Dartblog

Dennis Gartman, who writes a daily stock market letter for energy traders and others, includes an interesting suggestion in his latest. I reproduce it here for your consideration.

A MODEST PROPOSAL ON REAL ESTATE:

It is real estate that is the problem generally, and it is single family housing specifically that is the most severe problem. We all know this to be true. If housing’s problems here in the US could be resolved, then we shall go a very long way to plugging the leaks in the global economic ship that is listing so badly. Thus far there have been no solutions forthcoming. Allow us to propose one.

We turn to Canada for a partial lesson on what to do, and we ask our clients to remember back to the time when Hong Kong was passing into the hands of mainland China and out of the hands of Her Majesty’s government in London. It was eleven years ago that the Union Jack was struck, and the flag of the People’s Republic of China was flown in its stead. We remember watching the ceremony and we were moved by the pomp and pageantry that masked the concerns about the handing-over of Hong Kong to Beijing.

In the two or three years prior to the handing-over, many Hong Kongers were concerned about their future, and wishing to secure the right to leave Hong Kong should things turn ill, cast about for another passport. Canada, as a member of the Commonwealth came to their aid and said simply that if any Kong Konger came to Canada with C$400,000 and left it there, a Canadian passport would be theirs for the virtual taking. Some chided Ottawa for its stance; we lauded it instead, for it brought much needed funds to Ottawa and it cleared the market of excess housing that was a problem… albeit a rather small one compared to the excesses of today… at the time. Simply put, the smallest hovel in Vancouver suddenly was “C$400 thousand bid.”

We suggest doing the same thing here in the US, but aimed at a slightly more interesting crowd: the illegals living in the US who want to make their life here but cannot because they are illegal and must needs remain outside of the system for as long as they can. We suggest bringing these illegals into the system by offering them citizenship in the same fashion that Ottawa offered it to the Hong Kongers; that is, we think the government should say that any illegal alien who can buy a house… either with cash or through some banking or government program…at some fixed minimum price, be granted citizenship in a fast-track fashion. In the doing of this, much, if not most, of the overhang of lower to mid-prices single family houses can be taken up by a new audience heretofore shut out from buying. In the doing of this, people that had been lost to the system and who had likely not paid taxes to the federal and/or state governments will be brought into the system; they will be made into lawful tax paying citizens and they will be a buyer of the lower end of the economic ladder, allowing everyone else to advance one or two rungs up the ladder. It is clean; it is simple; it deals with the problem of excess housing inventories, and it is not without its problems. It does deal with the argument that we cannot give amnesty to illegal aliens for in so doing we make a mockery of those who went through the slow and laborious process of filing for citizens, and receiving it, as was done in the past.

This is not amnesty we are proposing for amnesty is “grace” from the government… and absolution of past sins as it were. Rather, we are asking/demanding that illegals with the wherewithal to buy a home do so, perhaps even paying a slight premium for that right as “penance” for their illegality, bringing them to some sort of “par” with those “legal” immigrants who went through the entire process, laborious though it might have been. Lou Dobbs and the dangerous factions on the far right may find out “modest proposal” anathema, but we care little what Lou Dobbs and those who follow him believe, for he and his trade protectionist crowd are out of touch with reality. We say bring the illegal aliens out of cold of their illegality into society and onto the tax roles. We say let them take up the excess inventory of housing that is so bothersome and put a strong bid under the market. We say open the doors once again to immigration on a large and growing scale in an attempt to stem the housing problem that threatens to take us all down with it. We say there are obviously problems that must be resolved, but our modest proposal, we think, has merit.