Dr. Housing Bubble:
Multiple sets of indicators are clearly showing that the housing market is entering a second winter. Home prices are inching closer to cycle lows and indicators of housing distress are rampant throughout the country. Home prices during the troubling five years of 1928 through 1933 saw a decline of 25.9 percent nationwide and this was during the Great Depression. The latest Case-Shiller data shows that home prices in the 20 City and 10 City composite measures are down by 32 percent from their 2006 peak. This is now nominally the worst housing correction since the Great Depression. The continuing correction in housing is economically challenging middle class households in ways vastly different from those during the Great Depression. What is troubling about the new cycle lows is that the liquidity injected into the banking system by the Federal Reserve simply delayed the inevitable while diverting precious resources to a broken financial system. The painful lesson of the new reality is that household income, the gas in the engine, is simply too low to support prices even at today’s new lower levels....
...Since the start of 2005 to the end of 2010, three million seven-hundred thousand American families have been kicked out onto the street. At an average of 2.3 people per household that’s 8.5 million Americans who have been directly, physically, affected by the popping of the US Housing Bubble, so far.
I estimate that by the time the “dust” settles on they myriad of personal tragedies that resulted from the misguided policies of the Clinton and more importantly the Bush era, to “promote” (i.e. subsidize) home ownership, six million American families will have been “de-housed” , that’s 14 million personal tragedies....
I just got back from a little league game in West University in Houston Texas. The price per sf here might be the most expensive in Texas, but all the executives from the legal and oil firms here are oblivious to how things really operate at the macroeconomic level. Might as well count them as welfare recipients of massive tax breaks for big oil which runs off in advantage to the attorneys.
ReplyDeleteI had to square off a typical fat cat in front of several well to do know nothings, and they all thought that tax and spend meant that the government can only function with it's tax receipts and nothing more.
I begged to differ and had to counter with a $100 bet ( I happened to have a c-note in my back pocket ) so I raised it up and held it like a cheap furniture commercial, and challenged him ( as well as the others ) that Ronald Reagan ( somehow ... somehow their deficit terrorist hero ... ) outspent all previous administrations combined, and topped it off with that only Carter and Clinton in the past 50 years made a negative rate on the government spending scale.
This infuriated them all .. imagine these are the fatso's who control the energy firms and the contracts that govern their transactions ... being put on the spot by a relatively kids-glove to the area.
None of them took the bet, and I made my point as best I could.