The Dallas Fed just published an analysis of recovery from the current housing bubble. In the very first paragraph there is this:
9.1 million homes were built between 2002 and 2006, a period when 5.6 million U.S. households were formed.If that doesn't jump out and shake you then nothing will. This report goes on to discuss how there can't be a "soft landing" from the housing bubble. There isn't enough money in the world to muffle the bursting bubble.
Capitalism is awesome, because it allows for the most rational and highest uses of resources to create wealth. It is also, unfortunately, subject to painful corrections, but those are the times when resources are getting re-allocated so that there can be a recovery. Like ripping off a band-aid, it hurts like crazy when you do it, but it is over faster and the recovery can begin in earnest. Programs to mitigate the pain, while comforting in the short run, are really just a waste of time and money. Kindness can kill us all.
1 comment:
Agreed a million times over, Cheryl! I heard the other day that the biggest crash in housing is yet to come.... which is pretty scary. The house next door to us is a foreclosure, but by some miracle the bank sold it quickly and the house is getting a complete makeover. Hal sees people in this kind of crisis every day and it is exhausting to say the least. He told me years ago when he was debt counseling that Bill Clinton's plan to make a home affordable for all Americans was going to come back and bite us. Well, I guess it did.
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