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February 17, 2009

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I have two big problems with the stimulus:

First, it uses huge amounts of debt to accomplish its mission of stimulating the economy. Debt increases risk, which is how we got here in the first place. So in the long run, my fear is it will make things worse, not better.

Second, it rewards those who are in trouble because of bad financial behavior, while doing nothing for those who have managed their money well and are doing fine in spite of the economy. I think that's called "enabling," not helping.

Like you, I would have felt a big sense of urgency with that $15K tax credit for buying a new home. Now, I'm content with just waiting and paying down principal on our current home, to build up a better down payment.

The point is the ES is macroeconomic. It's looking at group data. The view of you and several others on this blog is microeconomic. The ES isn't about your behavior or mine, it's about the behavior of the masses. And the authors of the bill decided there is no significant evidence the behavior of the masses will change with the housing credit.

Maybe there IS evidence smaller purchases such as cars and windows would increase if a tax credit is available. Or maybe that portion of the bill was brought to us by the auto and window industry lobbyists.

But nationally, houses aren't selling at any price right now.

Come on FMF, F20 and Cherryblossom. What are you going to rely on: the knowledge of what motivates you personally or RWH masterful grasp of human nature? You may think a 15K credit would move you to buy a home but RWH knows you (and the rest of the country) better.

Sounds like someone is drinking the "govenment-knows-best" kool-aid ;-)

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