The Fed Shutdown Poll and Megathread

[grumbler]

Am I just kind of stupid to think that while this may be painful, trying to stop it from happening has and will continue to have more negative long term consequences than positive?

The market needs to correct - right? Trying to artificially inflate housing prices - how is that a good thing?

I am not sure that anyone is trying to "artificially inflate" housing prices.  I think that they will re-inflate on their own, as the common sense of consumers convinces them that buying is better than renting, or that moving up is better than continuing to live in a house that is too small.

[MadImmortalMan]

Who says Republicans can't get serious about the deficit?

Boehner opens door to cutting U.S. oil tax breaks

(Reuters) - Congress should consider cutting multibillion-dollar subsidies to oil companies amid rising concern over skyrocketing gas prices, House of Representatives Speaker John Boehner said on Monday.

"It's certainly something we should be looking at," Boehner said in an ABC News interview. "We're in a time when the federal government's short on revenues. They ought to be paying their fair share."

"Everybody wants to go after the oil companies and frankly, they've got some part of this to blame," he said.

But Boehner said he also wanted to "see all the facts" first.

Boehner's remarks echoed concerns expressed this month by President Barack Obama, who asked Congress to repeal $3.6 billion in annual oil, natural gas and coal subsidies, a move that would total $46.2 billion over a decade and help pay for clean energy initiatives.

But Boehner's comments go against Republican orthodoxy because the party traditionally is very supportive of the oil and gas industry and rejects most policies that would raise the costs of domestic energy production.

Boehner also suggested that Obama could lose the 2012 election if gas prices do not decline.

Rising fuel prices are a persistent concern for the White House, which is worried about their impact on the economy as Obama mounts his run for re-election.

A New York Times-CBS News poll found that 70 percent of Americans believe the country is on the wrong track and analysts believe gas prices are a main reason for this.

The Obama administration tried unsuccessfully during the last Congress to cut tax breaks and subsidies for fossil fuels.

The attempt to end the subsidies has been strongly condemned by oil and gas companies, which argue that abolishing the tax breaks would reduce domestic drilling, cost jobs and increase U.S. reliance on foreign energy suppliers.

"This is a tired old argument we've been hearing for two years now. If the president were serious about job creation, he would be working with us to develop American oil and gas by American workers for American consumers," the American Petroleum Institute's chief economist John Felmy said.

Unrest in the Middle East has pushed crude oil prices above $110 a barrel. U.S. retail gasoline prices hit $3.88 a gallon over the last week, the highest level since the summer of 2008 when prices reached a record $4.11 a gallon, the Energy Department said on Monday.

Asked who the American people should blame for high gas prices, Boehner pointed the finger at Obama and said the president won't win re-election of gas prices are "$5 or $6" a gallon.

http://www.reuters.com/article/2011/04/26/us-usa-oil-boehner-idUSTRE73P03H20110426


...But I want to see all the facts first. We can't just go slashing corporate welfare willy-nilly.

[DGuller]

Am I just kind of stupid to think that while this may be painful, trying to stop it from happening has and will continue to have more negative long term consequences than positive?

The market needs to correct - right? Trying to artificially inflate housing prices - how is that a good thing?

I agree to a point.  Home prices need to fall from the highs, since the highs were kinda caused by a bubble.  However, you don't want the drop in prices to be self-perpetuating.  Let the whole thing free-fall, and not only do the people who deserve it lose their houses, but even the responsible homeowners who simply didn't plan for a catastrophe will get it. 

It's a tricky tight rope to walk.  It's extremely hard to engineer a soft landing from asset price bubbles, without causing needless collateral damage, which is why it's a good idea to avoid them in the first place.

[DGuller]

Yeah, but are they overcorrecting...

It looks on the surface like we've hit the rational historical price points again. I don't know though.

It looks close, but IMO we're not there yet.  I think the early 90ies level was about where we should be, and we're still 10 points off on the real price graph.  The real prices should stay about flat, historically the real returns are zero for house prices.

[Berkut]

Am I just kind of stupid to think that while this may be painful, trying to stop it from happening has and will continue to have more negative long term consequences than positive?

The market needs to correct - right? Trying to artificially inflate housing prices - how is that a good thing?

I agree to a point.  Home prices need to fall from the highs, since the highs were kinda caused by a bubble.  However, you don't want the drop in prices to be self-perpetuating.  Let the whole thing free-fall, and not only do the people who deserve it lose their houses, but even the responsible homeowners who simply didn't plan for a catastrophe will get it. 

How so?

I don't really understand that - if a responsible homeowner could afford their house payments before, why can't they afford their house payments after the correction? I certainly did not buy my house under an assumption that my ability to afford to make my payments was contingent on the price of my house not falling...

[DGuller]

How so?

I don't really understand that - if a responsible homeowner could afford their house payments before, why can't they afford their house payments after the correction? I certainly did not buy my house under an assumption that my ability to afford to make my payments was contingent on the price of my house not falling...

Being underwater does not have to be fatal, but it does severely restrict your options.  You can't move without realizing the loss, for example, or do anything that involves selling your house in general.  Also house equity is a rainy day option for many people, even if they don't plan to tap into it.  With that gone, many people's finances are on a more shaky ground.

[grumbler]

DG and Berkut:  are we actually discussing an actual, existing policy here, or just expressing theoretical points about a hypothetical "artificially inflating" of home prices? 

[DGuller]

DG and Berkut:  are we actually discussing an actual, existing policy here, or just expressing theoretical points about a hypothetical "artificially inflating" of home prices?

Both for me.  My points are mainly hypothetical, but things like credits for new home buyers weren't hypothetical.

[grumbler]

Both for me.  My points are mainly hypothetical, but things like credits for new home buyers weren't hypothetical.

I thought the credits for new home buyers was long since expired.  If that's the concrete example, I'd say it seemed to cost a lot for what good it did.

[DGuller]

Both for me.  My points are mainly hypothetical, but things like credits for new home buyers weren't hypothetical.

I thought the credits for new home buyers was long since expired.  If that's the concrete example, I'd say it seemed to cost a lot for what good it did.

They did expire a while ago, hence the second dip in house prices.

[CountDeMoney]

Who says Republicans can't get serious about the deficit?

A New York Times-CBS News poll found that 70 percent of Americans believe the country is on the wrong track and analysts believe gas prices are a main reason for this.
...
Asked who the American people should blame for high gas prices, Boehner pointed the finger at Obama and said the president won't win re-election of gas prices are "$5 or $6" a gallon.

...But I want to see all the facts first. We can't just go slashing corporate welfare willy-nilly.

Too funny.  Like the government has anything to do with the price of a fungible commodity traded globally on a single currency.  They'd be better off going back to bitching about his birth certificate.

[Admiral Yi]

At least as of a few months ago Obama was propping up the home market through ongoing losses at Freddie and Fannie.

Money is right about the global nature of the oil and gas markets (don't know about coal).  The original rationale was to increase domestic exploration and production, i.e. "lessen dependence on imported oil."  If we don't care about that any more that's cool.