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Herman Cain vs. Ron Paul on Housing prior to the collapse – Lost Republic
These two analogies are not really analogies on the same facts.
Cain stated that “makes homeowners fear that their most expensive possession could turn worthless overnight…” Fact is the value of equity would be reduced or lessened but it would not be worthless if bubble broke. This is accurate statement in economic value terms. Only those who had no true equity could loose out. That is those could be under water.
Paul said, “when housing prices fall, homeowners will experience difficulty as their equity is wiped out.” True to a point, but if their equity was based on true value of dollars and not bubble value, then they might have losses but not be wiped out. Yes, “the government actively encouraged over investment in housing”, and the Fed is still doing it! The Bernake is still keeping interest rates artificially low.
But those with true equity in their homes have not seen “their equity wiped out.” Just the inflated equity more in line with true value. So, they cannot use the hoped for increase in false equity to buy a bigger house. That is not a true bust. A true bust has not really happened.
And there are those of us waiting for a much anticipated book. When will beta version be out? Are the gally proofs at printers?
Or are we waiting on a true bust?
Addendum:
“Bullshit”, as Harry Frankfurt writes in his recent book “On Bullshit”, is a communication that pretends to be genuinely informative but really is not. The person who talks bullshit, Frankfurt holds, is unconcerned with whether what he says is true, but is very concerned with how he is thought of by the listener. In this paper, I discuss Frankfurt’s theory of bullshit, making specific reference to the requirement for deceptive intent on the part of the bullshitter and to whether bullshitting must involve conscious dishonesty. I hold that the really disturbing feature of much bullshit is that people often “believe their own bullshit” and that this requires making room for believing one’s own bullshit as a form of self-deception.
These two analogies are not really analogies on the same facts.
Cain stated that “makes homeowners fear that their most expensive possession could turn worthless overnight…” Fact is the value of equity would be reduced or lessened but it would not be worthless if bubble broke. This is accurate statement in economic value terms. Only those who had no true equity could loose out. That is those could be under water.
Paul said, “when housing prices fall, homeowners will experience difficulty as their equity is wiped out.” True to a point, but if their equity was based on true value of dollars and not bubble value, then they might have losses but not be wiped out. Yes, “the government actively encouraged over investment in housing”, and the Fed is still doing it! The Bernake is still keeping interest rates artificially low.
But those with true equity in their homes have not seen “their equity wiped out.” Just the inflated equity more in line with true value. So, they cannot use the hoped for increase in false equity to buy a bigger house. That is not a true bust. A true bust has not really happened.
And there are those of us waiting for a much anticipated book. When will beta version be out? Are the gally proofs at printers?
Or are we waiting on a true bust?
Addendum:
“Bullshit”, as Harry Frankfurt writes in his recent book “On Bullshit”, is a communication that pretends to be genuinely informative but really is not. The person who talks bullshit, Frankfurt holds, is unconcerned with whether what he says is true, but is very concerned with how he is thought of by the listener. In this paper, I discuss Frankfurt’s theory of bullshit, making specific reference to the requirement for deceptive intent on the part of the bullshitter and to whether bullshitting must involve conscious dishonesty. I hold that the really disturbing feature of much bullshit is that people often “believe their own bullshit” and that this requires making room for believing one’s own bullshit as a form of self-deception.
Ed K