Negative Feedback

Wednesday, June 01, 2011

Stephen B. Meister of the New York Post notes at least one way that the depressed economy is perpetuating itself.

[C]ause and effect have reversed themselves: While the subprime crisis and bursting of the housing bubble triggered the financial crisis that led to a broader recession, now it's the broader recession -- and its persistent joblessness -- that's dragging down housing.

The economy still isn't producing enough jobs to keep up with the growing workforce. So people are reluctant to become first-time homebuyers because they've lost (or fear losing) their jobs, and because they fear further price drops. That means "trade-up" buyers can't buy -- even if their jobs are secure -- because there's no one to buy their current (starter) homes at a price that will pay off their mortgages.
Meister goes on to note that the Feds now back 95 percent of all new mortgage loans and that, "No housing policy will stop housing's double dip. To do that, we need the millions of jobs only a reversal of President Obama's ruinous overall economic policies will bring."

-- CAV

--- In Other News ---

Carolyn Hax, on the futility of appeasing people who do not respect personal boundaries: "Eh, they'd just reject [a lie-detector test] as inadmissible." As with any such problem, there is often plenty of blame to go around on both sides. Hax makes that point, too, and Michael Hurd ably elaborates: "If you begin to recognize your own part in the problem, the problem will start to go away."

Heh! I'm probably old enough to be this guy's dad, but this graph illustrating "How Not to Sell Something to My Generation" applies equally well to me.

I'm no minimalist, but I found the arrangement of the this tiny apartment to be very clever. I agree with the commenters who said something like this would be ideal for someone who regularly spends part of his time working away from home.

It's a lot of effort for a "Big Mac," but I have got to try this some time. "Your move, clown. Your move." Indeed!

14 comments:

nolanreviews said...

Good post all around. I enjoyed reading the post about personal boundaries (I wondered for a moment if the columnist is an Objectivist! - she isn't). The apartment in Spain was very neat; I may try to use his idea in the future, actually. It looks nice and is resourceful; although it does look expensive to set up (I couldn't watch the video with sound, so I don't know if that was spoken of).

Regarding the financial crisis article: Is it just me, or is reading about politics *really* painful? Is there even a point? Other than being active in promoting good ideas, what's the point in engaging in and reading about politics and working oneself up? Or, if there is a point in reading politics, how does one *not* work himself up over it? I've considered just not reading the news altogether and reserving my energy for reading solely about issues that I can vote on (i.e. Presidential candidates positions, issues on the ballot, etc.)

Gus Van Horn said...

Thanks.

The apartment reminds me a lot of life on board a submarine, but minus all the other people and with the ability to leave at any time. Both are improvements, but not enough to outweigh the constant having to move things around.

Regarding politics, I have found that over the years I have tended to get less worked up about most individual news items as I have come to appreciate them as manifestations of larger cultural trends. (That said, I am probably more concerned overall about our current state than I was when I started blogging: I don't have a naive view that a few election cycles can get us off the hook anymore, for one thing. And I have almost no confidence in Republicans, anymore.)

That said, aside from what you focus on, and perhaps keeping generally informed so as to be forewarned should some political development have an impact on you personally (or that you might be able to do something about it), I think there is a broad range of such aspects of following politics as the degree of attention, what issues you follow, and whether you become an activist (and, if so, how active you are) that can be appropriate for an Objectivist; and these will depend on an individual's particular circumstances, his strengths and weaknesses, and even his temperament. (e.g., How much of it can one take? For some people, lots, for others, very little.)

But, yes, reading about politics can be painful. I find some relief in writing about it or, especially lately, promoting people who do a good job of getting the right ideas out there. But I can see how the very thought of reading a newspaper could be too draining for someone to want to do more than skim most of the time. (If I recall correctly, Leonard Peikoff doesn't spend much of his time reading about political developments.)

Objectivism is, first and foremost, a philosophy for living one's own life. While activism can help one lead a more fulfilling life, one should weigh (among other things) how effective one is at causing cultural change, how much time it will take versus how much time one has, whether one enjoys it, and whether more urgent needs might demand one engage in it more or less.

That's kind of rambling, but those are a few off-the-cuff remarks prompted by that good question. I hope that helps.

Dismuke said...

I understand what the guy is trying to do "improving" the Big Mac and why. But if you look at it from a different perspective, it is somewhat at cross purposes with the very things that made the Big Mac highly successful and an icon in the first place.

The virtue of a Big Mac is not that it is the BEST burger one can make or buy. It's virtue and success is based on the fact that its taste is significantly better than merely adequate and can be had with minimal wait and hassle at a relatively low price. And the biggest virtue of the Big Mac (and any other successful chain restaurant product) is that you can count on the fact that no matter where you are, whether it is New York City or Podunk Arkansas, the Big Mac you order is going to almost always taste just like the last Big Mac you ordered.

There is no doubt at all that one could "improve" the quality of the Big Mac in multiple ways. But some of those improvements would have an impact on cost and wait time. And, if a person is willing to pay more/wait longer, beyond a certain point, he probably wouldn't be in a McDonalds in the first place.

Above all, it would jeopardize McDonald's ability to provide a uniformly consistent product year after year on a mass market scale across a very large geographical area. For example, obtaining fresh produce of a consistent level of taste and quality across the span of a month even when it is in season and grown fairly nearby can often be a difficult task for a mere individual in his own kitchen. Imagine if you are buying on the scale of McDonalds and have to do it throughout the year when some items are out of season and it has to be brought in to stores in remote locations.

There is a certain value in something being merely this side of adequate if you can COUNT on it being that way going into it with no surprises. Not everyone is willing or in a position to pay for quality beyond a certain point. And while it is true that you can get food and service that is VASTLY better than the national chains at many independent, local restaurants, going to such places (especially while traveling) for the first time can be a big roll of the dice as, very often, the food and service is NOT particularly good.

So, to REALLY appreciate the Big Mac, one has to look at it on its own terms. But I do sympathize with that the guy in the article is trying to do.

Dismuke said...

For those who are fascinated by the potential one can achieve with a small living space, here is a very interesting website:

http://www.tumbleweedhouses.com/

Just ignore all of the environmentalist nonsense mentioned here and there on the site.

On this page you can find designs for houses ranging from a mere 89 square feet up to 850 square feet

http://www.tumbleweedhouses.com/houses/

Some of the "larger" houses look rather charming.

I can actually see a lot of virtue in such houses for people in certain contexts. People in parts of Manhattan fork over thousands of dollars per month in rent for dingy rooms smaller much smaller than some of those houses. I would far prefer living in even the smallest of the houses than, say, in a dormitory. And I would prefer such a house over most mass market non-luxury apartment complexes. And such houses tend to be far better in quality over most mobile homes.

The average size of houses - especially so-called "starter houses" in this country has increased significantly over the past 6 decades. Perhaps some of that is the result of a higher standard of living and two income households. But at least a good portion of it has to do with easy money though government subsidized mortgages and a willingness on the part of many to take on levels of debt that people a few decades ago would have regarded as unacceptable.

Personally, I would much rather have a smaller house with lower payments and more breathing room for other things financially than a larger house with the stress of having payments that are high relative to my income.

The problem with the tiny houses advertised on that site as well as the more famous Katrina Cottages (originally designed to be a better quality, more desirable living space at the same or lower cost than a FEMA trailer) is that many municipalities outlaw them through ordinances requiring minimum house sizes. City governments hate small houses because they do not bring in as much property taxes as larger houses. So, as a result, those looking for frugal housing options are often forced to turn to either apartment complexes and all of their pitfalls or less attractive, lower quality mobile homes usually located in more remote areas outside city limits.

nolanbookreviews said...

Yes, it does help. It's an interesting topic for me. I've been told that changing academia is what is important, and that politics will only follow once that changes. Thanks!

Gus Van Horn said...

Dismuke,

Your major point -- that the Big Mac should be evaluated on its own terms -- is excellent. The piece interested me because I occasionally enjoy a Big Mac, and the thought of improving it in this way sounds kind of fun.

That said, my quoting the last line of that post was tongue in cheek, as, I suspect it might have been in the piece I pointed to.

I've come across the site you note on tiny houses before (and may have even linked to it -- I don't remember).

NR,

Glad to have helped.

Gus

John Drake said...

As to Meister's note that the Feds back 95 percent of new mortgage loans, I recently experienced a buyer of our home that was backed 96.5 percent. They only had to put 3.5 percent down. Not that the actually percentage matters... the government should not be involved at all. Just saying it may be worse than Meister indicated.

Gus Van Horn said...

Wow! That leaves me speechless...

Anonymous said...

My bookkeeper made a point of getting a privately underwritten loan when he bought his house some 20 years ago.

He recently found out that the mortgage company had sold the note to one of the fannie/freddie backed programs. The Wells Fargo people administering the loan told him that there were very few privately underwritten loans left; most of those that started out privately have ended up in government hands by one means or another.

Apparently the "American Dream" of owning your own home is now a species of public housing. Makes one wonder if Frank and Dodd were aiming at this all along.

c. andrew

Gus Van Horn said...

Your last sentence there sums it up rather nicely, C.

Jim said...

Walking from the bus stop to the office the other morning, I was surprise to hear and see construction on a new office building.

The area is full of mostly empty buildings, so I wondered, "Who would be fool enough to build new when cheap vacant office space is immediately available?"

Then I realized that it was another building going up on Freddie Mac's sprawling campus.

Nothing says the feds phasing out the housing GSEs like one of them expanding their campus...wait, that sounds like government logic.

Gus Van Horn said...

With your last paragraph, we have two memorable quotes in a row from the comments to this post!

Andrew Dalton said...

Apparently the "American Dream" of owning your own home is now a species of public housing.

I've actually heard the argument (which I tend to agree with) that cheap, government-backed credit is a huge welfare program for the middle class.

Gus Van Horn said...

That sounds about right. And if the currency collapses, that will be the manifestation of there being nothing left to give away from the "pot".