Clinton's Gains-Tax Break Pumped Up Housing Bubble

Yes and no, experts say

(NEWSER) - When Americans heard that Mitt Romney pays a 15% tax rate , most probably assumed that was less than they pay—and they're probably wrong. Romney, after all, wasn't talking about his tax bracket, but his effective tax rate, meaning what percentage of his income he actually winds up paying, USA Today points out. The average American's effective federal tax rate is just 11%, according to 2009 IRS data, and if you make less than $50,000, that falls to 5%. More»

Robert Shiller shares a hunch

(NEWSER) - If you’re trying to spot the next big bubble that will roil markets, economist Robert Shiller has a dark horse candidate: Farmland. Sure, farm bubbles are pretty rare—there was only one in the 20th century—but prices for farmland have been booming in the US and UK, Shiller points out in a piece for Project Syndicate . More importantly, “farmland, at least in certain places, seems to have the most contagious ‘new era’ story right now.” More»

...If banks will get on board

(NEWSER) - California has launched a $2 billion program designed to help struggling homeowners keep their houses. The program will be paid for by federal funds originally intended to help rescue the financial system in 2008, the LA Times reports, and could prevent some 95,000 foreclosures—if the state can get lenders on board. So far only one of the five major mortgage carriers in the state has signed on. More»

Housing market gloom is over-hyped

(NEWSER) - Has the housing crisis scared you out of the market? Too bad, because there are still many good reasons to buy, writes Brett Arends in the Wall Street Journal . A few points to consider before hopping on the first train to rents-ville:

• You could get a deal: Prices are down—way down. "This is a buyer's market," Arends writes, especially if you're willing to play hardball. Could prices drop more? Sure. But that "doesn't really matter so much in the long haul."
• You'll save on taxes: Usually, "the breaks are more valuable the more you earn, and the bigger your mortgage," Arends says. So run the numbers—you could save on income, real estate, and capital gains taxes.

Self-dealing artificially propped up market for CDOs

(NEWSER) - An extensive ProPublica investigation reveals what it calls “one of the greatest episodes of self-dealing in financial history.” Banks, most notably Merrill Lynch, set the stage for the economic meltdown by rewarding themselves for said “self-dealing” during the final two years of the housing bubble. They created “daisy chains” of collateralized debt obligations or CDOs—securities backed by mortgages that became increasingly difficult to sell. The result? Banks created fake demand by buying the CDOs themselves, thus ensuring their generous bonuses would be preserved. More»