Bulldozers: Cheaper than a bailout, faster, and more fair

No joke: Wall Street Journal columnist Holman Jenkins suggests that bulldozing vacant homes would be a better government policy than the currently brewing stew of bailouts and tax breaks.

"Knocking down surplus homes would be the most efficient and equitable way to spend taxpayer dollars," he writes. "It can proceed experimentally. It can be turned off quickly when the need evaporates. It would not be a lesson to Americans that housing debt is not real debt and need not be repaid. It wouldn't benefit the most irresponsible lenders and borrowers at the expense of responsible ones. The housing market would still have to hit bottom, but the bottom would be higher (and sooner)."

Even if you think the bulldozer option is too far out there, the column is worth reading for its well-reasoned takedown of the thinking behind a bailout. As Jenkins points out, the only way to structure an effective housing bailout -- if that's really what you want to do --  is to construct a bailout that saves speculators from bad bets: "Behind the fig leaves that will be frantically waving, a lending bailout would be effective in stemming foreclosures and propping up home prices only if taxpayer money were used to put speculators' housing bets back 'in the money.' "

Thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Photo Credit: AP

Comments

[Uncle Billy]

Executive Summary: This Country/State/County/City needs a high colonic.

I like Michael's energy and enthusiasm with regards to effecting change by participating in the process (previous posts), but I'm inclined to think that letter writing and even voting has little effect on any issue but the one right down your own street. The system that has worked kind of ok for us for over 200 years just doesn't seem to be doing the trick anymore.

We do not need regular, cyclical bubbles that make a miniscule percentage of the population (and external entities) huge fortunes while ruining everyone else; we need slow steady growth and a much more even income distribution with a humane floor for poverty -- in my very humble, frustrated, opinion. That would be a good start.

[peter m]

Let me address this problem of demolishing abandoned foreclosed eyesore properties from the LA Angle. I have been into some of the most derelict districts in inner La and the IE where i saw abandoned REO properties so wreaked, trashed and gutted that they were unfit for human habitation. The deal is that there was also an enormous amt of teardowns, retros, quick fix and flips in the shabby inner LA slumzones, which always altered the old stable hoods into haphazardly upturned mixed-use zones with resultant decline in neighborhood stablity. Many older homes frequently would be demolished,a new home halfway built and then abandoned, leaving neighborhood eyesores while the city would repeatedly cite the skipped owners(?) for code violations . Eventually the city gets these half- finished quick fixes but no one wants then unless for a very cheap price say 20-30% of the original market value.
If these half finished or gutted eyesores start selling for a fraction of the average hood prices it would raise hell from the entire hood over declining prices.and values.
I would buy one of these half- finised gutted 2/1 's 700-800 sq ft even if completely trashed for $20,000-maybe even 30,000 even in a gang -infested ghetto. I could slowly restore it in a year or two and 100% sweat labor and have a decent small ghetto home valued at $100,000 and up.
No quality community would allow properties to sell so cheap , even if property completely gutted & abandoned, as it would lead to calamitous collapsing Re values all over LA.

So city /hood might as well demolish it and make the neighbors happy about keeping their hood values up.

[victor knopp]

from a thermodynamic,co2 emmision point of view bobs idea would result in= amount of emmisions as the tractor would ,however if conducted porperly and saftly would be economicly more effiicent

[JohnnyB]

This sounds more like the billionaire’s club of Wall Street floating a subtle threat into the populace through a... ehem (clear's throat)... “journalist”.

The populace is on the verge of forming an enormous mob of torch wielding Frankenstein hunters storming the castle seeking the blood of Ponzi’s brethren – the creators of this monstrosity.

Wall Street’s message; “you people want to walk away from your over-priced houses?... well, we’ll give you what for… like tearing them down in your wake. That’ll teach you plebs. We’re in charge here, so don’t piss us off too much or we’ll tear down your huts. How dare you not bow down and acquiesce to our private equity”

Jenkins; “It would not be a lesson to Americans that housing debt is not real debt and need not be repaid.”

What’s forming is a lesson to Wall Street from the mob that they’ve gone too far… way too far. They’re coming across as a bunch of lying, cheating, greedy crooks that are making up the rules as they go along so they cannot lose. How un-American can you get. But, that’s part of the problem isn’t it… they think they can float along, untouchable, on 5 star global clouds pissing on the very people whose real assets they’re leveraging.

The Roman patricians learned the hard way about pushing the “mob” past their tipping point. Blood letting in the network of coliseums and false warring with the neighbors only releases and redirects so much pent up resentment. When you f*ck with their homes and livelihood and smirk at them on top of it, eventually they’ll get lizard brain evil on you.

The mob tipping point is upon them and Jenkins & Co. should take heed.

Corrupted media filtering only goes so far when Joe six pack is taking repeated cheap shots to the back of his thick noggin'.

[Lynne Baker]

Here's my take on this. Let the Gov't take these houses back thru eminent domain. Then since we as Taxpayers are paying for them, GIVE the houses to those who earn an income and have taxes deducted from their checks. Not to homeless or those on Welfare, neither could afford to maintain them, then we have blight. Imagine the Gov't benefitting the middle class. WOW what a concept. Every action has a consequence in the real world. Let the Gov't seize the CEO's assets and give those to the Investors. In addition it is illegal for the Congress people and Senators who own stock in these companies to vote on any Nat'l proposal. Conflict of interest. Arrest them.