Monday, September 29, 2008

Four sideways thoughts on the Bail-out (guaranteed to provoke somebody)

1. So if the lack of a bail-out results in a national or even global recession/depression that causes people to go bankrupt and poor and businesses to fail, won't the resulting reduction in the use of fossil fuels have a positive effect on climate change scenarios?

2. If the stock market tumbles, the real estate market collapses, and T-bills continue to be worthless, won't that be a just reward to China, which will then end up holding 500 billion to a trillion bucks of useless paper?

3. Imagine just how bad the chaos would be if legislators always demanded the right to read legislation before they passed it?

4. If my home still provides shelter for my family, and if I intend to still be living there a decade from now, what difference does it really make to me what the market says it's worth?


Arthur Torrey said...

OK - I'm provoked 8)

Number 4 is easy... You should be glad if the market says your home is worth less, as it should mean that you will have to pay lower real estate taxes on it...


Duffy said...

ART has a good point. Can i make the county re-assess my house for tax purposes?

Josh said...

Thoughts on...

1. Yes, a global economic slowdown would result in less use of fossil fuels. This would have positive effects for climate change and would have a deflationary effect due to less demand for fossil fuels. This is likely to be the reason the Fed expects inflation to moderate in the short term. However, we would normally like to see these ends achieved without a recession - i.e. through increased productivity.

3. Nice

4. Obviously, decreasing home value means decreasing equity, which means less ability to borrow at a low rate to fund consumption. This was the key to forecasts at the beginning of the year that the economy would experience a recession. However, if the US is ever going to be a net exporter of goods, we will need to save, not fund all of our economic growth through borrowing.

As to property taxes, I think you can challenge your assessed value. However, this would amount to making the best of a bad situation. Because your property tax rate is less than 100% of the value of your house, you are still going to net a loss net wealth.

In making my way to your blog, I was hoping to gain a sense of the Libertarian position on the bailout. If you have thoughts or know of an authoritative source, I would like to see them posted.