I am really tired of hearing the presidential candidates saying how the housing market is ‘broken’. It is not broken, in fact, it is now working exactly like it should. It HAS been broken since about 96 or so, with many years of divergence between incomes and prices. Housing going up 20 to 50% a year with incomes going up 3% is broken. We don’t want and can’t afford a return to the old housing market. If you bought a home you can’t afford, I am sorry. Home ownership went from a 100 year historic 60% to 65%. Those extra 5% are what is the problem. Many people own homes now who shouldn’t. Let them be foreclosed and let market prices return to where they should be. It is a hard lesson to learn, but necessary.
Another thing, with all the credit markets, yeah it’s screwed up. You know why? Due to all the deregulation of the last 30 years, we lost the checks against leveraging, so we returned to the problem of the 1920’s. Borrowing money to invest it. Too much lending, not enough making things to create real weath, not the funny money that is our economy now.
So, now we are just entering a phase where market forces come back into play and the weak loose and the strong survive. Hey, I’m a liberal, but I believe in the free market with regulation.