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Posts Tagged ‘Luigi Zingales’

Citizens United: Corruption Disguised as Capitalism

Posted by Larry Doyle on August 1st, 2013 10:04 AM |

Follow the money.

The Citizens United decision allowing for corporate and union funding for the public support or denouncement of political candidates evokes strong reaction from those on both sides of the debate like few other topics.

Are we to believe, though, that the right of corporations and/or unions to speak out does not also come with a payoff tied along with it? Come on, really?

Is this what our founding fathers intended in promoting freedom of speech? I think not. Why is it that some individual entities’ freedom of speech carries more weight and substance than others? Simply because they can provide payoffs to our pols and demand the same in return?

No doubt. Money talks…

Washington Needs a New Housing Model

Posted by Larry Doyle on October 8th, 2009 12:04 PM |

Traders, strategists, analysts, economists, and politicians will always review models of past behaviors in an attempt to forecast future developments. In the process, the models are only as robust as the inputs. Many of the aforementioned individuals will become overly dependent on models. The risk in that process is that the models ‘work until they don’t work.’ As a result, programs, policies, and procedures are implemented that perhaps exacerbate rather than amend a situation. I believe this scenario is playing out in our housing market.

The breakdown in Washington’s housing model revolves around the newly developed phenomena known as “strategic mortgage defaults.” I highlighted this topic a few weeks back in writing, “Strategic Mortgage Defaults Have Major Implications for Markets and Economy.” We see more evidence of this new extension on our housing model in a report released by Reuters, The Flood of Foreclosures Shows No Sign of Ebbing:

The Center for Responsible Lending says foreclosures are on track to wipe out $502 billion in property values this year.

Investor's Real Estate Guide

That spillover effect from foreclosures is one reason why Celia Chen of Moody’s says nationwide home prices won’t regain the peak levels they reached in 2006 until 2020.

In states hardest-hit by the housing bust, like Florida and California, the rebound will take until 2030, Chen predicted.

“The default rates, the delinquency rates, are still rising,” Chen told Reuters. “Rising joblessness combined with a large degree of negative equity are going to cause foreclosures to increase,” she added.

Anyone doubting that the recovery in U.S. real estate prices will be long and hard should take a look at Japan, Chen said.

Prices there are still off about 50 percent from the peak they hit 15 years ago.


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