December 20, 2007

When the Housing Bubble's history is written, it wasn't Greenspan and The Fed that started it. Nope, it was the 1997 Taxpayer Relief Act

This corruption-enabled big-wet-kiss to their REIC masters, passed by the Republican Congress and stupidly signed by Clinton on August 5, 1997, kicked off the housing bubble. Which of course has now led to the housing crash, and the destruction of the entire worldwide financial system.

Ah, ya gotta love unintended consequences. You gotta love NAR and NAHB congressional bribe money. And ya gotta love it when the corrupt monkeys in DC do something so
fricking stupid, just because it "felt good" at the time (if ya know what I mean...).

Congress needs to repeal the cap-gains exclusion on home sales, and tax them just like all other cap gains. Or just junk the entire tax code (and IRS) and go with a Fair Tax. But of course, with our current corrupted Congress that won't happen, since their REIC masters just LOVE this stupid law and the mortgage interest deduction.

Taxpayer Relief Act of 1997


The law exempts from taxation profits on the sale of a personal residence of up to $500,000 for married couples filing jointly and $250,000 for singles. To qualify, sellers must have owned and used the home as their principal residence for at least two of the last five years before the sale. Effective for sales after May 6, 1997, this new provision replaces the prior rollover provision on home sales and the $125,000 exclusion of gain for those 55 and over. There was no change in the rule that prohibits taxpayers from deducting losses on home sales.


ice weasel said...

Your political shit gets tiring after a while. You failed to mention that this bill was written and passed by a republican house and senate. The reason you included an image of Monica Lewinsky? I guess you just like interns.

Stick to the topic. You're better at that.

Anonymous said...

typical of liberals....when in doubt raise taxes.

And hold up, did I just read you right? Something is NOT Bush's fault?

You are going to get kicked out of the Libtard club Keith.

keith said...

Stupid comment. The post threw the corrupt congress AND Clinton under the bus.

But I do think Monica is a good representation of politicians who do things because they feel good at the time, no matter how stupid

Screw the Democrats and screw the Republicans - they worked together to screw America.

Man, I can't stand closed minded people on either side

Anonymous said...

You think cutting the tax rate on capital gains from appreciation was a more significant factor than cheap credit? Really?

I agree with much that you write, but this is just wrong Keefer.

happy homeowner in the stix said...

Come off it, Keith.

If this law hadn't been in effect, how could you have all these "I cashed out at the top and now have my $ in gold/euros/vietnamese dong" posters?

You wouldn't, because if I'm correct, the only way to avoid a capital gains tax was to quickly plow the $ back into a property. There would have been quite a lot of those guys who would have been tempted to do that, just so they wouldn't have had to pay the tax. People will do dumb things that cost them money just so they don't have to give some vig to Uncle Sam.

End result? The bubble might have lasted a bit longer than it did, since the money these people made would have been less likely to leave real estate completely.

Stupid lending policies had much more to do with the bubble than this law ever did.

Dan said...

Clinton had absolutely no choice on this one. The bill was passed by an absolute landslide majority, way beyond veto-proof.

Anonymous said...

They just need to get rid of any and all deductions, period. Base flat tax for all for basic services- national defense, interstate commerce and the like. Everything else, people need to pay for via use taxes. You have kids that need to go to school- well, you pay for it. They need health care, you pay for it.

Anonymous said...

The 'Fair Tax'...uh huh

this is a scheme to tax consumption only..that way the poor can pay tax on ALL their earnings while the rich pay even LESS!

yep..that's a GREAT idea Keith, we need to concentrate more wealth with the very rich..that's been really working out well, hasn't it?

Anonymous said...

Keith your story changes every day.

One day it is Greenspan's fault. Then the next day it's Bush's fault. Then it's Wall Street's fault. Then it's China's fault. Then Hillary's fault. Now I see it is Bill Clinton's fault. Who will it be next week, Nixon?

Pick a villain and stick with it.

Anonymous said...


Brian said...

Actually Keith, the idea was a good one, here is why:

We know from Dr. Shiller that homes REALLY only appreciate with the rate of inflation, when considering the AVERAGE home.

Inflation is a direct result of currency debasement, thanks to the FEderal Reserve Bank. I KNOW that you know that.

Therefore houses have been the only asset that protects the average working man's income.

Inflation is a deliberate policy - a theft of savings through debasement.

In reality the AVERAGE home does not increase in value as much as it does increase in PRICE. So, when adjusted for inflation, there is seldom any real 'capital gain'.

What it does is make a house a store of value.

I've agreed with pretty much everything you have said on this blog, but I'd like you to reconsider this point.

Why should citizens be subject to theft of money through inflation, which drives up the PRICE of their home, and then turn around and have to pay taxes on a false gain?

The personal residence is the only safe haven the working man has from the evil of currency debasement. Don't take that away too.

If you were willing to adjust the capital gain for inflation (from purchase year to sell year) andthen only tax the excess I could accept that idea.

Without Greenspan's funny money, the bubble could not have happened.
Without the silly leverage available to idiots, the average idiot would not have been able to run these prices up.


keith said...




Greenspan and the Fed's stupid interest rate policy, combined with their unwillingness to regulate the REIC, was THE major cause of the housing bubble.

Lying realtors were a major cause.

Speculators were a major cause.

But this 1997 tax change kicked the whole thing off.

As to flat tax or fair tax - man, that's a whole 'nother discussion. Bottom line is our tax system is broken, it's a joke, it's unfair, it's inefficient and it needs an enema.

Move to consumption-based taxation (non-regressive) and abolish the IRS, and we'll be getting somewhere.

Why should I pay tax and strippers don't?

Why should there be deductions favoring this class or that class or this behavior or that behavior?

Why should hundreds of thosands of people make money off of taxpayers helping them plan and do their taxes?




Or we'll just keep on keeping on, and you should be seeing about now where that got us.

keith said...

Brian - very good well-thought-out point (unlike some of the others)

Cap gains should only take effect if you don't roll your home sale proceeds over into a new home. If you cash out, you should pay the cap gains tax, like selling a stock.

But better yet, abolish the entire tax code and all deductions and all income and cap gains taxes (see above)

It will happen some day.

Anonymous said...

Blogger keith said...

Brian - very good well-thought-out point (unlike some of the others)

Cap gains should only take effect if you don't roll your home sale proceeds over into a new home. If you cash out, you should pay the cap gains tax, like selling a stock.


So if I want to sell and go rent I should be taxed, but if you sell and buy you don't get taxed?

Yeah that's fair.

keith said...

Yes, when you sell an asset and realize a cap gain you should pay the cap gains tax.

Screw the whole thing though. Abolish the IRS.

pulling the ladder up said...

home owner in the stix nailed it....

Keith - I think you are so dead on with 99% of what you say.

But in this case, you've profited tremendously yourself -and now want to pull the ladder up behind yourself, Bill Cosby like.

If the cap gains tax is repealed, that will REALLY kill the housing market and economy.

I'm all into gold and Euros, but my 401K doesn't put milk bones into my dog's mouth....

randy said...

Ahhh, Mr. Keith.
You are on to something here; I think we’re beginning to understand.
There are some big questions when folks blame low interest rates for the housing bubble, because 30 year fixed rates never really went down more then about 2% (from 71/4 to 5/14), its what Greenspan termed the ‘conundrum’.

“Rates are at historic lows if you don’t buy today you’ll miss an opportunity of a life time” has realy been an REIC ploy all along.

Whenever I see HP or anyone else point the finger at Greenspan, it makes me question whether you all are just a bunch of conspiracy looney heads.

The FED overnight interest rates have not been impacting personal long term rates, that is why Bernanke’s rate cuts won’t help the housing crash.

The REIC has evolved into a huge and sophisticated organization at a time when tons of inexperienced IT collage kids got instant great paying jobs during the dot com boom, this was the concoction that fueled the housing bubble, the financial industry hopped along for the ride because they too had an huge influx of inexperienced college kids who have never seen a downturn before, and used technology (rather then underlying fundamentals) to create and track charts, trends, hedge funds, creative new assets like CDOs etc.
The age of communication also made the entire globe smaller and now we have entire inexperienced countries playing the game, REIC leveraged all this for billions in commissions.

Great post Keith.
BTW, at least Clinton had good taste in woman.
Any idea what Gingriches little mistress looked like?

keith said...

Yes, I should have paid cap gains on my last home sale.

Not paying taxes on a gain is inconsistent with the rest of the tax code.

Gotta run - gotta figure out my cap gains taxes on my REIC shorts this year!

Stuck in So Pa said...

randy said...
Ahhh, Mr. Keith.
You are on to something here; I think we’re beginning to understand.
There are some big questions when folks blame low interest rates for the housing bubble, because 30 year fixed rates never really went down more then about 2% (from 71/4 to 5/14), its what Greenspan termed the ‘conundrum’.
That's something that's usually never brought up. The big lenders KNEW that the whole thing was phony and temporary, and never really dropped their rates that much. In NORMAL times, rates have to drop more than 2 points to make a re-fi any sense, since all the fees and carrying costs at re-fi closing will eat up the dollar value of the interest saved over the life of the new loan.

And Greenscam couldn't understand? Funny, the big lenders understood, PERFECTLY!

Keyser Soze said...

Every time I see a picture of Monica, I think "It ein't love...but it ein't bad."
Why is that?

Anonymous said...

keith said...

Yes, I should have paid cap gains on my last home sale.

Not paying taxes on a gain is inconsistent with the rest of the tax code.


So why don't you send the IRS a check? They will gladly accept it.

Typical liberal yet again. Tax everyone else, except you.

Mammoth said...

Flat Tax with No Deductions!

Here is how a simple flat tax COULD work:
a) If you make >$X, then you pay
$A in taxes.
b) If you make between $Y and $X,
then you pay $B in taxes.
c) If you make <$Y, then you pay
$C in taxes.

This system would be more fair than the one we have now. And we could abolish the IRS, whose many members themselves have difficulties interpreting their own tax codes.

Since I had not lived there for six years, I will have to pay
~$25K in taxes on the rental house which I sold in October.

Just for fun, I took that $25K and bought GOLD, with the assumption that it will go up in value between now and April 15th.

Kinda like that algebra problem when you are on a bridge, and there is a freight train coming toward you. Do you run TOWARD the train, since you are closer to that end of the bridge? Or do you run AWAY from it? Cowbunga!


Brian said...


Let me rephrase:

Suppose Joe takes $100,000 of after-tax money and puts it in the bank. He then waits ten years. How much is that 100k worth now? A lot less, due to inflation. But you and I agree that inflation is the deliberate debasement of currency, theft of savings through monetary expansion. This is basically FORCES citizens to invest just to try to hang on to some of their money. It penalizes savers. Why should I save money and be responsible when the government will steal it through inflation?

Now suppose Bob takes $100,000 of after-tax money (remember, the house is purchased with after-tax money, only interest is deductible), and buys a house. The house "appreciates" (lol) with the rate of inflation.

My point: There is not really any "capital gain". Owning the house simply allowed Bob to AVOID theft by inflation. Now we will tax him?

Sure the house sells for a higher PRICE, but what are those dollars worth?

If you adjust cap gains for inflation, then I'm okay with taxiing the excess, but for now, with inflation being essentially an invisible tax, why remove the one and only tax harbor the low-income person can get? Rich peopl have all sorts of offshore tax havens that the government can't even FIND, let alone regulate.

If we stopped the policy of currency debasement, then I'm okay with taxing cap gains, since those gains are REAL gains, not inflationary gains.


keith said...

"So why don't you send the IRS a check? They will gladly accept it"

Uh, because I'm not a fool?

Man, this poster is lost. My point is to tax EVERYONE at the same rate, or on the same basis.

Brian - the problem with flat tax (on income) is how you define income. That still requires an IRS and tax code.

Get rid of the entire tax code and entire IRS and all income taxes.

That's where we need to go.

Anonymous said...

As a builder I pay ORDINARY INCOME tax on my spec homes. Up to 40% (before deductions) in a good year.

Bitterrenter said...

Let me remind you that the REPUBLICAN Congress pushed for the removal of the rollover requirement.

DEMOCRATS fought off attempts to put it in the 97 Tax Act. They had fought for years against rescinding the rule but they didn't control Congress in 97. REPUBLICANS did.

But really, as Ron Paul libertarians you should have applauded the removal of any regulation from economic activity. Isn't that what libertarians believe? In an economic free-for-all?

Keep thinking the parties are the same. And keep watching you lot in life get worse. I have relatives like that. They bitterly complain about how they're getting screwed by rich, white, republicans then tell me they're voting Ghouliani or Huckabee.

Such ignorance is simply astounding.

skidmark said...

This housing price debacle was driven by the credit bubble, not the 'capital gain exemption'

Not only did rates go down, lending standards disappeared completely, thus the no income no asset loans for 500k, 750k.

Naturally the sheep jump on board, housing prices are up, buy now. bla bla bla.

We just had a housing crunch in the early 90's, how quickly those short sellers forget, a stock bubble in the late 90's and now the mother of all bubbles, the 2005 housing bubble.

Unfortunately, the sheep are stupid. Further much of the bubble was driven by speculators
who are not eligible for the exemption, it applies only to principal residence.

The capital gains tax is mostly an inflation tax as it applies to houses. Keep it.

Anonymous said...

keith said...
"Brian - the problem with flat tax (on income) is how you define income. That still requires an IRS and tax code."

Bill Clinton said...
"I did NOT have sex with THAT woman."

We have long ago defined what Bill Clinton and the US Government are, now it is just deciding on the price... -Gotcha!

LauraVella said...

I remember during the years between 1996-1999 the conforming loan amount was constantly increasing. At the time, I couldnt understand what was driving this and why it was happening.

The REIC/NAR throwing money at congress, along with the relentless advertising campaign on new mortgages, re-fi's, and home improvements started the ball rolling in 1997.

After the taxpayer Relief Act, banks and mortgage companies started soliciting homeowners to re-finance their loans.

These telemarkers would inform the homeowners they had equity in their homes, and that they could use it to pay off bills, home improvements, or used for whatever they want (shsssh, just keep it quite if it's for personal use, like buying stocks)...

My husband said he received this type of call and he did re-fi because he had been underwater for 8 long years, and then all of a sudden it was like a blessing from above...

A representative from his mortgage company called to inform him his house had appreicated and the equity could be extracted to pay bills, home improvements or used on whatever you want!

Can anyone just imagine the magnitude of people who re-financed their mortgage or took out heloc's after this received this kind of news?

Looking back on it all now...this is the very reason why the conforming loan standard kept increasing through 2001. Then, when the limits couldnt be raised any further on conforming loans, the use of modified, toxic loans became popular. All types of different loan products started coming on the market - neg.Am, adjustable arm with a 2,4,5, 10 year fixed, no-doc loans, etc, etc...this was the only way to get new buyers into homes because the prices were already out of reach for the average person.

Back in 1997, the Real Estate Snow Ball was just starting to picking up speed - it grew bigger and bigger through the years, until it turned into a runaway enity without any ethics, or standards but worst of all..devoid of any regulations.

No doubt 911 contributed to the frenzy, along with Bush pushing for homeownership - however, the icing on the cake was in 2004 when Greenspan said he didnt see any "froth" in the housing market, and suggested people should buy homes using adjustable mortgages...

I knew we were goners at that point.

It's interesting - now the Fed's website has history of the Great Depression. This part of history wasn't linked on their until recently. I wonder why?

Tedy Jewski said...

Hey!!!!!! It's Honica Jewinski!!!!

Anonymous said...


Please don't tell me our Grand Exaulted Leader Heir Schlikmister had something to do with this?

Anonymous said...

Anonymous said...
Keith your story changes every day.

One day it is Greenspan's fault. Then the next day it's Bush's fault. Then it's Wall Street's fault. Then it's China's fault. Then Hillary's fault. Now I see it is Bill Clinton's fault. Who will it be next week, Nixon?

Pick a villain and stick with it.

December 20, 2007 2:10 PM

Yeah, let's include Nixon. After all it was Nixon who scrapped the Bretton Woods system in August 1971and essentially turned money loose.

Then dont forget Jimmy Carter who started the de-regulation disease against the airlines, trucking. We lost all of our airlines.

Ronald Reagan/ GHW Bush, the junk bond looting frenzy of the 1980's.

But at the bottom of all this destruction lie the real culprits, the American population.

Anonymous said...

my cats been unfed for a while also, si i guess thats why he only comes "home" about once a week. hope he eats the mice and cockroaches?, so much for low interest............

michael said...

lol...yeah...that's the cure.

more taxes.

to paraphrase a frequent infamous poster keith.


Anonymous said...

either way the house gotta be sold to keep up with dollar deflation or inflation theft, and today forclosure sales by the banks are not selling one out of a hundred and that one at more than 50 percent off of price and bogus the past, past due?

randy said...

Stuck in So Pa said...
‘And Greenscam couldn't understand? Funny, the big lenders understood, PERFECTLY!’

The underlying issue was house price appreciation.
What Greenspan did not understand was why the f@#^k are houses tripling in price over night.

The REIC and NAR where drumming many reasons to buy now.
Foreigners are buying everything up, baby boomers buying everything up, there is only so much land, they’re not making any more of it, Interest rates are at historic lows, (confusing people short term vs. long term), historically property values only appreciate,
It’s not just a place to call home but a lifetime investment, on and on.

Sheeple looked at each other and wondered what the hell was going on, everyone felt left out, some idiots that lucked out and bought pre this bubble felt like very savvy investors.

Point is to blame Greenspan for the herd run is stupid.
Japan has had insanely low interest rates and housing prices are in the dumps.

You’re buying into the REIC bluff that interest rates were the cause of the fake demand.
It was indeed one factor in the big picture, because it allowed short term teaser rates.

But Greenspan was scratching his ugly head not understanding how little influence he really had on controlling house prices.

So blaming the FED for the housing bubble is a lack of understanding of what went on.

Keith is right that it began in about 97 and gained momentum after 911 when all the cards were in place to cause a herd run.

In my opinion biggest blame goes to those who gained commissions for doing nothing but keeping the sheeple excited and keeping the prices high.

The FED did not gain anything by having an asset class go bezerk.

LauraVella said...
This comment has been removed by the author.
keith said...

Man a lot of you guys don't get it

Getting rid of all taxes on primary home sales started the housing bubble

Can we agree on that?

Now when it comes to what to do about it

1) Make cap gains on home sales the same as cap gains on any other asset sale and end the big corrupt wet kiss to the REIC

or, better yet:

2) Get rid of income taxes entirely and go with a consumption tax

I'm more anti-tax than most any person I know. But I am for fair, efficient and low taxation. We have none of those in America today.




Gavin said...

The Tax Relief Act of 1997 was sponsored by Rep John Kasich (R-OH) and that replaced a similar senate Bill sponsored by Senator Roth (R-DE). Although the Bill was Republican sponsored, it passed the Senate 92 - 8 and the House 389 - 43 and was signed into law by President Clinton.

Obviously this act had widespread bipartisan support and was veto proof.

Clinton did not create the bubble.

If we'd like to use the logic that "that bill is the start of the housing bubble" -- you're pointing the finger at Newt Gingrich and the Republican leadership.

QED. Deal with it, neocons.

Anonymous said...

gavin is the tool of the day

Anonymous said...

Dude you have it all wrong. The Jews and illegal aliens are to blame. Duh don't you know the yare always to blame every time one of you middle aged, balding, fat, white men gets fucked over.

Anonymous said...

Lauravella I think you hit the nail on the head. Rising conforming limits definitely played a role in the bubble but no one ever mentions that. IMHO, the bubble had alot of factors: too low rates, toxic loans, cap gains tax, etc... I worked in the mortgage business from 97-06. From 97-01 it was a decent industry. Then after 9/11 something changed. Too low rates, crazy loans....too many people beacme brokers and realtors. And then of course all the FRAUD set in. I kept saying to myself: How much more can they stretch these guidelines? These loans are stupid and full of fraud. I guess in the end we have Wall Street to blame for keeping the lenders afloat. PLenty of fingers to point for the cause, let's see how we get out of this one. Loans on this nature didn't exist in the early 90's, there is no precedent so who knows how bad this thing can get.

Bitterrenter said...

Let me point out that large "Acts" like the one from 97 contain all sorts of provisions. The removal of the cap gains on real estate was just one of them. The Act received bipartisan support because of the other provisions. The Democrats had to swallow the poison inserted by the republicans.

Of course they could have filibustered it like the republicans are doing now. Republicans have broken the record for filibusters, pulling the stunt 62 times just this past year. The previous record? It was set by the 107th Congress, the last time republicans were in the minority.

Republicans are the scum of the earth.

nicky said...

Man a lot of you guys don't get it

Getting rid of all taxes on primary home sales started the housing bubble

Can we agree on that?


In a normal market you would lose your ass trying to sell your principal residence every two years. said...

We need to go back to the days when landowners and only landowners were allowed to vote.


That would honestly fix all of our problems.

Personally I tend to vote Republican, but am sick and tired of watching religious zealots hijack the party. I'm also sick and tired of turning on Fox Talk or The Patriot on satellite radio and hearing all the hosts side with the pro-life candidates like zombies and as if that were the most important issue.

Housing crash ... major recession ... war ... terrorism ... and these clowns vote based on the abortion issue, and for only religious reasons.

No wonder we're so f*cked. said...

this is a scheme to tax consumption only..that way the poor can pay tax on ALL their earnings while the rich pay even LESS!

So your solution is to over-tax the rich and the business owners, who will then not have enough money to provide jobs, and you and the rest of the lazy suckers will be out of work and bankrupt?

Wow, what a genius you are. We should have thought of this sooner.

In reality, a consumption tax is what this country needs. It's fair and doesn't discriminate against those who produce - like our current tax system does - and it will do something to curb the hyper-consumerism (I need to buy a BMW and Rolex to impress everyone!) mentality that is crippling America.

happy homeowner in the stix said...

Keith, this Act had nothing at all to do with people getting homes without a down payment, with second mortgages in lieu of a down payment, with liar's loans, or with weird ARM's that should have made the applicants run for the hills.

It had zero effect on people using their house's equity to buy plasma TV's and other stupid shit.

It didn't encourage flipping, since the requirement that you actually live in the house for two years in order to get the tax free capital gain goes against that strategy.

I'm no fan of Bubba, but I'm not going to blame him for this mess.

LauraVella said...

I had to modify my post...

I went off on a tangent on my above post, but regarding the tax relief Act- this is so complicated and we can't have it both ways.

Which is, a home is just a place to live, vs a home as a investment.

To me, homes are not an investment-just places to live, but they have been treated as investments, then abused as ATM's for too long.

The home ownership exemptions should be modified into a long-term plan, not short-term gain it's set up now.

Starting with reducing the 500k for couple exemption down to 250k and extending the period of redemption to be 10 years instead 2 of the 5 years.

If the primary residence is sold before 10 years of ownership, then it's taxed as a capital gain.

Anonymous said...

Move to consumption-based taxation (non-regressive)

Ain't no such thing. You'll find Britney's virginity first.

Consumption taxes are the hyper-rich's orgasm; they can make tons of money tax free and then spend it in Switzerland, Canada, Bahamas, etc.

The rest of us schlubs, especially the ones barely making it will have to pay even more for necessities, since we have to stay here and actually work for a living.

and abolish the IRS, and we'll be getting somewhere.

As soon as you abolish it, it will need recreating. These taxes can be evaded and manipulated just as easily (if not more) than income taxes.

Who will run the computer systems?

who will do the audits?

Who will process the checks?

Who will distribute the payments?

randy said...

Dear banker, I own an asset that is made of gold which I would like to use as collateral to borrow money against, so that I can finally get me that red Ford F250 crew cab 4x4 with a full size bed.
Sure thing Randy, but understand that if you miss a payment we’ll come and take that golden house.
Ha, no prob… It’s a House!! We’re talking about here; worse case I’ll just refinance who cares about ‘rates’, $100 bucks a month wont make a dent in my finances, RE broker said that in 5 years this golden house of mine will be worth triple what it is today.
Woo Hoo.. Life is good

Dear wifey, uh oh..
You know our golden house?
Well, how should I put it…. It’s not like pure gold.. its more like gold plated.
But it’s still gold and pretty shiny.

Dear wifey, uh oh..
Wifey, Wiiifey!! (oh damn I miss her. Ahem I mean her steady job)
Anyway, You know our gold plated house?
Well, it’s not really gold at all; our house was coated in high gloss spray paint
from Home Depot (made in china and is now peeling)
Oh shoot!! This reminds me; the 12 ‘no payment’ months are up on that snow blower and pressure washer, Home Depot will probably expect payments beginning next month.
Come to think of it I never really used the damn pressure washer, why in the world did I buy it,. Oh right, was suppose to clean the driveway.
Hey wait!!!! This is Home Depots fault they should have never lured me in with that 12 month free plan.

No No wait I get it!
It’s the damn FED, (Why are these guys always ugly can’t they ever have a pretty young lady running the FED?)
Well, who cares; I had nothing to do with this mess, The FED allowed home depot to carry high gloss gold colored spray paint. and now I owe each month about 4 times what I earn.
Matter of fact if it was not for the FED my wife would have joyfully stayed around, paid the bills, clean my clothing, cooked my food, sucked my smellies, and curled up next to my horn blowing snoring with love.

Ahh, I have a plan…
Put this house up for sale, by now it’s worth a mint, I’ll probably get rid of it in about a week.

Realtor! What do you mean it won’t sell for more then $250K?
But but but, you said when I paid $469k and then re-fi’d for $650k that it wont be a problem selling in 07 for $999k

Randy, the market has had a sudden change, because of the media.
Damn damn damn! The media, they are ruining everything.

Oh man I’m all confused I need to find a ‘single point of blame’ it can not be me!

Clotpoll said...

Keith (2:26, 12/20)-

"But better yet, abolish the entire tax code and all deductions and all income and cap gains taxes (see above)

It will happen some day."

Yeah, right. And some wacko like Ron Paul will get elected president, too. Yep, that "money bomb" really made a dent, didn't it?

Now, Paul can get bounced right out of the race early in the primaries...and fools like you will have given him your money for absolutely nothing.

Hey, Einstein: a fringe presidential candidate can draw 1% of the vote and get his a** kicked WITHOUT your money.

Anonymous said...

Hey man lower taxes will always get my thumbs up. Sorry Keefer, you're way off on this one.

Huflump said...

Imagine if the government changed the law so that stocks could be sold and the profits were tax free (but kept all other income sources the same regarding taxes) and you could “buy” those stocks without any money down and you didn’t need any information to show that you could ever afford to pay for the stocks and there was a media blitz that told you it was your “right” to own stocks and there was no regulation to prevent stupid people from acting stupid and greedy people from preying on the stupid…well…you would have the current mess in the stock market rather than housing.

Keith is correct. The tax free status of the gains from real estate was the beginning of the runaway flipper mentality that screwed the market. Even the people who weren’t planning to move were still planning to “flip” into a new loan as soon as their ever increasing equity allowed. People don’t own homes. They use the home a vehicle to park their leveraged paper. And all of the cashing out is TAX FREE!!!

Nobody wants to pay taxes, but somebody has to. If we are going to tax income then tax ALL of it. Don’t try to pick and choose (what is income) in an attempt to influence markets and peoples decisions.

Anonymous said...

I don't understand this.

Does the bill apply to only when the bank kicks you out and don't make you pay the difference between the amount you owe and what they get at the sheriff's sale?

Or does the bill apply when the bank agrees to reduce the amount of the note to something like the house is worth post-bubble?

Anonymous said...

Like Keith said, they should tax all house sale gains the same as other cap gains, at a rate that's lower than other income (to sort of account for inflation). And the problem is giving real estate SPECIAL breaks, PREFERENTIAL treatment! It just exacerbates the price bubble, people.

It's waaay too late now...we are screwed and tatooed.

sam said...


Any ETF shorts/gains should qualify for section 1256 treatment if the ETF is a broad enough index. Don't know if the IRS has clarified that one (eg. is shorting the ITB homebuilder ETF a 1256 transaction), though shorting the SPY definitely would be.

1256 contracts (originally for futures) taxed 60% long term 40% short term regardless of holding period.

Shorts in individual stocks unfortunately are 100% short term regardless of holding period.

And random, ill-defined, rules like this emphasize the need to abolish the IRS.

Anonymous said...

BS...back in 1997 aka "the good ole days"...our economy was not based on wealth spun out of thin air and money for nothing. The dotcoms were not even peaking. This bill signed into law did not trigger the $20K year earner buying a $500K house with zero down, a credit report that was not taken into consideration, and payments only on the finance charges and nothing on the principle.

It was the banks who did this and the FED that enabled them. The elected officials stood idle.

The reason the right wing hates Clinton is because even the little man saw some prosperity between 1992-2000. The little man bought a better car, had steady employment, and a few bucks in his pocket. Greedy assholes can't stand it when others are successful so they love the current regime that made energy prices soar and the dollar crumble.

Bitterrenter said...

Sure Keith and the others who think like him, get rid of the IRS. Once they're gone and not taking our money everything will be FREE! The country will run on AIR!

So then if I blow up the bank I won't have to pay my charge card bill?

Brian said...

I'm curious of your view-

If we eliminated the income tax and replaced it with a consumption tax, would that finally turn us into a nation of savers rather than spenders? I tend to think so.


Anonymous said...


once again you miss the point. we get rid of the irs AND we get rid of the programs. we somehoe survived as a country for 150 years without social security, without medicare, without the dept of education and without 80% of the shit govt spends on today.

get a clue

roidrocketisaliar said...

The dot com bubble was also aided by legislation that allowed venture capitalists to sell shortly after launching an IPO. The result was hundreds of scam biz models all for the IPO pump and dump sell off. Banks and VCs win. Retail bagholder CNBC investors lose.

tater said...

Well, I have finally come to a conclusion on who is at fault. It is the American people. We have all lost our way. Miss South Carolina and I think this is the reason why we are unable to find our way:

"I personally believe that U.S. Americans are unable to do so because uh some uh people out there in our nation don't have maps and uh I believe that our ed- education like such as in South Africa and uh the- the Iraq everywhere like such as and I believe that they should uh our education over here in the U.S. should help the U.S. or- or- should help South Africa and should help the Iraq and the Asian countries so we will be able to build up our future"

Now, doesn't that make it easier to understand?

tater said...

"Every time I see a picture of Monica, I think "It ein't love...but it ein't bad."
Why is that?"

Yeah, and for some reason, I'm thinking cigar.

Anonymous said...

This is a typical expat statement, and will be received as such.

Australia (where I currently reside) allows tax free capital gains on your primary residence.

But you do NOT get to claim any kind of tax deduction of the interest (or other expenses) on a mortgage on your own home.

This solves some problems. It also creates some, but seems the most principled stance on home ownership.

This seems fair to me. It's either all or nothing.

Investment properties, however, are treated exactly like any other investment choice.

Plus, for something that will shock, check out the franking credits situation with share market investments in Australia.

Something to think about.

Mike F

Bitterrenter said...

1:32 am ignorant savage:

We didn't survive without social programs. Not very well at least. Getting an education was reserved for the top class. Electric lighting and roads were not all over the place. Old age poverty ran around 80%.

See savage, by collecting money from everyone and from those who can afford more, collecting more, we were able to build a first rate, first world country. That's how the rest of the civilized world did it too. It wasn't corporate ingenuity or free market activity, it was SOCIALISM. Since we've stepped away from that in the last 30 years we've declined, and farther than most realize. Like the frog in the pot of water.

But it's easy for you ignorant, subhuman garbage to criticize the system now that you've grown up in a world of plenty provided you by those programs and policies. People like you are like rich kids who think they did it all themselves. You truly make me sick. I wish nothing but harm and misfortune to you and yours. But then, when you have that retarded kid or that handicapped grandchild you'll go running to the system to bail your ignorant ass out.

I can see why over the centuries, post-revolution times saw so many of your ideological ancestors filling mass graves. Harsh? Perhaps. But people who don't want to contribute to the greater good and only seek to take advantage of their society are truly a waste of oxygen. And they're incorrigible.

You conservatives better hope people like me don't take the reins when this economy goes to shit.

Anonymous said...

Thank god people are finally identifying the REAL **Go** point of the RE Bubble.

I lived in Seattle at the time and can tell you this tax exemption is EXACTLY what kicked the madness off. Terrifying.

Anonymous said...

Bitterenter, you got it 100% wrong. Education existed long before there was government-sponsored education, yes, even for the poor. I went to private (non-religious) schools, on 100% scholarships and financial aid. I'm paying one of my wife's cousin's education, at a private religious school even though neither of us agree with their religion . . . it's their parents' decision where to send the kids; we just decide if we want to help them as a form of charity because they are really poor.

Road and electricty should not go to every place . . . not to an island with hardly any people, for example, not treading upon private conservation land or private homes on specious claims of eminent domain, for example. Road and electricity should only go to places where they make economic sense. Fiat money and "public welfare" ideology is what enables building roads and electricties in places that make no sense whatsoever . . . A welfare state locks up vast tracts of land on "conservation" claims, yet would not hesitate engaging in wastful construction of roads and electricity through some of the most pristine environment for no economic purpose whatsoever.

The key to understand the issue is this: government is not God (or any other form of deity/superbeing); government can not think for itself. It's the politicians and bureacrats who do the actually decision making. They have their own interests, which may be very different from what you would put your money towards as charity. Sure, the mafia has the ethos of helping the local poor too, but do you honestly believe being forced to give money to the mafia/politicians somehow make the neighborhood better?

As for revolutions, they always kill more fellow revolutionaries than members of the old establishment . . . just like the mafias and gang warfares always kill more opposing gang members than innocent bystanders. See, the revolutionaries/gangs need the productive members of the society to mooch off . . . whereas fellow revolutionaries/gang members are strictly niche competitors.

One more thing, modern welfare states are largely funded by fiat money (as the Communist Manifesto advocated). That means, whatever you are saving by renting get stolen by the welfare state every single day because they are printing more and more fiat money to dilute your savings.

Bitterrenter said...

Two words for you anon- nut job.

Great civilizations and societal progress have never been built upon radical individualism.

If it weren't for the collective efforts of many contributing to the greater good, you'd still be shitting outdoors and living in a freakin' cave.

Like I said, people like you are incorrigible, so convinced that the "every man for himself" ideology is what makes life good. Of course, you can only speculate on what your little slefishness culture would be like since, unless you were living hundreds of years ago, you've never experienced it.

As for your claims of how you're living this isolationist dream of freely giving when and if it suits you by doing things like sending people to private schools: I could claim to be Amelia Earhart having tea with Bigfoot. This IS the internet, after all.

Give me two minutes to question you and yours about your lives and I'll bet I can find a hundred instances of you using and benefiting from programs and policies created to benefit the greater good.

Ingratefulness is so ugly.

Anonymous said...

bitter renter is DOPES' evil twin idiot

Bitterrenter said...

Anonymous posters don't have a leg to stand on when criticizing others, especially when they say nothing of any consequence.

More proof that conservatism is totally devoid of any intellect.

abb said...

Look deeper. The Federal Reserve is a scam. The IRS is their collection arm. Both were installed at the same time by the same people. It was a conscious and purposeful plan to enslave the masses. You can look back before the 1860s when bankers decided they wanted a bond-backed dollar installed in the US. They called it the new wave of slavery. They liked it because the owners did not have to care for the slaves, but they reaped the labor just the same. I'll see about finding some links to direct quotes made by the bankers planning the above.

Bankers are the root cause of all of this mess. It is very conscious and very purposeful. They know EXACTLY what they are doing.

Be careful about the flat tax. The flat tax is an adjustment to the same scam. Politicians prefer an income tax because it allows more tinkering and profit opportunities, but bankers could care less how their interest payments are made. As long as govt taxes the public and makes their payments on time.

Taxpayer Relief Act
Bankruptcy Act
Interest rate manipulation
Rampant fraud (encouraged)
MSM fueling the fire

Carefully designed and planned. They've read Extraordinary Popular Delusions too. Once you understand the plot, it's easy to manipulate the plot. They've had plenty of examples to review. And practice during the 1920s & 1930s.

We're just figuring this out, but bankers have been teaching other bankers for centuries. (After they've passed a few tests of course). They are the parasite class.

This has been going on for thousands of years. I am hoping that with the Internet and open information, this will be the LAST time we are scammed like this.

"The Creature from Jekyll Island" is a good introduction to these ideas.

Most people here are only seeing the tip of the iceberg right now.

abb said...

In 1862, before the Civil War:
“Slavery is likely to be abolished by the war power and all chattel slavery abolished. This I and my European friends are in favor of, for slavery is but the owning of labor and carries with it the care of the laborers, while the European plan, led on by England, is that capital shall control labor by controlling wages. The great debt that the capitalists will see to it is made out of the war, must be used as a means to control the volume of money. To accomplish this the bonds must be used as a banking basis. We are now waiting for the Secretary of the Treasury to make this recommendation to Congress. It will not do to allow the Greenback, as it is called, to circulate as money any length of time, as we cannot control that. But we can control the bonds and through them the bank issues.”

"If you want to be the slaves of banks and pay the cost of your own slavery, then let the banks create money…" Josiah Stamp, Governor of the Bank of England 1920.

“Whomsoever controls the volume of money in any country is absolute master of all industry and commerce and when you realize that the entire system is very easily controlled, one way or another, by a few powerful men at the top, you will not have to be told how periods of inflation and depression originate.” – President James Garfield 1881.

Due to some honest politicians (Lincoln and Garfield for example), the bankers didn't get their full plan in place until 1913 with the Federal Reserve: a private corporation with secret owners creating bond-backed dollars. What is a bond? It is a piece of paper that promises to pay x dollars for 30 years at y%.

IOW, the Treasury prints a piece of paper promising to make payments to the bank for the next 30 years. (The banker accepts that promise because the Treasury promises to tax the masses for the interest payments.) In exchange for that promise, the Federal Reserve prints some money and gives it to the Treasury to spend. That money didn't exist until the Treasury borrowed it into existence.

Look deeper.

jim said...


By your logic, slaves should be grateful to their masters because the masters make centralized planning for the slaves' lives :-) Every man being out for himself is a reality ("called human nature") . . . all collectivism accomplishes is asserting that some men have special priviledges instead of free exchange among equals.

You are confusing "great civilization" and "great empires." The former can be built on a bedrock of rugged individualism. In fact, that's the foundation of western civlization; the opposite used to be described as "oriental despotism." Empire building is a different story; it may indeed involve collectivism, and it is usally brings down a civilization.

The "greater good" didn't even work for Americans at the very beginning. The Mayflower settlers nearly died the first winter because the religious theocracy insisted that all members farmed on land held in common "for the greater good." The result was quite simple: since reward was not apportioned to effort working the land, people spent pursued leisurely endeavors. The result was famine and near-extinction. After the near-death experience over the winter, in the second year, they divided the land into small plots to be farmed by individual families. The result was an abundant harvest. Individualism works. That's just human nature. Advocay of "greater good" is nothing more than con job to get something for nothing because you are unable or unwilling to produce something that can be exchanged in a free market placefor what you want , but instead you insist that what you need should be forcibly taken from someone else and transferred to you. Don't believe in human nature? Just look at our selves, you are probably thinking that you are benefiting far more from the transfers . . . I doubt you'd sing the same tune when you pay $60+k a year in taxes like I do.

What you are missing, bitterenter, is that much of the services that you assume to be the result of "common good" can be delivered in private exchanges . . . and routinely do, and for much less. Yes, education, healthcare, caring for the poor and the sick, even building of tolled roads all predated federal government involvement. There are less private resources available for those worthy endeavors now largely because of the heavy taxation and inflation. As a renter, you are about to find out just exactly how insidious the tax and inflation system of our government works: unless you have found a secure way to guard against inflation, the money that you are saving by renting will be vaporized by the money printing press . . . all in the name of "greater good" of course. The reality is the bankers looting your savings by printing more money; "great good" is just a political cover for "oriental babarism" as western individualists recognized thousands of years ago.