The new immigration?

I sincerely doubt that this bill will get any traction, given the overall political trend against immigration (and toward protectionism), but it seemed almost inevitable that something like this would come along.

The reeling housing market has come to this: To shore it up, two Senators are preparing to introduce a bipartisan bill Thursday that would give residence visas to foreigners who spend at least $500,000 to buy houses in the U.S.

The provision is part of a larger package of immigration measures, co-authored by Sens. Charles Schumer (D., N.Y.) and Mike Lee (R., Utah), designed to spur more foreign investment in the U.S.

Foreigners have accounted for a growing share of home purchases in South Florida, Southern California, Arizona and other hard-hit markets. Chinese and Canadian buyers, among others, are taking advantage not only of big declines in U.S. home prices and reduced competition from Americans but also of favorable foreign exchange rates.

To fuel this demand, the proposed measure would offer visas to any foreigner making a cash investment of at least $500,000 on residential real-estate—a single-family house, condo or townhouse. Applicants can spend the entire amount on one house or spend as little as $250,000 on a residence and invest the rest in other residential real estate, which can be rented out.

The measure would complement existing visa programs that allow foreigners to enter the U.S. if they invest in new businesses that create jobs. Backers believe the initiative would help soak up an excess supply of inventory when many would-be American home buyers are holding back because they're concerned about their jobs or because they would have to take a big loss to sell their current house.

This kind of bill would only speed up the dynamic that we've already begun to see in Texas, where the "new immigrant" is not a day laborer but an opportunistic investor. This shift may change the way we view immigration and immigrants in our country as we enter into a new century with new economic realities.

Either way, I'm always amused to see how far our politicians will go in their attempts to prop up old regimes. Here, they're basically willing to pull out all the stops in order to prevent a further deterioration in the housing market. Generally speaking, these sort of desperate attempts fail miserably, and serve only to create all manner of unintended consequences that we will later regret.

This kind of policy, when combined with ultra-low-interest-rate policy from the Fed (that serves to weaken the dollar against other currencies) will ensure that our primary "export" over the coming decades will not be any sort of product or service, but the very land that we live on. If more and more of our country is actually physically owned by foreigners, are we really even a country any more? And does it even matter?

Welcome to the 21st century, I guess--and welcome to the strange, existential questions that we never thought we'd have to ask ourselves.

[Wall Street Journal]

Update on an old theme

If you've been reading me for a while, you might remember my long-running diatribe against the various calls from Washington to brand China as a currency manipulator and to impose trade sanctions as punishment. That line of news went quiet for a while, in large part because the Treasury Department delayed its expected announcement on the matter indefinitely.

This past Friday, quietly, the Treasury finally made its long-awaited (long-forgotten?) statement, as Bloomberg notes.

The U.S. declined to brand China a currency manipulator while saying its No. 2 trading partner has made “insufficient” progress on allowing the yuan to rise.

China should follow through on President Hu Jintao’s commitments to allow more exchange-rate flexibility and boost domestic demand, the Treasury Department said in a report to Congress yesterday on foreign-exchange markets.

The yuan “remains substantially undervalued,” according to the report, which was originally due in October and says no major trading partner meets the legal standard of improperly manipulating its currency. “It is in China’s interest to allow the nominal exchange rate to appreciate more rapidly.”

Not surprisingly, some of the windbags in Washington still weren't convinced or satisfied.

Senator Charles Schumer, Democrat from New York, said Congress needs to take bolder action. “It’s as plain as the nose on your face that China manipulates its currency,” he said after the report was released. “It’s just as plain that the only way to address this problem is for Congress to act....

Senator Sherrod Brown, an Ohio Democrat who has been among the lawmakers pushing for a tougher U.S. stance on the yuan, said the currency’s progress is “inadequate.” Senator Max Baucus criticized the “failure” of Treasury to label China a manipulator. Both senators called for Congress to act this year.

Of course, someone should probably remind Sen. Schumer that it's also as plain as the nose on his face that the House and the Senate are not, in fact, their own branches of the federal government--but I digress.

Treasury Secretary Timothy Geithner has certainly had his failings--on this issue and others--and I don't typically approve of much that he has done since taking his current position in January 2009. But on this topic, he certainly understands the dynamics at play much better than our cantankerous friends in the Senate, and he therefore recognizes the need to tread lightly. He has taken a measured approach with regard to China and its currency, which is the only rational course. Acting brashly and pounding our chest will only end in economic pain for our country one way or another, something that our Senators are still devastatingly slow to realize. Hopefully they will come around.

[Bloomberg]

Late challenger for Quote of the Week

I gave a nod to Brett Keisel yesterday for his quote at Super Bowl Media Day, but then Chuck Schumer came along and issued the face-slappingest quote of the year so far. Far be it from me to deny the good senator his time in the limelight.

This week's NOT-QUITE-QUOTE OF THE WEEK

"We have three branches of government. We have a House, we have a Senate, we have a President. And, all three of us are going to have to come together and give some."
                -New York Senator Charles Schumer

Video here (at the 1:09ish mark):



Hey, Chuck, phone call for you: it's Roger Vinson. He says, "up yours". So does John Roberts.