Comments on: On Paul Krugman on Homeownership

By: Dr. Kenneth Noisewater

Dr. Kenneth Noisewater — Tue, 24 Jun 2008 15:02:09 +0000

JP and Kip:

I understand both your points. I'm not here to say who is and who isn't an appropriate target for your particular brand of libertarian ressentiment. But absent an actual example of the sort of damned-if-they-do, damned-if-they-don't criticism of banks coming from the likes of Krugman, the To The People comment starts to look a bit like a claim that predatory lending and redlining aren't actual business practices that have occurred but simply products of leftist imagination.

Maybe I'm inferring too much from the comment.

By: KipEsquire

KipEsquire — Tue, 24 Jun 2008 14:03:21 +0000

Dr. Noisewater, Sure, just like taking Suzette Kelo's land to give it to Pfizer was a "public use." JP is correct: As a matter of partisan politics, "redlining" is usually defined as, "whatever you want it to mean in order to further your agenda."

By: J. Philip

J. Philip — Tue, 24 Jun 2008 13:39:07 +0000

Dr Kenneth,
The problem is that the intellectually dishonest, agenda-driven types will blur the lines between responsible underwriting and redlining to make political hay.

I predict that the caution we can expect to see from lenders who have redicovered sanity will yield another column in another year or two from Mr. Krugman (especially if McCain is elected) that minorities have been unfairly excluded from ownership opportunities.

By: Dr. Kenneth Noisewater

Dr. Kenneth Noisewater — Tue, 24 Jun 2008 13:03:17 +0000

"Redlining" isn't simply the practice of not loaning money to unqualified minorities for unqualified properties. It's the practice of deeming large swathes of property unqualified simply because a lot of minorities live in the area, without regard to the individual financial circumstances of the prospective borrowers. I think someone can both be against redlining AND against the sort of no-doc mortgage originating practices that put a lot of greedy borrowers into homes they couldn't afford, put a lot of money into the pockets of greedy mortgage brokers, and put a lot of worthless paper into the portfolios of investors.

By: 5000 Square Foot Homeowners Shouldn’t Cast Stones « J. Philip’s Real Estate Blog

Tue, 24 Jun 2008 12:55:01 +0000

[...] commented on this KipEsquire post on the same article which was more [...]

By: Chris

Chris — Tue, 24 Jun 2008 11:56:54 +0000

Are you telling me that minorities had built up over $160 billion in equity over the last several years on subprime loans? I find that a little difficult to believe. Far more believable is that the homes that the banks owned were worth over $160bn, but that isn't exactly the same as lost wealth is it?

By: J. Philip

J. Philip — Tue, 24 Jun 2008 05:50:12 +0000

I think you are being rather kind to Mr. Krugman, who lives in a 5000 square foot home in Princeton. Easy for him to talk, and I think Kip's Law is applicable here. The reason home ownership is important is because it stablizes the hell out of the economy. Renters don't buy washing machines, put up decks and swimming pools, or landscape their front yards.

The ripple effect of ownership is massively positive, and people who build equity in their own domicile have a ready made asset for their retirement, give their heirs more economic traction, and stimulate far more growth.

This, by the way is the economic argument for why even the most rabid bigot should still support gay marriage. Married people adopt, buy swingsets, minivans, clothing, and in general circulate commerce far more than unmarried people do. Home ownership factors into that also, because as families grow so does their need for a home of their own.

Krugman doesn't get this, apparently, and asks rhetorical questions for their intellectual novelty rather than their true merit. Ownership is bloody important, it should have a tax benefit (as should child bearing and marriage), and even questioning that isn't so much thought provoking as it is cerebrally challenged.