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A tale from Brazil... A couple years ago we had absolutely no credit here, so the Government created an almost free credit line (from R$160k to R$300k) to be u

by cfontes 11y ago

A tale from Brazil... A couple years ago we had absolutely no credit here, so the Government created an almost free credit line (from R$160k to R$300k) to be used to buy homes. This is a major problem here and was kind of a good move. As a consequence of that now every place is very expensive, because everybody has at least R$160k (except people like me that hate to borrow money) so places that went for R$50k (not nice ones) are now around R$250k, nice places that where on the range of R$300k are now around R$700k to a million. If you saved money before the credit line you are in a bad position now, back in 2007 It was possible for a graduate student to work, save and in a couple years buy a small apartment for R$50k in a low middle class neighborhood, nowadays you can't find anything for that amount of money not even in the really bad places, I am not sure it is the right solution, we just inflated prices and people still can't buy homes or they do and will have a debt for live. So I like that people have credit to buy their places but I hate seeing prices rise like that for no reason besides "But you can get a loan..."

marcosdumay 11y ago
That was almost exactly like the real state bubble of every other country by the same time. Our just took a little longer to blow. It has absolutely no relation to how a market would react to BI. Home loans are targeted, BI isn't; home loans are granted for buying expensive goods, it should be very hard to buy anything expensive with BI. Too bad that you brought our experience with real state loans, instead of our experience with guaranteed income (biggest in the world), what is somewhat similar to BI, and could teach some good lessons. Fact is, people that choose to rely on guaranteed income moved to the poorest regions of the country. It would be great to see some data about how those regions fared.
- cfontes 11y ago
  I can't say I know most countries real estate bubbles but I've lived in 3 and none had the exact same problem. I see a relation to how prices might behave as now the economy is flooded with free money while most people are still working and generating their own income. And I don't agree that we have the biggest "guaranteed income" ours is a very badly designed system (aimed at buying the poorest votes and deeply exploited) based on bad assumptions on the population and how to distribute wealth, that is why so much money is stolen from it. Without health and education investment, it's a short sighted project instead of a long run one which would aim to take those people out of misery. BI is for countries that have solved at least the basic educational and infrastructural problems otherwise it's just a waste of man power to build those.
a3n 11y ago
And similar in college tuition, they raise tuition as high as they dare because they know they can fill desks with people who can get loans.
wycx 11y ago
Could this have been alleviated somewhat by changes to the tax system? The increase in price that occurred as a result of the new loans is an excellent example of unearned economic rent, i.e. the owners of the now inflated real estate did nothing to generate value. Thus, the tax system should be structured to capture that inflation via capital gains tax. Obviously, this would be most unpopular amongst real estate holder. Everyone loves being a petit rentier because, something for nothing. The other necessary component is prudential regulation. Loans for mortgages need to be constrained by loan-to-personal_income, loan-to-rental_income and price-to-rental_income ratios to control the flow of inflationary credit.

by cfontes 11y ago

marcosdumay 11y ago

That was almost exactly like the real state bubble of every other country by the same time. Our just took a little longer to blow. It has absolutely no relation to how a market would react to BI. Home loans are targeted, BI isn't; home loans are granted for buying expensive goods, it should be very hard to buy anything expensive with BI. Too bad that you brought our experience with real state loans, instead of our experience with guaranteed income (biggest in the world), what is somewhat similar to BI, and could teach some good lessons. Fact is, people that choose to rely on guaranteed income moved to the poorest regions of the country. It would be great to see some data about how those regions fared.

cfontes 11y ago
I can't say I know most countries real estate bubbles but I've lived in 3 and none had the exact same problem. I see a relation to how prices might behave as now the economy is flooded with free money while most people are still working and generating their own income. And I don't agree that we have the biggest "guaranteed income" ours is a very badly designed system (aimed at buying the poorest votes and deeply exploited) based on bad assumptions on the population and how to distribute wealth, that is why so much money is stolen from it. Without health and education investment, it's a short sighted project instead of a long run one which would aim to take those people out of misery. BI is for countries that have solved at least the basic educational and infrastructural problems otherwise it's just a waste of man power to build those.

a3n 11y ago

And similar in college tuition, they raise tuition as high as they dare because they know they can fill desks with people who can get loans.

wycx 11y ago

Could this have been alleviated somewhat by changes to the tax system? The increase in price that occurred as a result of the new loans is an excellent example of unearned economic rent, i.e. the owners of the now inflated real estate did nothing to generate value. Thus, the tax system should be structured to capture that inflation via capital gains tax. Obviously, this would be most unpopular amongst real estate holder. Everyone loves being a petit rentier because, something for nothing. The other necessary component is prudential regulation. Loans for mortgages need to be constrained by loan-to-personal_income, loan-to-rental_income and price-to-rental_income ratios to control the flow of inflationary credit.