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Annals of The Clueless Economist: James A. Wilcox

James A. Wilcox, an economist, is a professor of business in the Haas School of Business at the University of California, Berkeley. Here's the headline for his Op-Ed in Izvestia:

A Way to Make People Buy Homes Again

Hey, I've got an idea!

Why not mandate that people buy homes, just like ObamaCare mandates they buy health insurance? Seriously, what's the difference?

Oh, and while we're at it, it apparently never occurred to Herr Doktor Wilcox that people just might think twice about buying a house, even if they thought they could afford it, because the housing market is rigged by looters and thieves!

NOTE If Wilcox really wants to restore the housing market, he should write an editorial advocating the criminal prosecution of banksters CEOs for accounting control fraud. Of course, he's an economist, so na ga happen.

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Submitted by Hugh on

Well, I am not sure that Wilcox chose the title of his op-ed. It might have been called How to Encourage People to Buy Houses. But it is true, it is still idiocy.

It's not a down payment protection plan as its name suggests but insurance against declining housing prices, and it apparently is only good for 3 years. So again not about protecting the down payment but just some early into the mortgage protection against falling property values.

There are all kinds of hidden assumptions in this. For example, that the housing market will bottom out and begin to recover in less than 3 years. But if this were true, or if it is predicated on the beneficial effects of this program, why is it the home buyers Wilcox wishes to encourage to jump into the market who get stuck with paying an extra couple of thousand for this insurance? They are being asked to foot the cost but the benefit really isn't expected to go to them.

On the other hand, if there is a pay out at the end of 3 years, that means the housing market would be underperforming relative to what it is doing today. So what's to say that the market and the economy might not continue to go down? All that has happened is that some suckers have been enticed into the game and will go underwater a little later than they otherwise might. I don't see this as that much different from adjustable rate mortgages or ones requiring balloon payments. I mean it just seems like a way to get people to sign and then it is your ass are belong to us.

And then there is all the tripe about how banks can be enticed into offering easier credit and better terms to their clients. I mean on what planet does Wilcox live that he thinks that banksters actually think and act this way? Planet Propaganda?