I don’t disagree with this at all but I think the point many are making (and it appeals to many on both the far right and left) is this has been a continuum of resource (over) allocation towards homeownership since WWII, banking crisis or not, and it can’t be separated from excessive suburbanization in this country. I see the mortgage deduction, the tax exemption for home profits, the implicit backing of the mortgages by the GSEs, the allocation to more highways as all being part of the same phenomena. The sh*t has now hit the fan for other reasons too but the fact still remains that we have basically told lower middle class people to live far from cities, drive excessively and to buy single family homes and have done everything possible to make that happen.

I could be wrong but I believe a housing market as it existed before WWII would necessitate up to 40% down and banks could not risk providing 30 year fixed loans so all loans would be adjustable.

Interest rates also were kept low to avoid a recession 5 years ago, and that inflated home prices as well, further reducing labor mobility. Bankers then kept rates low in order to inflate the loans that generate interest which is income to a bank. This is part of the flaring of the FIRE (Finance, Insurance and Real Estate) economy that arose after Gramm/Leach repealed Glass/Steagall, broke down the divisions between banks and insurance companies which allowed for the financialization of housing and real estate and consumption and the debt which serviced them.

Reregulating finance, insurance and real estate is critical to removing the incentives towards gaming the system into the ground. The purpose of finance and debt is to lubricate capitalism not to become capitalism, and the financialization of the economy with the attendant globalization/free trade is what led to the offshoring of the real manufacturing economy to be replaced with the FIRE economy.

Housing should serve as a piggy bank more than a casino. And retirement reform is critical towards definancializing housing.

The social relationship of tenant/landlord dates back to the feudal regime and even in San Francisco with the strongest pro tenant laws in the country,still carries an oppressive taint.

If capital is going to flow unrestricted, than labor needs to be able to flow to follow it. The European Union allows this. I speak as much Spanish to people in shoppes in London as I do at the tiendas here. NAFTA, on the other hand, does not allow for labor mobility. Could it be the various nefarious fears of our vecinos south of the border?

-marc

The mortgage deduction has been around for many decades without causing economic crisis. The current crisis was caused by irresponsible bank lending (and the irresponsible borrowing that it enabled), and that is what we need to regulate.

After all, I can’t cash out my 401(k) or SEP IRA without a severe tax penalty. Why should housing cashouts be a tax-preferred form of spending?

I am a renter and it would be great to be able to move to a different place more easily w/o worrying about the deposite so much.

The case against subsidizing home ownership is very simple. Home “owners” have got us into the mess we’re in now, and wage earners (whether owners or renters) are having to pick up the tab. Axing the mortgage interest deduction and other federal incentives is only fair.

I think it is better social policy to encourage more stable communities than to turn people into migrant workers who follow the jobs around. The modern economy will inevitably cause movement and displacement of people, and we need social policies to mitigate that at least somewhat.

We shouldn’t be so eager to sacrifice community to the economy.