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

[Jim Devine <jdevine03@xxxxxxxxx>]

On Thu, Jan 15, 2009 at 9:10 AM, Doug Henwood <dhenwood@xxxxxxxxx> wrote:
>
> 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.

then we agree. (is that allowed on pen-l?)

-- 
Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own
way and let people talk.) -- Karl, paraphrasing Dante.
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