Now, even the NY Times is joining the refrain:
Housing Woes Bring a New Cry: Let the Market Fall
...As the economy again sputters and potential buyers flee — July housing sales sank 26 percent from July 2009 — there is a growing sense of exhaustion with government intervention. Some economists and analysts are now urging a dose of shock therapy that would greatly shift the benefits to future homeowners: Let the housing market crash. When prices are lower, these experts argue, buyers will pour in, creating the elusive stability the government has spent billions upon billions trying to achieve...
The further the market descends, however, the more miserable one group — important both politically and economically — will be: the tens of millions of homeowners who have already seen their home values drop an average of 30 percent. The poorer these owners feel, the less likely they will indulge in the sort of consumer spending the economy needs to recover. If they see an identical house down the street going for half what they owe, the temptation to default might be irresistible. That could make the market’s current malaise seem minor.
Caught in the middle is an administration that gambled on a recovery that is not happening. “The administration made a bet that a rising economy would solve the housing problem and now they are out of chips,” said Howard Glaser, a former Clinton administration housing official with close ties to policy makers in the administration. “They are deeply worried and don’t really know what to do.”
Look folks, we know where we want to get...to a housing market where homes prices reflect demand for homes and the ability of the average person to pay for that home. We're Andy Dufresne in the Shawshank Redemption. Either we crawl through the river of shit now to freedom, letting prices fall. Or we wait and wait until we're old and gray and hope for housing to rebound in a decade or two.
I agree with your post and the NYT article, but I cannot help but chuckle at the hubris of the NYT article headline. Letting market forces work area "New" cry??? I guess if a tree falls in the woods, it makes no sound unless the New York Times hears it.
ReplyDeleteI hear you.
ReplyDeleteI look at it as another way of saying that the volume of the cry has increased to the point where it can't be ignored. As long as only conservatives were crying it, it was an old cry. One NYT was happy to ignore. But when independents and liberals joined in, that's the new and noticeable part.
Seems to me that virtually none of the ideas about how to deal with current economic circumstances are especially new. But with the direness of current circumstances, maybe they're getting a closer vet by a wider audience. And the ones that seem to make the most sense are slowly getting wider support.
I venture to say that's a bit encouraging.
Having been so thoroughly pilloried in certain circles for pointing out the obvious and fundamental truth that blowing air back into a burst bubble does nothing but waste air without re-inflating the bubble, you know what I think.
ReplyDeleteKicking the can down the road with price supports using borrowed money (and make no mistake, that's what the home-buying credit was, as was Cash-for-Clunkers) does not avoid the pain, it merely postpones and makes the cumulative pain amount larger with interest and time payments. Much the same as the "rebate" trick we see every fall, where retailers "borrow" from next year's annual sales to plump up this year's right before the close of the year.