Electrical grid and water supply improvements
There are plenty more but the best was:
-Licensed and regulated internet poker
Ok, I love online poker!
Stay away from amorphous crap like "better education", or "green energy". Come up with real things that are either doable today, or doable with a few advancements keyed by better funding.
Economic Disconnect's List of Government Funded Infrastructure
-I like the monster internet access idea. What is great is because government works so dumb, I have full faith this could be built and they would have no control over it because they got out smarted by the guys building it. What I mean is don't fear government control of what happens with it.
-I know I have talked about this before, but natural product research is a monster gap in the pharmaceutical world. Why? It is hard! So many drugs come from organisms (they may be made by chemical means later) that have a broad range of activities. Did you know that in labs we can only grow perhaps 3% of all the bacteria/bugs that exist? Did you know that around 70-80% of ALL drugs are natural products! And this is based on the 3% of things that can be grown in a lab! The world's oceans have untapped microbial diversity that is not usable in lab settings right now, what could those bugs give up? Sadly many large pharma companies have abandoned natural product research and this is a monster gap in not only drug therapy research, but many other areas. I do not want to go on all night, but funding for this work is crucial going forward. For an example, here is a pathway I have cloned from Streptomyces that is used all over the world, and no I did not find it (it is very old), it was a control experiment!
-A non-state employee, non-union worker overhaul of bridges and roads in the 6 biggest metro areas.
-Steam generators fueled by the Earth's own heat via tapping in to the Moho.
That should get you started. Sound off in the comments! Best answers get an automatic (non-Beatles) Friday night request.
Have a good night.