Tag-Archive for ◊ new york times ◊

Round-Up: Mortgage Deduction May Shrink, Owning vs. Renting
Author: admin
• Friday, February 27th, 2009

The big news this week was the Obama administration’s budget proposal, which takes on what has long been considered a sacred cow by trying to reduce the mortgage-interest tax deduction for top earners. Meanwhile, Iceland’s government has started selling off real estate to stay afloat. Here’s what else was going on:

Click here to see more of Iceland’s properties

LOCAL NEWS
Condo auctions come to New York City (New York Times) Some New York buyers, meanwhile are walking away from six-figure deposits on apartments. (NYT)

The population of Maricopa, Ariz., soared during the housing boom, rising to 37,000 last year from 1,400 a decade ago, making it one of the nation’s fastest-growing towns. Now the town is struggling as many homeowners are trapped in houses that are worth less than their mortgage and others are walking away. (The Wall Street Journal)

Boston’s luxury condo market headed down. (Boston Herald)

$10,000 state tax credit for buyers of newly-built homes in California goes into effect Sunday. (L.A. Land) Meanwhile, home sales in California jumped 100% in December, according to the state’s association of Realtors. (Hot Property)

BUYING AND SELLING
One blogger suggests it’s time to encourage renting to keep Americans more mobile and to discourage sprawl. One idea: tax incentives that get people to live closer to their place of work. (Greater Greater Washington)

Meanwhile the relative cost of owning versus renting is swinging back in favor of homeownership in some U.S. markets, buoyed by several quarters of sharp declines in home prices. (WSJ)

The economic stimulus bill contains provisions to compensate service members who sell their home at a loss or have been foreclosed upon because they were forced to move after a base closure, reassignment or a combat wound required them to be relocated near a health facility. (Washington Post)

Boomer wealth is evaporating due to housing bust. The homeowner in 2009 will have less–not more–wealth than their non-home-owning counterparts, according to a new report out from economists David Rosnick and Dean Baker. (Center for Economic Policy and Research)

HIGH-END LISTINGS
Strapped for cash, Iceland’s government puts its ambassador’s homes up for sale in Washington, D.C., New York and London. (WSJ)

A Denver couple build their home and an apartment building next door to an art museum in Denver. (WSJ)

Where Nixon once dwelled. Just hitting the market: a house newly built on land that was formerly part of the so-called ‘Western White House’. (WSJ/House of the Day)

Ten priciest listings in Los Angeles. (The Real Estalker)

Good deals on luxury vacation homes. (NYT)

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Secondary Sources: Nationalize, Mortgage Deductions, Good/Bad Banks
Author: John Travis
• Tuesday, February 24th, 2009

A roundup of economic news from around the Web.

  • Privatize the Banks: Writing for the Baseline Scenario, Simon Johnson says it’s time to privatize the banks, since they have been de facto nationalized already. “Why have we de facto nationalized? Because the private credit system – particularly large banks – is weakened and not getting any better. Attempts to deal with the problem banks are apparently blocked by the political power of influential bankers. How then do we really privatize? By exercising leadership: take over insolvent banks and immediately reprivatize them. The new controlling owners can replace the boards of directors (tell me: why haven’t they resigned already?), and these boards can decide who to keep and who to let go from existing management. The taxpayer retains a significant number of shares (or the option to buy common stock) as a way to ensure upside participation – the economy will one day recover, and that will be a very good day for owners of the remaining banks.” Separately, on Salon’s How the World Works blog, Andrew Leonard looks at who’s against bank nationalization. “Barry Ritholtz has a list of who he thinks are for or against nationalization. The first five names on the anti-list are Barack Obama, Tim Geithner, Lawrence H. Summers, Barney Frank and Bernanke. What do those names all have in common? They are in the government, and their every utterance moves markets. Which means, according to David Kotok, the chairman of the money management advisory firm Cumberland Advisors, whose thoughts on the financial markets are frequently featured at Ritholtz’s blog, The Big Picture, that they are almost by definition prohibited from forthrightly endorsing nationalization!“
  • Home Mortgage Deductions: Writing for the New York Times’s Economix blog, Edward Glaeser suggests eliminating a sacred cow. “The Great Depression provided an opportunity to rethink old policies in a major way. In the current morass, everything should, once again, be open for debate. One sacred cow that has long been in need of a good stockyard is the home mortgage interest deduction. So, in the spirit of libertarian progressivism, I suggest gradually reducing the upper limit on the deduction to loans of up to $300,000, and then refunding the tax revenues in a more productive manner. “
  • Good and Bad Banks: On their blog, Susan Woodward and Robert Hall say that a key to having a good bank-bad bank scenario work is to give the bad bank ownership of the good bank. “Much thinking about bank policy takes an old-fashioned point of view by assuming that a bank finances all of its assets through deposits. The good-bank/bad-bank separation has no advantage in that traditional setting. But for a bank that is mostly financed by non-deposit borrowing, moving the non-deposit liabilities to the bad bank has an advantage in dealing with insolvency.”
  • Formula That Killed Wall Street: Writing for Wired, Felix Salmon looks at the model that helped bring down the market. “David X. Li, it’s safe to say, won’t be getting that Nobel anytime soon. One result of the collapse has been the end of financial economics as something to be celebrated rather than feared. And Li’s Gaussian copula formula will go down in history as instrumental in causing the unfathomable losses that brought the world financial system to its knees. How could one formula pack such a devastating punch? The answer lies in the bond market, the multitrillion-dollar system that allows pension funds, insurance companies, and hedge funds to lend trillions of dollars to companies, countries, and home buyers”

    • Compiled by Phil Izzo

    Category: Economy  | Tags: , , , , , , , , , , , , , , , , , , ,  | Comments off
    Secondary Sources: Stimulus Skepticism, Krugman, Soros
    Author: John Travis
    • Friday, January 23rd, 2009

    A roundup of economic news from around the Web.

  • Stimulus Skepticism: On his Marginal Revolution blog, Tyler Cowen says we just don’t know how effective stimulus will be. “I fully admit that I don’t trust the oft-cited evidence that tax cuts are 4x better stimulus than government spending boosts; I think the result is a mirage from underspecified models. Overall we simply don’t know how well the proposed stimulus will work — if at all (is aggregate demand always the relevant war?). It’s a kind of Hail Mary pass, an enduring belief in aggregate demand macroeconomics at the theoretical level, even in light of broken banks, sectoral shifts, and nasty, failing expectations, all mixed in with hard to spend well, slow to come on line, monies. Yes it could work but our agnosticism should be strong rather than just perfunctory. “
  • Krugman Criticism: Writing for the New York Times, Paul Krugman has some criticism of Barack Obama’s inauguration speech. “But my real problem with the speech, on matters economic, was its conventionality. In response to an unprecedented economic crisis — or, more accurately, a crisis whose only real precedent is the Great Depression — Mr. Obama did what people in Washington do when they want to sound serious: he spoke, more or less in the abstract, of the need to make hard choices and stand up to special interests. That’s not enough. In fact, it’s not even right.”
  • Soros on Banks: Writing for the Financial Times, George Soros gives his views on the best way to fix the banks. “The hard choice facing the Obama administration is between partially nationalising the banks, or leaving them in private hands but nationalising their toxic assets. Choosing the first course would inflict great pain on a broad segment of the population – not only on bank shareholders but also on the beneficiaries of pension funds. However, it would clear the air and restart the economy. The latter course would avoid recognising and coming to terms with the painful economic realities, but it would put the banking system into the same quandary that proved the undoing of the government sponsored enterprises (GSEs) – Fannie Mae and Freddie Mac. The public interest would dictate that the banks should resume lending on attractive terms. However, this lending would have to be enforced by government diktat because the self-interest of the banks would lead them to focus on preserving and rebuilding their own equity. Political realities are pushing the Obama administration towards the latter course.”

    • Compiled by Phil Izzo

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