4 ms·

A taxpayer bailout solves a bunch of problems, at the expense of non-mortgage holders (AKA renters). It seems unjust to take from renters and give to property-h

by nickff 7y ago

A taxpayer bailout solves a bunch of problems, at the expense of non-mortgage holders (AKA renters). It seems unjust to take from renters and give to property-holders, given that the latter are generally more affluent, and knowingly took a risk (by taking out a loan).

toomuchtodo 7y ago
> It seems unjust to take from renters and give to property-holders, given that the latter are generally more affluent, and knowingly took a risk (by taking out a loan). Life isn't fair. Renters have landlords with mortgages also, and renters are just as challenged as homeowners currently (30+ million unemployed, 1/5th of the US working population). Broad policy decisions have some moral hazard to be deprioritized. The goal isn't fairness, it is to return to economical equilibrium as rapidly as possible.
- nickff 7y ago
  Your proposal would stabilize the situation, but I am not sure why this bailout is better or worse than other proposed bailouts. We can't go bail everyone out, unless we want to go into hyperinflation. I am not saying I have an answer, I just think there are deep problems with these ideas.
  - toomuchtodo 7y ago
    There are always deep problems when the problems are complex. This does not mean you take your time. Just as the Obama administration quickly moved GM through a Chapter 11 reorganization [1] despite objections by free market proponents and shareholders (to save GM workers' jobs), and drastic actions was taken by the Treasury and the Fed to save certain financial services firms (merging them into stronger entities) after the failure of Lehman Brothers during the 2008 GFC [2], complaints can saved for the history book on the topic. In the meantime, move fast to avoid suffering at scale. I'm not saying you're wrong, by any means, but that you have to be comfortable with your solution being unfair and suboptimal. It is not the best course of action, but the least worst course of action. [1] https://en.wikipedia.org/wiki/General_Motors_Chapter_11_reorganization https://en.wikipedia.org/wiki/General_Motors_Chapter_11_reor... [2] https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308 https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80...
    - nickff 7y ago
      I would be comfortable advocating for an intervention if it were a Pareto improvement. Unfortunately, such an alternative is not readily apparent.
- cadlin 7y ago
  As a renter and voter, my preferred policy solution is to suspend rental evictions, let the foreclosures go forward as mortgages are a risky asset, then let the market sort it out at auction. That sounds like a more market-oriented solution to me.
  - toomuchtodo 7y ago
    Over 62.5 percent of American homeowners have a mortgage, worth collectively over $10 trillion dollars (total equity is ~$18 trillion). You are entitled to your opinion, but are in the minority.
    - dllthomas 7y ago
      The percentage of homeowners who have a mortgage says nothing about how many rent vs own. That said, the relevant number seems to actually be higher.
      - toomuchtodo 7y ago
        64.2 percent of Americans are homeowners. Still a majority compared to renters.
        dllthomas 7y ago
        > Still a majority compared to renters. I'd noted it was higher so that would follow, yes. I left out the precise number because I saw some variation in the across sources and couldn't be bothered to dig into the details as it didn't make a difference anyway.
    - edmundsauto 7y ago
      How many homeowners also rent? I have a mortgage on a cabin in Idaho, but rent in California. I would vote to support the renters, because although I'm practically neutral, homeowners have at least 1 asset and are generally better off in wealth and savings. Also, majority rule is probably not the relevant metric here (even if renters + owners were mutually exclusive sets). We have a long history of not going strictly with the majority.
samsonradu 7y ago
Thanks for pointing out the big elefant in the room. It looks like this is the ‘new normal’ though. Pushing people to take on debt as it’s almost interest-free and you might even get help from the government paying it back, all to double up on past mistakes and sustain the current asset valuations.
eli_gottlieb 7y ago
If anything, given the last crisis, we should be focusing on how to address this crisis in a way that helps renters. After all, the average homeowner who can't pay their mortgage becomes a renter.
maxsilver 7y ago
We can just bail them out too. We're probably going to have to just give most-to-all renters a few months of free rent here pretty soon anyway. At least bailing out mortgage-holders has zero real world cost. Bailing out renters costs actual real money (since it doesn't just defer a loan, but actually prints new money to cover it).

by nickff 7y ago

toomuchtodo 7y ago

> It seems unjust to take from renters and give to property-holders, given that the latter are generally more affluent, and knowingly took a risk (by taking out a loan). Life isn't fair. Renters have landlords with mortgages also, and renters are just as challenged as homeowners currently (30+ million unemployed, 1/5th of the US working population). Broad policy decisions have some moral hazard to be deprioritized. The goal isn't fairness, it is to return to economical equilibrium as rapidly as possible.

nickff 7y ago
Your proposal would stabilize the situation, but I am not sure why this bailout is better or worse than other proposed bailouts. We can't go bail everyone out, unless we want to go into hyperinflation. I am not saying I have an answer, I just think there are deep problems with these ideas.
- toomuchtodo 7y ago
  There are always deep problems when the problems are complex. This does not mean you take your time. Just as the Obama administration quickly moved GM through a Chapter 11 reorganization [1] despite objections by free market proponents and shareholders (to save GM workers' jobs), and drastic actions was taken by the Treasury and the Fed to save certain financial services firms (merging them into stronger entities) after the failure of Lehman Brothers during the 2008 GFC [2], complaints can saved for the history book on the topic. In the meantime, move fast to avoid suffering at scale. I'm not saying you're wrong, by any means, but that you have to be comfortable with your solution being unfair and suboptimal. It is not the best course of action, but the least worst course of action. [1] https://en.wikipedia.org/wiki/General_Motors_Chapter_11_reorganization https://en.wikipedia.org/wiki/General_Motors_Chapter_11_reor... [2] https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308 https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80...
  - nickff 7y ago
    I would be comfortable advocating for an intervention if it were a Pareto improvement. Unfortunately, such an alternative is not readily apparent.
cadlin 7y ago
As a renter and voter, my preferred policy solution is to suspend rental evictions, let the foreclosures go forward as mortgages are a risky asset, then let the market sort it out at auction. That sounds like a more market-oriented solution to me.
- toomuchtodo 7y ago
  Over 62.5 percent of American homeowners have a mortgage, worth collectively over $10 trillion dollars (total equity is ~$18 trillion). You are entitled to your opinion, but are in the minority.
  - dllthomas 7y ago
    The percentage of homeowners who have a mortgage says nothing about how many rent vs own. That said, the relevant number seems to actually be higher.
    - toomuchtodo 7y ago
      64.2 percent of Americans are homeowners. Still a majority compared to renters.
      - dllthomas 7y ago
        > Still a majority compared to renters. I'd noted it was higher so that would follow, yes. I left out the precise number because I saw some variation in the across sources and couldn't be bothered to dig into the details as it didn't make a difference anyway.
  - edmundsauto 7y ago
    How many homeowners also rent? I have a mortgage on a cabin in Idaho, but rent in California. I would vote to support the renters, because although I'm practically neutral, homeowners have at least 1 asset and are generally better off in wealth and savings. Also, majority rule is probably not the relevant metric here (even if renters + owners were mutually exclusive sets). We have a long history of not going strictly with the majority.

samsonradu 7y ago

Thanks for pointing out the big elefant in the room. It looks like this is the ‘new normal’ though. Pushing people to take on debt as it’s almost interest-free and you might even get help from the government paying it back, all to double up on past mistakes and sustain the current asset valuations.

eli_gottlieb 7y ago

If anything, given the last crisis, we should be focusing on how to address this crisis in a way that helps renters. After all, the average homeowner who can't pay their mortgage becomes a renter.

maxsilver 7y ago

We can just bail them out too. We're probably going to have to just give most-to-all renters a few months of free rent here pretty soon anyway. At least bailing out mortgage-holders has zero real world cost. Bailing out renters costs actual real money (since it doesn't just defer a loan, but actually prints new money to cover it).