Letters to the Editor
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Yes, it's true
The housing bust could easily lead to a recession, business cycles do happen (although you can usually pinpoint what caused the business cycle to change), and a recession isn't the end of the world.
I also think that if the government stopped jacking around with the economy on a routine basis, it would be better for everybody and the subprime meltdown was not caused by governmental fiscal policy but rather by some company's willingness to engage in fraud (deceptive advertising) which should be punished by both bankruptcy and criminal charges.
And, yes, I hope that a recession will evict the lemming like fascists that have been running the country since 2000 (yes, I know they lost the '06 elections but they didn't become a minority so much as a not quite majority).
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Too little, too late?
Great little article by Kathleen Pender in The CraminerExonicle reasoning that this "fix" isn't really going to fix anything... Tsk.
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2007/10/16/BUF3SQCHQ.DTL
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Unkind?
Living in the Arkansas Ozarks, I always say that, but for papers, TV, and now the net, we wouldn't ever know whether we're in a boom or a bust. Unlike the Wal-Mart corridor, our modest housing expansion was just getting started, and was not universally welcomed. (Don't move here. You won't like it.)
Given Andrew's projection of the effect of the bust on the next presidential election, would it be unkind of me to hope that every housing contractor in Southern California (and Bentonville, for that matter) has filed Chapter 11 before November, 2008? It would be for the greater good.
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Here's a tip
Lower.The.Price.
You can't do that? Oh it sucks to be you then. I laugh at your failure.
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Call it what it is!
It is "The Entity!"
And Cheney is a romulan...
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Paulson Needs Some Investigative Journalism
I remember when Paulson was being nominated for the Secretary of the Treasury position, NPR did a story on his tenure at Goldman Sachs. The gist was that it was stunning -- just amazing, really -- that Goldman managed to make such stunning numbers with such regularity. The story ended with an interview with a Wall Street insider, who was asked:
"So when the Street sees these numbers come out time and time again, for an organization with zero transparency, does anyone ever wonder if they're cooking the books, Enron-style"?
The answer: "Every single day."
One of the biggest book-cooking crooks is sitting pretty in the Treasury Dept as the house of card falls. No wonder he's finally worried.
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Downtown Raleigh NC
Has a boom in the $300K range of condos right now. And for us, that's pretty expensive. I guess it depends on where you live. Of course this isn't Boston, NY or San Fran so according to Salon we probably don't own shoes and each of us runs a still and wants to own slaves too. You know how us hillbillies is.
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Call it what it is
Hey Andy,
I've just finished reading your current article and it's previous companion piece. They are surface reports of the current situation. If we want to understand just how long ago the wheels started to come of this wagon, we need to go back to last year when Freddie Mac announced that in 2008 they would no longer pick-up the paper on the questionable loans. Also around that time another news blurb announced that the amount of money being returned to Mexico was down by X millions. The reason, reduced work by illegal construction workers.
If we combine those two things, along with the re-write of the personal bankruptcy law; no one should be surprised that the financial institutions are now wallowing in the mud of their own design. The next real problem is coming from the extraordinarily high debt in the credit card industry.
A little recession now and then is not a good thing.
footsore
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Economic warfare for political gain?
This is a scary quote for the article:
"In a very real sense, the next batch of Supreme Court Justice nominations could hinge on how far home prices fall in, for example, Southern California."
In light of this quote it is hard not to see Leonard's writing as advocating economic collapse as a simple tool towards political change.
It doesn't make it less scary to me that I most likely agree with his political choices.
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Settle Down
You could just as easily read Andrew's closing thoughts as concern that a recession might reflect negatively on the current administration, as you could read it as hopeful that voters will take revenge on the current administration. I think he was simply making the point that economic catastrophes don't remain isolated to the world of finance, and that they have far reaching socio-political consequences.
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Ghost Town
Another victim of the housing mess has to be home improvement stores. I was in Home Depot (Oakland, CA) on a weekend afternoon and it was a ghost town. Unthinkable when it first opened about 4 years ago.
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We are already in a recession ... Now comes the Depression
Real inflation , for real people , who drive cars , who eat and who have health iinsurance is over 5% . This is greater than the GDP which is 2.5% , but which is overstated due to outsourcing and transfer payments in the financial sector. So in real terms we have been in a recession for over a year.
Housing prices are going to plummet . It will take at least 3 if not 4 years to get through the subprime crisis and another 5-6 years after that for prices to start rising from the floor they will hit in 2-3 years , if the economy holds up , which is doubtful.
Oil and food prices will continue to rise, eating up what's left of disposable income for 60% of the population.
Maybe the pols will support housing like FDR did farming , pay Home Builders not to build !
Welcome to the new paradigm , ever increasing poverty with no end in sight.
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Lower housing prices good
In the long term, I think lower housing prices would be good for everyone. Sure, there's short term pain. And the idea that you are going to get rich just by owning a home is an attractive idea that's hard to shake. But housing should be about putting people and families into homes not making speculators rich. Home prices in the US dropped for 30 years beginning about 1925. I think this time, they might drop for 60 years, and that's a very good thing. If you want to make money, get a job. If you want a place to live, buy a house. Don't confuse the two.