[PEN-L:29526] Re: Rising stock market redistributes wealth?

[Yoshie Furuhashi <furuhashi.1@xxxxxxx>]

> I would suggest that redistribution is real.  The fictitious capital
> associated with capital gains through the wealth effect bids up the cost
> of goods such as housing.  That asset bubble also has real consequences
> for renters who get displaced.
>
> Michael Perelman

*****   HOUSING

"Tech Boom Fuels Rising Home Costs
George Lardner Jr.
Washington Post, June 12, 2000, page A1

"Home Prices Are Out of Reach for Many
Michael Janofsky New York Times, June 12, 2000, page A20

These articles discuss a study released by the Department of Housing
and Urban Development that found rapid increases in housing prices
are making housing unaffordable for many of the nation's workers.
Both articles attribute the run-up in housing prices to the boom in
high-tech industries.

It is worth noting that the run-up in stock prices, apart from the
actual growth in the high-tech industry, has been a major factor
leading to the rise in housing prices. When people have large gains
in the stock market, they are willing to pay more money to buy a
house. In this sense, stock market gains for some people have come
directly at the expense of others, making it more difficult for
millions of workers to buy or rent homes. When the stock market rises
for reasons not related to more rapid overall growth, it implies a
redistribution of wealth, not a net gain to society.

<http://www.fair.org/err/000619.html>   *****
--
Yoshie

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