Anonymous
08/17/2012 09:37
Subject: We're doing a mortgage refi at 3.75% -- someone tell me why that interest should be deductible?
Anonymous wrote:
PP: My biggest problem with your response and your original post is that it is lazy. You say I am reading too much into your post, but I am reading this stuff thinking that these casual comments are nuts. Don't say stuff like 'what happens if China dumps our treasuries?" and "looming crisis" when it won't happen and when we actually want them to sell some treasuries so their currency can appreciate. Don't say "Romney pays enough". What kind of tax plan is that? Think through your comments and then defend them.
You're right. I think and write in shorthand. In my world, a comment about China dumping treasuries would be immediately understood as we've all read many stories about China redirecting their UST purchases--less from active selling and more from not rolling over maturities. The China (and India and other developing world) central banks are ramping their gold purchases and hedging their USD exposure. The benefits of the 20 year symbiotic relationship btw China and US is ebbing and they don't enjoy recycling their funds into a depreciating currency. The debt ceiling crisis was a huge wake-up call to the developing world who, right now, have better balance sheets.
Similarly, "looming crisis" is also shorthand as I view that as conventional wisdom for those of us who read financial publications daily. In my meetings we all understand this perfectly well--whether liberal or conservative. Paraphrasing the mayor who said "there's no republican or democratic method to picking up the trash" there's also, in my view, no dispute about the upcoming crisis. (Herb) Stein's law: most things that can't go on forever--don't. This was well presented in Reinhart/Rogoff's book "This Time is Different."
So I see the fussing about Romney's tax returns, who's presented what plan, etc as a side show--not unlike Germans whining about irresponsible Greeks while the entire Euro project careens into a ditch.
We've had it pretty good in the US over the past 60 years. After WWII the rest of the world was flat on its ass while our factories were humming. Then the cold war came along and cut off a huge % of the world's population from the global economy. But now it's their turn--they're younger, hungrier, work their asses off, want their own chicken-in-every-pot and are on their way to getting it. Meanwhile, we have these stupid arguments about extending retirement ages by 20 minutes and can't figure out how to get basic medical care to all.
Simply put--we're broke. Why is that hard to see? We're spending vastly more than we take in. Add in state/municipal budgets and an honest actuarial accounting of pension obligations and the numbers are staggering. There is simply no way to solve this off the backs of "those rich assholes." The numbers do not work.
Ah..I'm done. I'll keep doing these stupid refi's with free money and look forward to the inflation that's coming--which, btw, is wholly confiscatory. I'll be fine. Mitt will be fine. Soros will be fine. Warren too. But the middle class is gonna get absolutely hosed--much more so than they've been over the past 5 years.
Really Germany is being silly for debating the extent to which it should sacrifice in order to solve another country's fiscal problems? That's some nerve there.
Anonymous
08/17/2012 08:02
Subject: Re:We're doing a mortgage refi at 3.75% -- someone tell me why that interest should be deductible?
Anonymous wrote:I just learned this afternoon, that in Germany, people prefer to rent rather than to buy. They have 40% home ownership compared to 70% in the United States. All in all the Germans are doing better than a lot of countries economically. While I would need to know more, that suggests the possibility that it's not just renting that makes communities more transient.Anonymous wrote:IMO the mortgage dedication is powerful as a psychological motivator for home ownership. (Heck, we hit the AMT so a mortgage dedication of 4% on a smaller downpayment because we've paid most of the house off and re-financed isn't much money at all. ) The mortgage deduction leads to individuals believing that owning a home is a better financial move than renting. Home ownership tends to create more stability, less crime, better communities, more involvement in schools etc etc.
The mortgage deduction also leads into the comfort of borrowing more for a home. State's depend heavily on property taxes which are determined by house value.
As an individual incentives toward renting would make us more agile, more able to pick up and move to another part of the country, or follow various job opportunities for a year or two. It could actually be better for us as individuals but the communities and states would suffer with an increased transient population.
Renting is a very different affair in Germany. Many people rent long term, the same place, think 20 years plus, they put a lot of money into their apartments, complete remodel when you move in, including extensive kitchen/bath remodels, all your own appliances. They pay rent, but they feel the place is theirs, and it is. No two apartments look the same inside. And yes, if they cannot find a new renter who is willing to take it over, they run the risk to have to put it back into the original condition, but usually you find people who like the remodel, or will remodel again, anyways.
Here, in my experience people always rent with a temporary mindset, and often it is, people move much more often here. People here don't take pride in their rented apartments, as they do in Germany. If you take pride in something, you care for it well.
Anonymous
08/17/2012 07:44
Subject: We're doing a mortgage refi at 3.75% -- someone tell me why that interest should be deductible?
You implied that China would dump it's treasuries and rates would skyrocket. You say it is happening, which is somewhat true, but I wouldn't call it dumping. They are selling a portion. So where are the sky high rates? I just think there are misconceptions out there that need to be challenged.
Also, I don't think we are broke. This country has plenty of money. You are right that we do need to get the government budget in line. You are right that we have to pay more taxes. I am ok with getting rid of the mortgage deduction in a responsible way. I also think the wealthy need to step up. I think we need a sensible health care plan instead of the current approach of only giving health insurance to healthy people then dumping them into medicare when they turn 65. Finally, we really need to create jobs and invest in education, science, and infrastructure so we have skilled and talented taxpayers in the future.
Also, I don't think we are broke. This country has plenty of money. You are right that we do need to get the government budget in line. You are right that we have to pay more taxes. I am ok with getting rid of the mortgage deduction in a responsible way. I also think the wealthy need to step up. I think we need a sensible health care plan instead of the current approach of only giving health insurance to healthy people then dumping them into medicare when they turn 65. Finally, we really need to create jobs and invest in education, science, and infrastructure so we have skilled and talented taxpayers in the future.
Anonymous
08/16/2012 21:04
Subject: We're doing a mortgage refi at 3.75% -- someone tell me why that interest should be deductible?
PP: My biggest problem with your response and your original post is that it is lazy. You say I am reading too much into your post, but I am reading this stuff thinking that these casual comments are nuts. Don't say stuff like 'what happens if China dumps our treasuries?" and "looming crisis" when it won't happen and when we actually want them to sell some treasuries so their currency can appreciate. Don't say "Romney pays enough". What kind of tax plan is that? Think through your comments and then defend them.
You're right. I think and write in shorthand. In my world, a comment about China dumping treasuries would be immediately understood as we've all read many stories about China redirecting their UST purchases--less from active selling and more from not rolling over maturities. The China (and India and other developing world) central banks are ramping their gold purchases and hedging their USD exposure. The benefits of the 20 year symbiotic relationship btw China and US is ebbing and they don't enjoy recycling their funds into a depreciating currency. The debt ceiling crisis was a huge wake-up call to the developing world who, right now, have better balance sheets.
Similarly, "looming crisis" is also shorthand as I view that as conventional wisdom for those of us who read financial publications daily. In my meetings we all understand this perfectly well--whether liberal or conservative. Paraphrasing the mayor who said "there's no republican or democratic method to picking up the trash" there's also, in my view, no dispute about the upcoming crisis. (Herb) Stein's law: most things that can't go on forever--don't. This was well presented in Reinhart/Rogoff's book "This Time is Different."
So I see the fussing about Romney's tax returns, who's presented what plan, etc as a side show--not unlike Germans whining about irresponsible Greeks while the entire Euro project careens into a ditch.
We've had it pretty good in the US over the past 60 years. After WWII the rest of the world was flat on its ass while our factories were humming. Then the cold war came along and cut off a huge % of the world's population from the global economy. But now it's their turn--they're younger, hungrier, work their asses off, want their own chicken-in-every-pot and are on their way to getting it. Meanwhile, we have these stupid arguments about extending retirement ages by 20 minutes and can't figure out how to get basic medical care to all.
Simply put--we're broke. Why is that hard to see? We're spending vastly more than we take in. Add in state/municipal budgets and an honest actuarial accounting of pension obligations and the numbers are staggering. There is simply no way to solve this off the backs of "those rich assholes." The numbers do not work.
Ah..I'm done. I'll keep doing these stupid refi's with free money and look forward to the inflation that's coming--which, btw, is wholly confiscatory. I'll be fine. Mitt will be fine. Soros will be fine. Warren too. But the middle class is gonna get absolutely hosed--much more so than they've been over the past 5 years.