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Monday posting will resume in the new year. Cheer up, motherfuckers!
But leverage is everywhere, not just on Wall Street. If you buy a house with 20% down, you're employing leverage of 4:1. At 10% down it's 9:1. At 5% down it's 19:1. At the FHA minimum of 3.5%, it's 27:1.
That's too much. Just as leverage much above 10:1 is dangerous in the banking system, it's dangerous in the home mortgage market too. If 10% had been the minimum down payment over the past decade, the housing bubble never would have taken off the way it did. Crazy loans would have been rare. Unqualified buyers would have continued to rent. Mortgage fraud would have been dramatically reduced. Speculation and flipping would have been dampened. Foreclosures wouldn't have decimated entire cities. The derivatives market wouldn't have reached such stratospheric heights. We still might have had a medium-sized housing bubble, but the world probably wouldn't have been on the verge of imploding last year.
We should limit leverage everywhere: in the real banking system, in the shadow banking system, in hedge funds, and where it's baked into derivatives. But we should also do it at the individual level: mortgage loans, car loans, and credit card loans. The point is not to cut off credit, but to do what we can to ensure that it grows steadily and sensibly, not catastrophically. A minimum 10% down payment to buy a house is a place to start.
What’s the difference? Short story. Novel. It’s going to have stupid vampires in it. If the reader is that easily amused, then $3.99 is a perfect price point. “What are you reading?” (Oh, it’s a short story I bought on line.) “What’s it about?” (Well, it’s got these, you know, it’s really great, it’s set in this weird country…….it’s about vampires, okay? Vampires.) “Why Johnny can’t read, eh?” (Huh?) “This is my stop, good luck.” (Snob. What are you reading? Come back here!) The Snob stepped quickly from the car, dodging the rush of fresh passengers. Then a vampire jumped from out of nowhere and killed him, and laughed about it, like the dirty rat-person thingie a vampire truly is. The end. That’ll be $3.99 please.
Chiang is one of the legends of the science fiction world, often hailed as the best short story writer of his generation.
And at the risk of pissing off some decent people, I'll add one other thing. In the near term, no serious carbon tax will ever pass the U.S. Senate. Period. If you believe otherwise, you're just not paying attention to things. A big part of the surge in interest in a carbon tax is purely cynical, coming from special interests who are afraid a carbon cap might actually pass and want to muddy the waters with pseudo-liberal arguments in order to build an anti-C&T alliance and keep anything at all from passing. There are plenty of carbon tax advocates who are perfectly sincere, but I gotta tell them: you're being played by people who are the farthest thing imaginable from sincere. If you win, we're not going to get a carbon tax. We're going to get nothing.
"Just the place for a Snark!" the Bellman cried,
As he landed his crew with care;
Supporting each man on the top of the tide
By a finger entwined in his hair.
"Just the place for a Snark! I have said it twice:
That alone should encourage the crew.
Just the place for a Snark! I have said it thrice:
What I tell you three times is true."