Decent discussion on To the Point

[estokien]

So I caught a bit of the radio show To the Point when running an errand today, and it surprised me by being interesting (I've rarely found the debates on the show interesting since it was just Which Way LA, and it was a full hour long). They were discussing the future of Fannie Mae and Freddie Mac, which currently own something like 90% of the

Comments

[dieppe]

Did you have a point here?

[jon_leonard]

The journalist would have been Michael Lewis: I've read a few of his books, and they've all been well worth reading. Not sure what to make of his critique of the private sector lenders: The government hasn't done terribly well predicting long-term risk either. Lots of pension funds are in trouble for related lack of foresight.

In terms of fixing the mortgage market, I think limiting loan-to-value ratios is important, and favoring fixed-rate loans would help. There's really not much of a reason to subsidize the gamble of an adjustable rate loan. (Think of it as a fixed rate loan plus and interest rate swap. What fraction of borrows are sufficiently sophisticated as investors to know if an interest rate swap is a good idea?)

And for what it's worth, I think we should repeal prop 13. But maybe I'm not that "conservative". It'd need to be part of a reform package, though. A simple repeal would most likely lead to even sillier budget messes.

[estokien]

Yes, well I doubt a simple repeal would be that simple anyways. But, to show that I'm not a blind liberal either, I think we have a problem in this state that the most palatable taxes seem to be those imposed on the highest income brackets, and over time we have a system where a small percentage of the population is paying a large percentage of our tax income. This means a fluctuation in the incomes of these people can have a huge effect on our budget. Likewise, sales taxes are highly dependent on the economy and are a large part of state income. So ideally, I'd like to see changes that increase property tax revenues, even out the income tax rates a little more, and lower sales taxes in return. And get rid of this raiding of local municipalities tax revenues by the state. Combined with an elimination of the 2/3 requirement for raising taxes in the legislature, and other electoral reforms to allow more real legislators and fewer idealogues in the state legislatures. But, yeah, not sure how all that would come about.