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A solution to housing market oversupply and social security outlays.
More housing defaults will occur and the number of homes on the federal government's "asset list" will only increase. The federal government and it's GSEs have citiloads of houses that they cannot get rid of. Most are worthless. What is more worthless than a run-down unmaintained home that is unloved?
The answer to this question is the expected value of your social security pension! Everyone expects THE ponzi scheme to end, to be cut, or to be means tested. Trick after trick has been used to extend its life but now the federal government is in the baby boomer phase where the lines get longer, the payouts grow, and the need for solutions much more immediate.
It seems that the federal government is faced with two crises that cannot be solved, however, might we be able to create a unique solution to both crises?
Lets say you are in the market for a home. You are not in a favored class and you cannot obtain financing from the taxpayer supported TBTF GSE banks. You are an older American who has been paying into SSC for a long time.
Suppose you head down to your Trusty Resolution Coop. The friendly clerk (former TSA) presses a button on his GOVphone and the net present value of your social security payout appears on the LCD desk surface.
You look down at the desk and think wow that much? The former TSA agent hits another key on his GOVpad and a list of government held homes appear. Their values all appear to be roughly similar to the net present value of your social security stipend.
While the value of these homes is quite inflated remember that because of ZIRP the net present value of your social security payout is also hugely inflated!
He hands you a USBless sphere and suggests you take your time selecting one. So many states, so many cities, so many neighborhoods. You leave and decide to do some serious googling. You can go anywhere.
You pick a house and take it in lieu of your social security stipend. The federal government has one less house to get rid of and one less check to cut every month in your old age.
A worthless government owned house has just been exchanged for a worthless government supplied pension. Is this not the perfect match? You now have a fixer upper real asset instead of a broken down paper promise.
The icing on the cake is that we can give TSA agents something else to do with their hands!
Thanks ZeroHedge
Mark Hittinger
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You can't eat houses and they don't take them as Medicare premium payment either. Fail.
If you plan to depend on SS for medical expense and food, then you are planning to FAIL.
Simply having no mortgage or rent when one is retired is a huge leg up. However, the same can be achieved by making FICA, mortgage and personal retirement savings consecutive instead of concurrent. For example:
If one could put the half of one's income that goes into mortgage, FICA and the 401k into the mortgage alone you'd own the house in 10 years that today takes a 30-year loan. The interest savings would average almost $200K per household. That savings comes right out of the financial industry.
Either side of the house payments, one could put that moneyball into 401k/IRA/etc. That would provide more contribution in 20 years than what we can today in 45 years.
By age 50 or so one's house is paid off and one's retirement is fully funded. As an insurance measure, which it's intended to be and is sold as, one would begin FICA contributions that would continue until retirement, which would cost no more than a third of one's income (including employer's contribution). One third too much? Not considering that the mortgage, FICA and your personal retirement contributions add up to much more paid concurrently.
Having a paid-off home and a fat retirement fund by 65, one could accept a smaller SS benefit to help keep that program solvent.
Screw the mort interest deduction especially if it's only to fund your gambling habits like your 401k/IRA. Your 'fat retirement fund' is anything but a lock.
Entitlements by any name still smell like poop.
Most people get divorced which would ruin that plan for one of them.
rental income, reduce the property tax...some better than none
Cardboard box barons unite!
Most old people already have houses. What they don't have is cash to pay bills and buy food with. How is handing them an illiquid asset a useful aid to them? Some few might be able to rent out the home and make some income that way, but the taxes and maintenance would still eat up most of that.
The government should bulldoze 98% of what it owns.
Broken window fallacy.
So we tax everybody so that grandpa can pay his property tax. Huh?
Just drop all the taxes on owning land. I know. I know. The schools.
What would we do without .gov schools brainwashing our kids that all this shit is normal?
Drop the taxes, lose the schools, home prices rocket.
Do it by choice, or wait and do it by force.
Give them to combat veterans for free. Disabled/injured get first pick
while I understand the sentiment behind "free" homes for combat vets - I'm not sure more perks and inducements for enlisting in the Banker sponsored WarMachine for other nationstates oil, water, gold, etc. are needed right now.
sorry, but perhaps we should stop making enlisting "heroic" - I'd rather get those same people up to speed on the REAL enemy to their futures. . .
Well, I've just noticed that you said what I said but a whole lot more concisely!
This, I can get behind, but isn't that what VA loans are for?
VA loan is just a regular mortgage albeit with possibly slightly lower interest rate and less fees. You still need a job.
Moving a dozen ex-marines with combat experience into a deteriorating neighborhood by giving them free houses could greatly reduce crime and keep the neighborhood in a positive economic state rather than a collapsing one.
You know a not-insignificant portion of our Marines are in the service because it was better than jailtime, right? There were three such clowns from my high-school who took a judge up on his kindly offer.
You'd be better off hiring Marines to rehab blighted neighborhoods, if property values are your real concern.
Oh man, I'm going to get flamed for saying this, but: give a free house to someone who took part in what historians will probably call wars of aggression? I see where you're coming from, and I totally think your heart's in the right place caring for working class guys, but I don't think it's the way to go.
Marines and vets individually can be great guys, but a lot of what they fought for was pretty screwed-up. Like General Smedley Butler said: war is a racket. It's fought by working class kids for oil, the petro dollar, and fat old men in board rooms who like keeping the rest of us poor. Heck, plenty of military historians say that.
Kuwait was about oil. Iraq was about oil. Afghanistan was about mineral rights, pipelines, bases next door to China, and the lucrative opium dollar (a bigger economy than California's). (Why invade Afghanistan in 2001? 19 of the 20 hijackers were Saudi; none were Afghan; and Afghanistan repeatedly, publicly offered to hand over Bin Laden if the USA handed it evidence - as per international law. Bush Jr refused, saying 'We don't need to give them evidence. We say he did it.' Those exact words. You can see the videos on YouTube.)
- 45% of US federal taxes already go to the war economy, or to veterans.
- The US military is the least cost-effective arm of government. It has the highest waste and worst management. It bungles, people die.
- In many ways, it's a massive job-creation scheme for people who couldn't get productive jobs that actually boost the economy.
- The US military isn't very good at what it does. Whenever the US has fought alone, or done 90% of the fighting, it's been stalemated or lost most of its conflicts.
- Getting a house solely because you worked for an organisation that killed a few million civilians over the past fifty years, is plain weird.
- We don't need soldiers more than we need bakers, farmers, teachers, hairdressers and plumbers.
- They're not heroes. They're just men. Most soldiers weren't the hard-working, diligent kids at school. They were the 'hey, whatever' kids who didn't try hard.
Yes one party gives to people who are unemployable or federal type worker and the other gives to military defense industry and otherwise unskilled.
The common thread is that they are all on welfare but the military recoups some in what we pilfer from these countries when we "bring them democracy".
I might point out that "winning the war" is not measured in the way you speak..it is more about achieving their goals (usually expanding their size and coffers).
Confessions of an EHM.
"You now have a fixer upper real asset instead of a broken down paper promise."
And no income to do any of the fixing, pay insurance and taxes, oh but the elderly or frail can run right out and compete in the labor market where even young and experienced college grads can't get decent jobs, or any jobs.
I do hope this was meant as satire rather than the insult it would otherwise be to the intelligence of the ZH readers.
VA loans are helpful usually, but there is no more provision in them for declining markets and falling equity than there is any other type of loan. It is just a zero down program with preferential interest rates which usually match the best on the market, and they absolve the borrower of the requirement to buy mortgage insurance. They still require roughly the same FICO standards. I had one once in the late 1990's, and it was a good deal as far as the options available, but it was not what so many people seem to think it was, and should anything go wrong and the VA takes a hit on your house you then have a debt to the government that they make no effort to collect, as far as reporting you to credit bureaus and hounding you and such, but it also never goes away, you can never use the benefit again till it is cleared off which depending on the loss of equity and sale proceeds might mean never. Use it wisely.
The Feds giving up assets is a good idea, but I was thinking 'mineral rights'.
and taxing rights
not bad......
You;ve got the right idea, but needs expanding.
Just like the govt did in the old west, give it away(land, in this case house and land).
deal is that can't sell the homes for thirty years, pay property tax, and must pass on to heirs who are also constrained.
gotta take the supply off the market and not constrain spending with ssn reductions!!
What happens when you take the house, give up your SS, and then need welfare or other assistance because after all, you don't get a SS check anymore ?
The libtards are not going for us just abandoning that poor idiot who was tricked out of his SS.
What if you cant pay the property tax?
If you end all property tax and people learn to raise their own food like we used to, nobody would need SS.
What they earned, they could live on. Not give it to some taxing agency to feed some .gov worker so he doesn't have to raise his own food.
You drop property taxes to zero..... You watch home prices go up!!!!
Your idea is vastly more sensible than the original author's. Thing is: it's also inevitable. You can't tax money that isn't there, so property taxes *will* fall, even if governments kick and scream about it.
And the article is just batty in so many more ways! :o) Someone near to retirement probably has a home, they're in the demographic most likely to. What do they do with the old house? Sell it to someone younger who can't afford it? Sell the new house for peanuts? (Why couldn't the government do that itself?) Do the retired all decide to move to Detroit because there's empty property there?
And looking at the theory: why get a free asset in exchange for SS payments what were mathematically incapable of meeting your promised payout, just because you're a senior? Why give a free house to people based on that criteria? Why not reward attractive babes? Or people with nice personalities? Or ginger hair? Why not reward people for the total amount of tax they've paid in, not just SS, for a lifetime bankrolling the nation? There's as much linkage between those attributes and deserving a government handout.
Heck, why not give the house to someone in their 20s who'll never have a home unless it's priced close to free? They didn't bust the economy, rack up obscene debt, and acquiesce to shipping jobs abroad in order to keep inflation low in consumer goods and services - but they're stuck with all the bills for those choices. Ain't that more moral? Not screwing over a generation that's been born into poverty?
"can't sell the homes for thirty years, pay property tax, and must pass on to heirs who are also constrained"
LOL...in what way is that "OWNING" a house?
I'm sure they'd treat that place the way welfare sleaze treat their govt supplied digs. To have "ownership" you have to have both responsibility and means to keep up the place.
I've got a friend who makes good money. The city buys nice homes in nice neighborhoods, moves in sleaze. The sleaze absolutely destroy the place. He buys the house for pennies on the dollar from the city, completely rehabs it (while living in it for the later part of the work). Sells it back to the sort of people who actually belong in the neighborhood. The only problem is that his profit, obviously, came from the taxpayers--they paid for the original purchase, subsidized the destruction, absorbed the cost for his opportunity to buy the property cheap.
Sometimes I feel bad for the working poor who struggle to make ends meet, but then remember that the struggle makes them stronger and better people, that if they were non-working poor, not only would they be living off you and me, they'd also be devolving into feral animals because of the utter lack of any responsibility to keep themselves warm and fed.