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Comment by acd | Hacker News Reader

This is simply not true us as us citizens has not profited from this. The banks has been printing money like crazy and the American middle class has not gotten richer while the top 1% has gotten really rich.

Here is a graph from CNN about it http://money.cnn.com/2011/02/16/news/economy/middle_class/

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This is strictly federal government revenues associated with TARP funds. In a way the middle class has benefited by not having their bank suddenly go down or the local factory shut down due to some giant Detroit automotive contract defaulting on its payment.

But strictly speaking, it's a Troubled Assets Relief Program, not Middle Class Enrichment Program, so not sure where those expectations come from.

The middle class got one of the world's largest bailouts in the form of record low mortgage rates. They were able to buy homes with cheap rates, and they were able to refinance with cheap rates; and that's still true even now, the homeowner bailout continues. The savings for the middle 50% of Americans is staggering. So yes, average Americans profited in a big way.

Further, all homeowners got bailed out via a multi-trillion dollar asset inflation program that re-inflated housing prices. If you own a house, you saw a massive benefit from that bailout.

That's not a bailout. Coupled with flat wages and rising costs of living, savings aren't exactly piling up. And home prices are expected to be pretty flat for the foreseeable future.

Would you elaborate on how giving homeowners trillions in wealth by intentionally re-inflating the housing market, and holding down mortgage rates, isn't a bailout?

The government & Fed ran programs that directly, by design, benefited all homeowners, to the tune of $5+ trillion.

Homeowners aren't benefiting, they've underwater on their mortgages and are selling for pennies on the dollar. It's Blackstone and a number of other clever players who've been at this for years [1].

http://www.bloomberg.com/news/2014-03-14/blackstone-s-home-b...

The 80 million homes that are owned in the US, are selling for pennies on the dollar and are underwater? Quite the opposite, only 8% of home owners are underwater, and that's a drastic improvement vs the peak of the real estate collapse. Total home value in the US is near all time record highs, and home equity has skyrocketed the last three years.

Home equity has climbed by $4+ trillion in just the last 2.5 years, an increase of 64%; from $6.7 trillion in the first quarter of 2012, to roughly $11 trillion today.

Home owners have benefited massively from the Fed bailout, via low mortgage rates and cheap refinancing. Home owners have gained probably $8 trillion since the bottom, across essentially every market in the US.

Numbers without sources have no value in an internet forum but from what I'm taking from your argument (please correct me if I'm wrong), is that: "TARP worked because, housing prices have increased across the board and as a result, the whole country is richer and everyone is better off"

You're definitely right about prices have definitely gone up[1] (side note: Case-Shiller Index isn't close to 64% nationally), but all of this is all on paper. Residential home sales are still at '08/'09 levels; it's hard to translate those paper gains into liquidity [2]. I also agree with the low mortgage rates comment, however, all of the QE money is going everywhere but the housing market. Even if you have a stellar credit rating, it will be incredibly difficult to get a loan. Hell, even Ben Bernanke couldn't refinance his mortgage, which is both ironic and absolutely insane when you think about it [3]. Six years post-TARP, the housing market and American economy, still have plenty of structural issues. TARP was a monumental decision that will forever affect every part of America and housing prices cannot be the only metric or lens that we judge TARP's performance on.

[1]Case Shiller Housing Index - http://us.spindices.com/additional-reports/all-returns/index... [2]https://www.flickr.com/photos/126862837@N04/15451411994/ [3]http://www.bloomberg.com/news/2014-10-02/you-know-it-s-a-tou...

I disagree about the 'middle class bailout'. Interest rates are lower, but house prices are higher (good for middle class wealth if you bought before the crisis, bad if you have to buy after the crisis - look at household formation since the crisis to see how that's working out). On balance, banks collect the same interest, and homeowners have less to spend on anything else.

And yet, the US is producing more millionaires each year than every country except China. . .

https://www.bcgperspectives.com/content/articles/financial_i...

The total number of millionaire households (in U.S. dollar terms) reached 16.3 million in 2013, up strongly from 13.7 million in 2012 and representing 1.1 percent of all households globally. The U.S. had the highest number of millionaire households (7.1 million), as well as the highest number of new millionaires (1.1 million).

That's what the earlier post is getting at. There is a lot of wealth skew towards the top... so of course there are a lot more millionaires.

It is the common man who didn't see any benefit from TARP.

The common man saw a massive benefit from TARP, and all the other programs. Had the government & Fed not intervened, the common man would have seen his housing value vaporized. Mortgage rates would have - properly - skyrocketed to record highs, making it extraordinarily expensive to refinance a home or buy a new home. Such high mortgage rates would have crushed housing values even further, and it's unlikely there would have been any value recovery to this day. The common man would have lost trillions.

The common man rents. The better off common man buys a house in a market with now reinflated prices. If you're a buyer, low prices are better than lower interest rates.

The winners were the narrower subset of Americans who skewed older and wealthier (enough to have already owned a home).

The common man does not rent in America. The home ownership rate is 65%. The common man owns a house, or lives in a family that does.

"The homeownership rate is computed by dividing the number of owner-occupied housing units by the number of occupied housing units or households."

http://quickfacts.census.gov/qfd/meta/long_HSG445212.htm

So you're counting a 26 year old millennial living with their parents as a homeowner?

No, and neither is the 65% home ownership rate.

So, let's say we add an additional 26 year old millennial to every household that's owner occupied (that 65% rate you cite).

Does the home ownership rate go down, along with that absolute and percentage increase in the number of people who don't own a home?

That scenario is a fake one, it doesn't exist in reality, and it's a straw-man. Nowhere on earth, at any point in time, has it been common for a 24 or 26 year old to own a home.

Among 30-34 year olds, the home ownership rate is above 50%. Among 25-29 year olds, it's still 37%, which is substantial.

The stats say the vast majority of sub 30 adults are renting, not living at home with their parents. That group is the only majority renter group and has been for decades.

208 million people in the US live in a home that is owner occupied, and that represents 79.5 million homes. Those 79.5 million homes have a mere 2.6 people per home. It's blatantly obvious the 'common man' owns a home.

74 million of the US population are non-adults and can't qualify for home ownership typically. That leaves 240 million people.

Just the fact that there are nearly 80 million homes that are owner occupied, proves my point. You can't have 80 million owner occupied homes, and pretend it's the minority, when the total sum of all households in the US is 123 million.

There are 43 million households that are renter occupied, representing 104 million people. By definition these people are the uncommon, the minority.

You throw out a bunch of numbers, but again, you're making the mistake of counting the number of houses that are owner-occupied, not the number of people who own houses.

And it's worth pointing out one of your subconscious biases at work here. You say: "Nowhere on earth, at any point in time, has it been common for a 24 or 26 year old to own a home." And sure, that's true. But they comprise just as much a part of the common man as a 35 year old white man. Just because someone is young doesn't mean you can write them off as "oh they don't count as a typical American!"

14% of people 24-34 live at home with their parents. That's a substantial number. If there are 50 million people in that age group (a guesstimate), that means you're deciding to count 7 million people--a number that is increasing faster than the rate of population growth--as living in owner-occupied housing, when that's misleading as to their actual economic status. And there are similar setups--cousins living with family members, friends living with friends--who aren't counted either. And, given the socioeconomic makeup of most Hacker News readers, I'm guessing the typical reader doesn't have much exposure to demographics where this is a big trend.

No; that doesn't factor into it at all. The home ownership rate is the percentage of occupied houses that are occupied by their owner, rather than being rented. It isn't affected at all by the number of people under each roof.

Which is exactly the point: the home ownership rate does not, contrary to its name, give a real description of what proportion of people own homes. It describes the proportion of homes that are owner-occupied, which is an entirely different thing.

And if what we're trying to do is figure out what the common man (whatever that is) rents or owns, it's a terrible and misleading measure to use.

The 65% home ownership rate includes a lot of people who recently bought a house that was much more expensive because of housing policy deliberately designed to increase the price of homes. It seems a stretch to claim they benefited from it.

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