As I was watching the All-Star game, I was struck once again by the difference in quality. For once, it wasn't the position players; the NL put a really good set of hitters on the field, and the defense was great (one error notwithstanding). No, it was the pitching, and in particular, the real relievers the AL had. Pabelbon-Nathan-Rivera is just not fair. Oh, and King Felix was the guy before them. Wow. Very impressive.
The National League is starting to catch up, but there are still way too many franchises clinging to slim mediocre wild card dreams. With the Dodgers coming into their own, maybe the rest of the league will be forced to grow up and build real teams with real farm systems, like the front-runners in the AL.
Wednesday, July 15, 2009
Wednesday, July 08, 2009
Proposition 13 caused the global economic crisis
OK, so before you dismiss this out of hand, hear me out.
Proposition 13 did a few things:
1. Immediately lowered property tax revenue by forcing valuations of property to 1% of cash value in 1978.
2. Establish that valuations of property could on increase by 2% per year unless there is an ownership change.
3. Any statewide or local tax measures have to have a 2/3 majority (since amended by another prop; education funds only require a 55% majority now).
I am not going to talk about the horrible consequences to education and local services due to this law. That is for another day. I am going to talk to the implications to the California housing market.
After 1978, there were strong incentives not to sell houses, as the property taxes were fairly frozen while the land values were shooting up. Local governments used eminent domain to shut down poor neighborhoods and turn them into big box retailers, or shopping malls, or whatever, which they could use to boost their tax revenue.
What this meant is that there was scarcity created in the housing inventory, which meant that prices went up. In addition, sprawl hit the urban areas, and the population spread out. At the same time, California had several rounds of economic boomtimes, with a huge influx of new population.
This population could not afford the houses. So, they started using creative loans to get into the housing market, or to upgrade their existing houses as they had families. This was actually a cycle, as the economy kept booming, and the real estate prices kept going up and up, traditional loans were impossible, and creative loans were the rule of the day.
These mortgages were precisely the ones that are the heart of the financial crisis.
I don't have exact stats, but I seem to remember a quote that 60-75% of the toxic mortgages were in California. And the environment that these mortgages were allowed to be created in was directly created by Proposition 13.
I am so glad to be in Texas now.
Proposition 13 did a few things:
1. Immediately lowered property tax revenue by forcing valuations of property to 1% of cash value in 1978.
2. Establish that valuations of property could on increase by 2% per year unless there is an ownership change.
3. Any statewide or local tax measures have to have a 2/3 majority (since amended by another prop; education funds only require a 55% majority now).
I am not going to talk about the horrible consequences to education and local services due to this law. That is for another day. I am going to talk to the implications to the California housing market.
After 1978, there were strong incentives not to sell houses, as the property taxes were fairly frozen while the land values were shooting up. Local governments used eminent domain to shut down poor neighborhoods and turn them into big box retailers, or shopping malls, or whatever, which they could use to boost their tax revenue.
What this meant is that there was scarcity created in the housing inventory, which meant that prices went up. In addition, sprawl hit the urban areas, and the population spread out. At the same time, California had several rounds of economic boomtimes, with a huge influx of new population.
This population could not afford the houses. So, they started using creative loans to get into the housing market, or to upgrade their existing houses as they had families. This was actually a cycle, as the economy kept booming, and the real estate prices kept going up and up, traditional loans were impossible, and creative loans were the rule of the day.
These mortgages were precisely the ones that are the heart of the financial crisis.
I don't have exact stats, but I seem to remember a quote that 60-75% of the toxic mortgages were in California. And the environment that these mortgages were allowed to be created in was directly created by Proposition 13.
I am so glad to be in Texas now.
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