Voodoo Home Buying
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I am disappointed in James Flanigan’s Jan. 24 column, “Baby Boomers Will Cushion Housing Slide.” It reads like an advertisement for the real estate industry.
When he quoted John Silvia of Kemper Financial Services saying that consumer debt should be measured against consumers’ growing assets rather than against their current income, he was advocating voodoo economics. The value of assets, particularly of highly leveraged houses, is elusive. It fluctuates wildly with the economy (just look at Houston). But the monthly debt service of the mortgage is real. And when the current income cannot service the debt, the value of assets disappears.
Flanigan also stated that the baby boomers have time enough later to save for retirement. By that, he was encouraging us to spend now and let the Japanese and Taiwanese buy up our bonds instead. If this continues for another decade, we will owe them about $5 trillion. By then, all of us will be working hard just to pay taxes to service that debt, and we can all forget about retirement. Wake up, America!
WENTE KENNETH LIN
Santa Monica
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