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December 31, 2007
Morning Links: 12/31/2007
Inequality
Interesting summary of research on charity and fariness by Dr. Christina Fong, Department of Social and Decision Sciences at Carnegie Mellon.
Paul Krugman on trade and inequality here and here.
Housing Market
Historian Louis Hyman discusses an early instance of a subprime crisis and concludes:
"Homeowners cannot build equity in an overvalued house, no matter what the terms of the mortgage. Whether that inflated value comes from corrupt inspectors or frenzied markets is immaterial. The crisis, now as then, is a symptom of inequality — not its cause."
An argument that the real threat of a rising tide of home foreclosures comes from falling home prices not resetting of mortgage rates:
"We are suffering from a home value crisis, not simply a credit crisis. If home prices were still rising, defaults would be low, investment returns would be high, borrowers would still be cashing out equity, and lenders would be showering credit on home buyers. Falling prices reverse this dynamic. A recent study by the Federal Reserve Bank of Boston found that most foreclosures result from falling home prices, not from the resetting of mortgage rates."
Calculated Risk breaks down the latest on existing home sales by the National Association of Realtors.
Brad Delong comments on Paul Krugman discussion of the role of exports in preventing a recession so far.
--Mark Price
Posted by Price at December 31, 2007 10:51 AM