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Originally Posted by Tommy
juggernaut
bill Clinton created the housing boom
and that's one of the best domestic things any president has done in the last 50 years or so
the housing boom that allowed Bush to go around taking credit for how good the economy was
housing is usually 8 to 15% of the nations GNP
but in the last 5 years its hoovering around 40 to 50% of the nations GNP
what would happen to this economy if the housing boom didn't happen
it would be in the toilet
would you like to know how this happened
see Clinton made a trade agreement with china called
Central America Free Trade Agreement Implementation Act
and that allowed china to invest their money in the us
china choose to invest their money in americian Tbills
the us goverment takes the money from Tbills or tresurarys and lends that money to banks
since there were so much money available to lend to banks that forced the intrest rate to come down and it made the lending requirments looser
since the intrest rate came way down and mortages were easyer to get a lot of people were taking mortages and buying houses
since there was such a demand for houses the houses went up in price
but thats not the end of it
since the intrest rate was so low and the value of a house went up so much
people that already owned homes took equity out of their homes and used that money to buy cars and furniture and computers
which drove up the demand for workers
but thats not the end of it either
those new workers that had money to spend
they went out and bought clothes and pizza and computers and tvs
and that created a demand for even more workers
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I dont know man. I'm not saying it did not help, but here is what I saw where I live and you are not that far from me, shit maybe 20 miles across the water. What I saw in my town was before 9/11 I could have bought a house on my 65K year salary. After 9/11 I had to move 20 miles away as I could not afford a 2 bedroom house that was going for 350k. Interest rates where low but not at the 5 and 6% rates we saw down the line. After 9/11 my town 1 hour outside NYC saw a major influx of people leaving NYC because they were scared. Having only a 20 minute commute by boat to hit downtown they started to think. It took them 20 mins anyway by subway, bus or taxi to enter their place of work so why not move to a "safer area". People who were paying 3 and 4 k per month to live in a shoebox in NYC found out "WOW I can pay 2k and have 3, 4 bedrooms with a backyard. Raise my kids in good schools in a place where they can stay out after dark with no worries. Live 5 minutes from the beach I go to anyway on the weekends. Hey how much is that guy asking for his house? 200k? No problem call it sold." Now the people in my town freak out they did not have to hassle on the home price and word gets around threw the agents. They start recommending people put their houses up for more money, which they do. Houses reach 300K 400k 500k 600k in 6 months. My moms 5 bedroom which was bought in 75 for 35k is now worth 480k. She put it on the market last year and was offered asking price in 1 weekend. She decided she could not sell the house so passed. It's going to be interesting to see the outcome of this in 20 or 30 years as most of the people I know were taking interest only loans just to stay in the town they grew up in. My friend who does mortgages told me it was 60% of his business. Refi's being 20% and the rest were taking traditional mortgages. Those loans even tho they save you money in the short term are going to kill them in 20 or 30 years. If the interest rates go up they are going to have one hell of a time dropping those homes and paying off the loan. That's what is going to come from what Clintion did. We are going to see this country worse off then it was as bankrupsy courts are going to be flooded. Thats why they just changed that law last year. They know the bubble is going to pop. Then what do you have? You have a shit load of banks who have property they can't unload or get the loan back on and they start asking the government for help. Which means what? Taxes balloon to the point where I would not be surpised to see a 50% income tax just to fix this nightmare. I don't know if it was Clinton's trade agreement with China that did it. I like to think it was this
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What accounts for the housing boom? Economists have cited a number of fundamental factors, including low interest rates, favorable demographics, and restrictions on development. But the unappreciated force that may have infected a strong housing market with home-buying mania is bad tax policy. Specifically, I mean the Taxpayer Relief Act of 1997, signed by President Clinton.
Under a set of easily met limitations -- mainly that a home has been a primary residence for two out of the past five years -- a family can exempt the first $500,000 in profit on the sale of the home from capital-gains taxes. The comparable figure for a single filer is $250,000.
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http://www.businessweek.com/bwdaily/...4208_db013.htm
Oh yeah and a little bit of the 9/11
