Odds and Ends

May 31st, 2011 at 9:16 am

Costs of war: This made sense to me, given this.  Though if you want to understand the true costs of war, you need to listen to this.

Housing market—it ain’t getting better: Dean Baker, as usual, is right.  He proposed this idea—allowing homeowners facing foreclosure to stay in their homes as renters—way back at the beginning of the end of the housing bubble.

I’ve tried to understand objections to it: banks will make lousy landlords; if you can afford to rent, you can afford the gov’t’s modification programs (this is patently wrong–a key advantage of own-to-rent is that homeowners, not solely banks/mortgage lenders, can initiate it); it doesn’t solve the problem of folks who simply bought too much house.   Some of these may have merit, but if there was ever a case of not letting the best be the enemy of the good, this is it.

It’s not too late to try it.

Energy Efficiency: I couldn’t squeeze this into my piece of gas prices, but in an energy market of largely disturbing trends, it’s an underappreciated positive one: the long-term decline in energy consumption per dollar of GDP.  It’s down by half since the 1960s, meaning it takes half as much energy now compared to then to create a dollar of output.  Doesn’t by any means suggest we’re out of the woods, nor does it diminish the need to conserve or to develop renewables.  But it’s a good trend nevertheless.

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9 comments in reply to "Odds and Ends"

  1. Laurence Watkins says:

    Re: Energy efficiency. Is the reduction in energy consumption per dollar of GDP really a good thing? My kneejerk (and totally unresearched) conclusion would have been that it reflects our continued outsourcing of production capacity to lower-cost regions. That is, a nation whose economy is based primarily on lawn care services (like ours) will *always* use less energy than one based on manufacturing.


    • Sandwichman says:

      Further to Laurence Watkins’s kneejerk conclusion, world energy consumption per dollar of purchasing power parity GDP has not declined nearly as fast as consumption in the U.S. Also the energy intensity of employment in the U.S. is only down a few percentage points because it takes much more GDP growth to create each job.

      The bad news is world energy intensity of employment (BTUs per employed person), which is UP about three percent since the mid-1990s.


    • Paul J says:

      That’s possibly some of it, but most of it is really technology has become more energy efficient. Your refrigerator uses far less energy, florescent bulbs use less energy than incandescent bulbs, cars get better fuel mileage than in the ’60s. Steel production uses far less energy per ton of steel produced than before. These are just the things I know about, I’m not an energy-use expert.

      Of course, as Jared says, we have to keep going down that path, because we could still be a lot better.


      • Sandwichman says:

        Yes, we do indeed have to keep going down that path but we have to go a lot faster than we have been going. And perhaps over the last half century much of the low-hanging fruit has been picked.


  2. Fred Donaldson says:

    Democrats and Republicans often point to the high cost of gasoline and fuel oil in other countries – the $8 a gallon and such, that is also trumpeted by pin-headed pundits.

    These high prices do discourage wasteful use of private transportation, promote public transit use and contruction, and contribute to better insulation and efficient appliances.

    However, these high prices in foreign countries are not the result of Americans getting some kind of break, but come from higher taxes which are used for their public good. Our recent high prices are the result of exploitation by private companies and oil producers and benefit only them.

    Higher taxes on gasoline would encourage lower prices by producers, because price resistance would come from price hikes for public use, rather than more profits for private gain.

    High gas and oil taxes also act the same way as a tariff, promoting more private produstion. And, there is the rub for “New” Democrats – the best answer is high oil tariffs, in addition to higher overall oil taxes, which would reduce foreign oil imports and promote U.S. production because of lower overall costs.

    But there’s a rub to tariffs. Two of the three countries where we get the most oil imports are Mexico and Canada, and that spells NAFTA, and our hands are again tied by a treaty that haunts us in more ways than one.


  3. Neildsmith says:

    The housing market has been distorted beyond reason and it is very hard to have sympathy for people who used their home as an a source of free money during the bubble years. There is no reason to modify underwater mortgages – they are already renters until they need to sell and most have no reason to sell. Maybe I’m missing something, but if people can’t make their mortgage payments, how does converting them to leases help. You have to forgive debt to lower the payment. If we are going to forgive debt, I recommend forgiving student loans first. Otherwise, the discharge of mortgage/HELOC debt as part of Baker’s scheme should occur with a bankruptcy filing. Now that most of the fraudlent mortgages have been foreclosed and the securitization market is dead and buried, it’s time to reconsider the bankruptcy cram-down. That’s my long-time renter’s perspective.


  4. Geoffrey Freedman says:

    I don’t understand why people aren’t looking at the true cost of our military and defense expenditures – which go beyond the actual military budget.

    In 2010 the military budget was 693 billion. The department of veterans affairs was 112 billion in 2010. 53 billion was allocated to homeland security, 80 billion to intelligence services, 50 billion to the state department, and 23 billion in foreign aid. Plus I don’t know how much of our military related functions were outsourced to contractors. I lumped our foriegn service in here because so much of our foriegn policy is now conducted via military measures; perhaps this was always the case and I am just being naive.

    If you add this up its 1011 billion (over a trillion per year).

    We simply will never be able to balance our budget via cuts in social security, medicare.

    Just do the math.

    We will need to cut eveything AND raise revenues and the longer we take to face up to this, the more draconian the measures we will have to take just to stay afloat. We are in deep trouble and don’t seem to recognize it.

    As POGO once said ‘we have met the enemy and they is us!’


  5. comma1 says:

    It is too late to implement a home-owner to renter scenario, since hundreds of thousands of people have already been foreclosed on or sold their homes. You think the cries of moral hazard are inflammatory… imagine the screams of “unfairness” that this would bring.

    It is my opinion that the answer is to require all Fannie backed loans to have an option to repay extended to 50 years. This would mean a drastic cut in monthly payment for all who wanted it, would increase the population who could afford homes generally, would eliminate moral hazard because the banks would take a short term loss all while fundamentally remaining fiscally sound in the long term, and to boot would have stimulative effects without increasing debt. It would be inflationary to the price of housing, but that already happened in 2006. Until someone invents a time machine that ship has sailed.


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