Re: [Pen-l] "loss of wealth" [was: Dean Baker: Getting the most bang for the stimulus buck

[Doug Henwood <dhenwood@xxxxxxxxx>]

On Jan 15, 2009, at 10:56 AM, Jim Devine wrote:

> In this "mark to market" world, I can use the equity on
> my (allegedly) $1 million house as collateral to get new loans.

and

> it's not a matter of cash flow. It's the ability to use home equity as
> collateral (as "an ATM," as one famous economist put it). Having a
> valuable house increases one's reputation and creditworthiness.

Aren't these just different ways of saying what I'd already said?  
Wealth means little if you can't turn it into cash. The cash is where  
the action is, and the asset just an enabling mechanism. So studies of  
the effects of housing wealth on consumption are looking at an  
imperfect proxy for something, not the thing itself.

Doug

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