By Arnold Kling
the average home in foreclosure has been delinquent for 674 days–a delay that has doubled since the exposure of the robo-signing scandal ground the foreclosure process to a halt. In Florida, the time from default to foreclosure now exceeds 1,000 days. During that time the homeowner can live rent-free…
Worse than the delay, however, is the uncertainty of a foreclosure system in chaos. Current occupants have no incentive to engage in a short-sale or otherwise turn the house over to a performing borrower. Buyers have no certainty as to when delinquent properties will finally come available for purchase.
This “settlement” is actually a non-legislated tax, or more colloquially, a shakedown. But the story of banks as villains and borrowers as victims is so appealing that the well-being of the housing market and the rule of law are easily sacrificed to it.
2. Ken Rogoff says,
To make Greece competitive, wages would have to be halved. That is impossible to implement politically, but without a steep wage cut, the economy will continue to stagnate.
3. Karl Smith predicts that this graph will make the rounds:
I challenge any supporter of the sticky-wage story (Bryan? Scott?) to write a 500-word essay explaining how this graph does not contradict their view. If employment fluctuations consisted of movements along an aggregate labor demand schedule, then employment should be at an all-time high right now.