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{ cato.org } ~ For nearly 100 years, a federal law known as the Jones Act has restricted water transportation of cargo between U.S. ports to ships that are U.S.-owned, U.S.-crewed, U.S.-registered, and U.S.-built... Justified on national security grounds as a means to bolster the U.S. maritime industry, the unsurprising result of this law has been to impose significant costs on the U.S. economy while providing few of the promised benefits. This paper provides an overview of the Jones Act by examining its history and the various burdens it imposes on consumers and businesses alike. While the law’s most direct consequence is to raise transportation costs, which are passed down through supply chains and ultimately reflected in higher retail prices, it generates enormous collateral damage through excessive wear and tear on the country’s infrastructure, time wasted in traffic congestion, and the accumulated health and environmental toll caused by unnecessary carbon emissions and hazardous material spills from trucks and trains. Meanwhile, closer scrutiny finds the law’s national security justification to be unmoored from modern military and technological realities. This paper examines how such an archaic, burdensome law has been able to withstand scrutiny and persist for almost a century. It turns out that, as in so many other cases of rent seeking, there is an asymmetry of motivations among those who benefit from the Jones Act’s protections and the vastly greater number who bear its costs...
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Huff and Puff and Blow the Housing Market Down?
Home prices are rising today, and there’s a general feeling that there’s never been a better time to own a home or purchase a new one. Throw a strong U.S. economy into the mix, and it’s no wonder we’re having trouble seeing the dark clouds on the horizon.
The Investor’s Business Daily editorial board writes, “Right now, housing suffers from an affordability crisis. Despite median household income rising strongly since President Trump took office, the average price for a new home today is just under $330,000, vs. about $248,000 in 2006, before the last housing crisis. Higher Fed rates followed by a downturn in housing prices would devastate the U.S. economy.”
Higher interest rates are a near certainty as the Fed responds to rising incomes and low unemployment. This would not only keep some new buyers from qualifying for mortgages but ensure those who did buy would see higher payments. Moreover, the demand for homes would dwindle if such a scenario played out.
A greater threat is that the very government meddling that caused the bubble to burst in 2007 is setting us up for another potential crash in the market.
But didn’t we learn anything from the recession? Didn’t the government put safeguards into place to prevent it from happening again?
Not a chance. We are talking about politicians after all, and many of them will do anything to maintain the status quo if it benefits them politically.
Remember Fannie Mae and Freddie Mac? They’re the two federally backed mortgage behemoths that contributed to the housing crash in 2007. In response to mainly leftist politicians pushing for greater homeownership for low-income citizens, and under orders from the Department of Housing and Urban Development, these government-sponsored enterprises offered loans to millions of applicants who simply couldn’t afford them. And both organizations failed to disclose the number of subprime loans they held.
As with just about any government solution, this one mainly benefitted politicians claiming to be looking out for the little guy. Except in this case, too many little guys couldn’t afford to keep their homes, and the bursting of the resulting housing bubble led to the Great Recession of 2008. Thanks, dummycrats-Democrats.
The election of Donald Trump offered a glimmer of hope. Last fall, the Trump administration highlighted problems with Fannie and Freddie in a meeting designed to prevent another housing crash. The objectives of the meeting included ending government control and doing away with the federal loan guarantees that cost American taxpayers billions when those loans fail. But in the end, there weren’t enough points of agreement to move to the next step, and we’re back to square one.
Bloomberg’s Joe Light writes, “Trump’s administration effectively acknowledged that it’s no closer to figuring out what to do with Fannie and Freddie. Treasury Secretary Steven Mnuchin said there’ll likely be no end to federal control during this Congress. In the meantime, the duo has only become more crucial to America’s booming-again housing market, standing behind about $5 trillion of loans.”
Light adds, “Trump’s team hasn’t decided how to restructure the companies — or even who should do it, the White House or Congress. It’s still in the earliest stages of figuring out what a new housing-finance system should look like, according to interviews with officials inside and outside the administration.”
For now, there’s plenty of good news on the housing front — including a sharp uptick in home purchases due to low interest rates and a growing economy, especially among first-time buyers who are fueling a surge in home building. Housing starts for single-family homes are the strongest in a decade, and home builder confidence remains strong after reaching an 18-year high last December.
But with the Federal Reserve expected to increase interest rates as many as three times this year, and with the government encouraging lenders to engage in the same risky practices that led to the last crash, we could be facing a wake-up call that collapses the housing market and takes Trump’s surging economy with it.
~The Patriot Post
https://patriotpost.us/articles/56974?mailing_id=3613&utm_medium=email&utm_source=pp.email.3613&utm_campaign=snapshot&utm_content=body
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