Peter wrote:

> Transportation is needed to make the others work. So those areas should be, if
> not regulated, then at least supervised and taxed on a very nonlinear scale that
> would discourage and punish speculation (e.g. capital gains rate on property
> value increase by resale set to wipe out most gains if no major improvements
> were made etc etc - and this is a lame example I just thought up). But I am not
> an expert, and I am not in the US.

We actually pay for PUBLIC transportation with Municipal Bonds, which 
give indexed returns (decent ones, but not mind-blowing) at a 
significant tax discount to the holder in the form of often both local 
and Federal taxes.

But people saw greater returns in these other "securities" (what a 
stupid word to describe pieces of paper... pure fiction/marketing) and 
couldn't resist.

How would you recommend that people be properly motivated to buy the 
less exciting, consistent "slow growth but very secure" investments like 
Municipal Bonds that pay for our city projects, when they see the 
double-digit returns on riskier things?

Just telling people the other things are much higher risk, doesn't seem 
to grip their minds very well until something like today happens.

> Anyway one cannot help but notice that there is one unregulated issue among the
> ones listed above: housing. Or, at least, it wasn't until now. Happy
> coincidence, or was it the hand getting its own way insidiously. Perhaps it
> liked the sound of popping a large, overinflated balloon (that could not have
> existed if certain authorities had not looked the other way for years).

I think the hand was held back from slapping the bejeezus out of some 
folks in housing.  You just can't offer so-called NINA loans (No Income, 
No Assets) to people and get away with it.  The hand's coming for a 
whoopin' on that one sooner or later.  Problem is, we held it off until 
the owners of these loans were so buried in them as they were sold 
upstream to the big investment banks and insured by the world's largest 
insurers, that now we're going to have to throw money on the bonfire to 
appease the hand.  :-)

> I have not been following the issue after the Miami disaster, are there still
> realtors selling un-insurable prime land suitable for lotus flower harvesting or
> has that market cooled down now ?

Haven't followed that one.  Most of Florida is a real-estate nightmare, 
and has been since the real Pirates of the Caribbean days, though.  Sane 
people see this, not many sane people investing there apparently, though.

The old saying, "I have a bridge to sell you" still holds true.  The 
problem was, this market hid what was being bought and sold from the 
middle-men and didn't react until the bad debts were gobbled up by the 
top of the food chain.  Now the food chain has a very bad case of 
indigestion.

Nate
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