ECON 101: The Answer to A Housing Recovery is Lower Prices, Not Incessant Government Tinkering
"In order for the housing market to build a firm foundation that does not require government aid we will need to see a reduction in prices.
Congress is currently discussing creative new ways to prop up this market. It should be plain as day at this juncture that the government cannot fix the housing market with their incessant fidgeting. The market needs to correct further before reaching a sustainable bottom. Lower prices will act as an automatic stabilizer by generating significant demand. At this point, more government intervention merely kicks the can down the road by pulling demand from the future. We can continue to deny the simple economics at work here, but at some point the market will prevail and prices will settle at a level that the market can absorb. In my opinion, the sooner this happens the sooner we can get on with the recovery process. Unfortunately, politicians have elections to win so they will continue to use their law degrees to attempt to change the laws of economics. It won’t work."
~The Pragmatist Capitalist writing in the Business Insider
4 Comments:
amen.
these government programs are worse than just kicking the can down the road.
they also run up extra debt (subsidies) or increase borrowing costs/tighten credit standards (loan forbearance) while making the whole market less confident due to their capricious nature.
"these government programs are worse than just kicking the can down the road"...
Oh heck yeah moranovich!
Maybe just maybe there's change in the air, albeit slow change...
From the WSJ: Spreading Hayek, Spurning Keynes
Thanks to professor Peter J. Boettke there may be a push on back to the Austrian school of economic thinking...
You are a really "pretty boy economist", Perry.
Let me count the ways that your creepy incessant housing recovery posts were shaping up with LA, Miami, Vegas prices, ad infinitum, with government tinkering.
You are a "pretty boy economist" Perry. How are your silicone injections working out without government tinkering? Good luck without your government tinkering, Perry.
Ya jaundos, back in the real world you would be begging for food on the streets of the home of the Austrian The Spirit of St. Louis. Now that was a malinvestment when it comes to animal spirits.
marmico whines: "Ya jaundos, back in the real world you would be begging for food on the streets of the home of the Austrian The Spirit of St. Louis. Now that was a malinvestment when it comes to animal spirits"...
What are you babbling on about?
I don't have a government job and guess what? The original Spirit of St. Louis wasn't built with taxpayer dollars...
Yet you being a socialist don't have a problem with the following from YOUR link: These government-sponsored enterprises provide more than $5.9 trillion in funding for the U.S. mortgage markets and financial institutions...
Where did the federal government get that money from other than extorting it from the people who earn money in this country?
marmico wouldn't you be much happier in Havana where they have a whole lot of government financed housing?
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