>It would be interesting to have an informed
discussion
>about housing policy, but it won't happen if LBO
>continues to project a fantastic image of 'Europe'
>whose purpose is to offer a positive example to the
>self-loathing of Americans
Well, you could maybe strip the 'Europe' bits out and learn from people here who deal with the monumentally wasteful landscape in much of the country, its consequences, and the dynamics and policies it necessitates.
Some people think that all the growth and dynamism (oh, Lord) of the American system have the potential to destroy the economy. (It's pretty multiplicative and iffy, but it basically is this: the homebuilding industry [HB] is a consolidation story and is obviously subject to profit pressures. As HB itself adds very little value, most of what profit there is accrues to the land component. Larger houses on larger lots follow and building expands laterally. There's also an artifact of the traditional HB here, where players of a few generations ago were basically glorified hicks with a few acres of farmland and a couple pickup trucks. Anyway, lenders oblige and offer non-traditional mortgages. Financiers offer more exotic bundles of asset-backed product. Homeowenrs leverage themselves. Money builds up at institutions who are averse to the inflation engendered by these processes. Enough of it goes into commerical real estate in until capitalization rates are squeezed almost to the cost of capital. Liquidity then dries up just as credit expansion translates into pricing in both commercial and residential. HBs who had to pay inflated prices for lot acquisition start liquidating portfolios. People stop spending. Things grind to a halt and then collapse as eveybody runs for the exit simultaneously.) I may have skipped over many of the connectors and my telling is probably faulty. I'm not even sure I buy it as a worst-case scenario. But it is clear that it's a complicated system given to speculative excess, and that it can't easily be divorced from a lot of the stupidity and waste surrounding it.
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