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  • From: Gene GeRue <genegerue AT ruralize.com>
  • To: homestead AT lists.ibiblio.org
  • Subject: Re: [Homestead] Fannie/Freddie bailout question
  • Date: Sun, 7 Sep 2008 15:45:15 -0500


On Sep 7, 2008, at 10:58 AM, Clansgian AT wmconnect.com wrote:

And anyone who thinks that politicians can fix it are drinking or
smoking really good stuff.

The US saying that tax revenue can cover the losses incurred by Fan/ Fred is
our mouth making promises our colletive a**es can't keep. If your
conversations have been wide ranging, over the past half decade you will have heard many
times that the Congress wouldn't allow entitlements to go south because all the
retiring geezers would not vote for them,

Hear ye, hear ye, this is the most sacred sacrament of the nation: the vote. To a politician, the most important American issue is election and reelection. Votes are as food.

When real estate
"values" began to rise unrealistically in the early part of this decade fueled
by low interest rates and shady loans, most sober economists predicted the
housing bubble and the current (and continuing) aftermath. Others, under the
guise of being economists, such as the economic spokespersons for the NAR, kept up
a tatoo of "bottom is just around the corner", "they ain't makin' any more
land!", "it's a GREAT time to buy."

First, let's use the facts. Real estate "values" is not useful. Real estate sales prices are much more accurate and useful. I taught all my real estate appraisal students that the "value" of any piece of property is what a buyer and seller agreed upon, neither being under any undue stress.

It is tempting to look at those and say, "Ah, well you see, the economists

didn't agree so nobody really knows, do they?" It wasn't that economists didn't
agree, it was cheerleaders and mouthpieces didn't agree with the economists
and there was an effort to lump them together as all being experts alike.

Quite so. It is essential for all of us to recognize the chasm between purveyors of fact (few) and cheerleaders (many). Today, we have another element to the equation of what equals truth: bloggers. Bloggers are like all of us, they want to be perceived as important. So they offer their views. Some are competent in their understanding of what they react to and some are simply provocative and entertaining. One of the challenges we face today is becoming sufficiently discerning to separate useful viewpoints from the merely entertaining.

For example, the infamous David Lereah . . . .

Always beware of lobbyists and industry spokespersons. The caveat is that such people often have access to more information than the bloggers.

Apropos, I am skeptical of what AARP, my personal lobbyist, puts out.

wrote (retitled and republished) . . . .

Writers and publishers are another group for whom skepticism is appropriate. They may well have an agenda that seduces you, but their bottom line is their bottom line: the paycheck.

Having a garden is ALWAYS a good idea.

I can think of instances where this would not be true, for instance, where the minimally available space might better serve for sleeping room or for making a living sufficient to buy clothing, etc.


Having debt is ALWAYS a bad idea.

I disagree sharply with this notion. Used prudently, debt to buy real property or to pay for a good education is very worthwhile.

So the advice has been from the clay tables of ancient Sumer to Shakespeare
('neither borrower nor lender be') to the present and it has always been the
best advice. The problem came in the 'irrational exuberance' of the early part
of this decade when some became convinced that having debt was a GOOD idea.
After all, if you owned a $50K house that was rising in value 20% a year, you
were only "making" $10K. But if you borrowed $200K for a bigger house, you
would be "making" $40K a year. A no brainer, eh?

During most economic times during which I have lived, including three decades-plus in and around real estate, yes, a no-brainer. I could provide a long list of useful things that I have because I bought real estate, including this wonderful one hundred and thirty acres of woods where my heart is, so which I call Heartwood.




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