“Tonight, I propose a new tax cut for homeownership that says to every middle-income working family in this country, if you sell your home, you will not have to pay a capital gains tax on it ever — not ever.” — President Bill Clinton, at the 1996 Democratic National Convention.
So the stage was set. Sell your home, don't pay taxes on the profit. As the tech bubble burst, housing was viewed as safe. Easy credit led to bad lending, not because of the initial loan, but the securitization of those mortgages. Crazy underwriting standards ensued. Cash and debt was not a strong enough "currency".Wall St. needed a new way to maximize, to margin, to leverage at multiples of the original loan. The housing market was their experiment. Derivatives and credit default swaps were the fuel. It was all funny money.
But cheap money was not the only cause. We still had homeless in record numbers, rents were untenable. Homes were built when the market demand was not really there. Laws from the 80s gave the capacity of real estate owners to write off their real estate property as losses and make more money by doing so than they would if they rented at a modest price.
So yes, many factors got us to where we are. Although rooted in previous administrations, the current Bush Administration was at the wheel and it's de-regulatory, "let the markets run themselves" approach, coupled with no government oversight, made things worse.
Pushing their "ownership society" through home ownership was just another way to get you tethered to a bank for the next 30 years of interest payments. Republicans have an evil way about them like that. Remember Reagan tried to crush social programs like welfare through overspending, claiming no funds were left. Make government ultimately fail is their goal, just ask Grover Norquist.
We are always so proud of the wealth we have in America. How much is just manipulating tax codes? Creating bubbles? Distorting markets through taxation policies. How much is made at the expense of someone else?
Not to mention the special interests. The banking world is so powerful they get to lose all the money, break the system, show no remorse, point fingers at everyone else and then get bailed out by taxpayers. That's cajones!
What do you think?
NOTE: One thing left out was the massive amounts of cash pumped into the ststem around Y2K. People thought ATMs would fail, planes would crash, etc. All the cash fueled the internet bubble a bit.
Source: NYT
No comments:
Post a Comment