Sunday, August 3, 2008

How to Fix the Housing Mess: An Alternative to Dean Baker

Despite the large number of people who lack adequate housing and rents that make decent housing unaffordable, the Wall Street Journal's Holman Jenkins suggests housing demolition as a way to eliminate the excess supply of "homes going rancid on the shelf." As discussed in

New York, inspired by Roger Starr, engaged in the planned shrinkage of New York, which meant letting houses burn in poor neighborhoods, which inspired arson, which helped to clear out neighborhoods for developers.

This kind of logic might even lead to reducing unemployment by ....

Jenkins, Holman W. jr. 2008. "How to Shake Off the Mortgage Mess." Wall Street Journal (30 July): p. A 13.

Jenkins reports: "The Economist, in its July 10 edition, endorsed a "wrecking-ball response." Bill Gross, the Pimco bond king, says in an ideal world Washington would "buy one million new/unoccupied homes, blow them up, and then start all over again"."

"... a relevant policy would consist of judiciously buying unsalvageable houses and demolishing them. Fannie and Freddie's strength is housing market software: They could be put to work devising a least-cost, maximum-bang strategy for demolishing unoccupied homes to preserve as much value as possible for the homeowners and mortgage creditors who remain."


Shag from Brookline said...

Shades of Vietnam military strategy:

"Destroy village housing to construct/develop affordable housing."

Revitalize Section 8 and high-rise affordable housing? (Just a few years ago, weren't such high-rise affordable housing buildings imploded because they did not work well?) Let the "free market" (with subsidies for developers, etc) prevail! More eminent domain takings for private development!

Meantime, what to do with those displaced "temporarily"? (Compare with New Orleans.)

Anonymous said...

Shag, Halliburton has been tasked with building concentration camps for a while now. i think that answers your question

Anonymous said...

I have recently been trying to come up with a more incompassing strategy for generally improving the economic situation in the US. Given that so much of the difficulties seem to stem from Wall Street capers, given that the bulk of the Wall street crowd lives and plays on the north and south sides of the Long Island Sound the answer seems clear.

We could solve the excess housing crises and the over all financial
and banking crises as follows. One, maybe two retired battle cruisers are minimally brought back to cruising capability, armed to the teeth, I believe they featured both 9" and 5" guns in multiple arrangement on both sides of the decks together with an array of smaller, fast firing 20mm and 40mm guns.

Said cruisers then take a leisurely trip coming into the Sound from the east. If they keep a course along the north/south mid-line of the Sound both the north shore of Long Island's gold coast and the south shore of the Connecticut shore should be in easy range of the ships' guns. The real estate in those general areas has been doing little good to the over all population. Given that most of the home sites are on grossly over sized lots, the existing homes could then be replaced by a sufficient number of homes to make the entire enterprise economically feasable.
Yes it's a bit extreme, but we are facing a substantial real estate crisis which is exacerbating the credit situation.