Friday, April 11, 2008

How the Housing Surge Will End the Iraq War.

Comes with GPS so you can find the kids.

There is a lot of debate about how to win the Iraq war, end the Iraq war or quit the Iraq war. Take your pick but the point is moot. The Iraq war will end for the mundane reason that we will not be able to afford it to continue. The war was financed with cheap borrowed money as was much else in the American economy over the last seven years. The cheap money window for American borrowers has closed. It is all a consequence of the housing mess, exasperated by the deficits in trade, oil, consumer spending, government spending and common sense.

There is not a day goes by without visible and painful consequences being felt because of the mortgage and housing mess. Today it is GE who is taking a hit for it's part in being exposed to some of the toxic waste buried into the financial system. Oil is up, dollar is down and the troubles have just begun.

Call it the revenge of the McMansion or the super-sizing of stupidity but almost all aspects of American life, economics and politics will be affected by the huge misallocation of resources into housing.

8 comments:

  1. Geez, four airlines tank in one week. Maybe we could convert them to tankers. Tank Air.

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  2. 2164th: Call it the revenge of the McMansion or the super-sizing of stupidity but almost all aspects of American life, economics and politics will be affected by the huge misallocation of resources into housing.

    What do you mean "misallocation"? I thought the invisible hand of Adam Smith ruled. Free markets, man! Capitalism is where it's at, not central planning. If American had been directed by a Five Year Plan from the Politburo there wouldn't be so many McMansions.

    But we can take heart that our misery is shared around the world:

    the boom in the British housing market has been much bigger than the one in America. And the long-dreaded correction in British house prices has hardly even started. So if you believe that events in America since house prices peaked there about 18 months ago could accurately be described as a “crisis” or even a “disaster”, you had better reach for the Book of Revelations to find an appropriate word for Britain's economic prospects in the next year or two

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  3. A free market is only as free as government edict and regulation allows it to be. There is not enough time to annotate the distortions caused by government.

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  4. We have a guided market which when it gets off the flight path becomes a misguided market.

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  5. 2164th:Geez, four airlines tank in one week. Maybe we could convert them to tankers. Tank Air.

    There's 250,000 passengers stranded because somebody gundecked the maintenance (old Reagan Navy term), and no one got fired. But the FAA assures us that won't be the case going forward!

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  6. 2164th: A free market is only as free as government edict and regulation allows it to be. There is not enough time to annotate the distortions caused by government.

    Interesting, 2164th. Do you think the next time they come up with a screwball idea like securitizing huge batches of NINJA (No Income No Job or Assets) mortgages and selling them as Prime paper, that the free market should govern it because of the distortions caused by government regulations which would put those instruments through a vetting process?

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  7. Bill Kristol's little sit-down with the Old Man:

    [...]

    So, the president said, at the heart of his speech today "are a couple of questions . . . two big questions that will be answered. . . . One is, are we good enough to take the 20 out to 15? The answer is yes. Will [we] . . . take out any more beyond that? And my answer is no. I'm not going to say that. I'm going to say that I agree with David, that we ought to take a look." And, the president continued, it will be a look or an assessment, not a "pause." "'Pause' is the wrong word--because I'm going to explain why--you don't pause in the middle of a war; you continue to conduct war, you assess. And do I hope that we can continue 'return on success'? Yes, I do hope so. Do I guarantee it? No, I don't. . . . ."

    The president also emphasized that getting to 15 brigades would allow for a rotation schedule for the active force of one year in, one year out. That, he said, would "begin to handle this issue of stress." The president explained that he sympathized with the strain on the troops and their families. But, he said, "the biggest stress would be defeat."

    [...]




    Doctrine calls for a one in/two out deployment schedule; one in/one out moves us back to half the recovery and retraining standard. That's "progress."

    The biggest stress would be defeat? The administration's pie-in-the-sky strategic goals can't be met on any schedule. Few want to say so, but this is indeed the case.

    Obama wants to throw our efforts instead into Afghanistan, which is an even bleaker project with still less durable interest in and commitment to the political, social, and commercial re-engineering that goes with the B1s.

    Next time we go down this road, I propose one simple rule, the No Dicking Around Rule: You're not coming home 'til you're done.

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  8. I agree with you sooner or later we're just not gonna have enugh money to fight this war the economy is strugling alraedy its just a matter of time till the money just isnt coming in any more

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