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Plunge in home sales not pretty, but necessary for real recovery

By Frank Ahrens
Painful as it is to take in the short term, today's news about the plunge in home sales is exactly what this economy needs for the long run.

Think of it as an economic colonic. Not pretty, but necessary.

This morning, the National Association of Realtors said that sales of existing homes in July hit their lowest level in 15 years, despite historically low mortgage rates. The decline was nationwide, with all regions dropping. Sales of existing homes (as opposed to new ones) make up the bulk of the market, so today's number gives you a good picture of the dismal situation.

The next thing you need to know is that home prices are probably going to drop, perhaps precipitously. This is simple supply and demand. If no one is buying the thing you're selling, you lower the price. Prices drop until demand matches supply, and then prices stabilize. And that's where we were before this decade's housing boom that led to the financial crisis.

We now know that the U.S. housing market expanded into an artificial bubble through the first half of this decade, with home prices peaking in 2006. Builders were throwing up subdivision after subdivision of spec houses in anticipation of demand, as the White House said that home ownership was the right of every American. Bankers and brokers peddled exotic mortgages that made it look like you could own a home for practically nothing.

People who already owned their homes watched the so-called value of those homes skyrocket. Intuitively, they knew that their $300,000 house really wasn't worth $600,000, as the market was telling them, but -- what the hey? -- everyone else is profiting, so why shouldn't they? Too many homeowners treated their rapidly inflating home values like ATMs, taking out home-equity loans to buy stuff. The economy hummed along on this false boom.

And then it all collapsed, nearly sending the entire financial system over the edge.

To counter the crisis, the government wisely saved the banks, because if the banks went down, everything else would follow. You may not like it -- and it's difficult to swallow the bailouts -- but that's the nature of this system.

But after the system stabilized, the government took the next step and tried propping up individual industries. Helping homeowners was a political no-brainer, especially after the unpopular big bank bailouts. The government tried a two-pronged approach: Help troubled homeowners stay in their homes, and goose the housing market to get it back on its feet.

The first effort has had, at best, mixed success. We learned earlier this week that half of the homeowners who enrolled in President Obama's flagship mortgage-relief program have dropped out.

The second effort -- government-sponsored attempts to prop up the housing industry -- has only postponed the inevitable pain. The government offered a home-buyer tax credit program last year, then extended it, then extended the deadline for closing on new purchases, in an effort to spur sales.

And, for a time, it worked. But literally the minute that the government subsidies stopped, home sales fell off the cliff. Again, this is simple economics. I don't know why it still surprises us. We saw the exact same thing to auto sales when the government's cash-for-clunkers program ended last year.

The bottom line is this: Government-subsidized programs that prop up troubled industries help for as long as they exist, but rarely create any lasting demand. It's like a car with a bad battery that won't hold a charge. You can use another car to jump the battery, and the car will run for awhile, but once that charge runs out, your car will stop again.

Economists have been saying since spring that housing prices have not bottomed, that they could be heading for a double-dip. A rebound in home sales and prices was the basis for the hoped-for "V-shaped" recovery. Now, it looks more like a "W-shaped" recovery is on the way.

Further, the economic recovery we've seen since the March 2009 stock market rally began has stalled. Economists are reducing their estimates for growth for the remainder of this year, and new weekly unemployment claims are going the wrong way.

You've probably already seen the value of your home drop 20, 30, 40 percent over the past four years. That's painful, especially because it's the largest purchase most Americans will make in their lives. But today's number -- combined with the general economic malaise -- tells us that home prices probably still have not hit bottom.

And that's exactly what needs to happen before the economy can right itself.

By Frank Ahrens  |  August 24, 2010; 12:36 PM ET
Categories:  Housing , U.S. Economy  
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Next: CBO says stimulus may have added 3.3 million jobs

Comments

Here's a chart on US pending home sales data. It pretty much says the same thing. The double dip in home prices has arrived. Look at that ugly M shape.. M's are dangerous for economists and technical charters.

http://www.hiddenlevers.com/hl/u?dbQo8P

Posted by: HiddenLevers | August 24, 2010 12:59 PM | Report abuse

Can he state the obvious any more?! Completely useless article. Govt bailouts have not helped. They have only prolonged the inevitable. Spending trillions of dollars that we don't have is not a sound practice. Terrible article.

Posted by: Anonymous | August 24, 2010 1:13 PM | Report abuse

One should note, however, that while car sales dropped when the cash for clunkers program ended, they recovered (albeit not completely) in subsequent months and car companies are now profitable and hiring workers. Cash for clunkers provided a lifeline when the economy, particularly in the midwest, needed it most.
Either the analogy to the car subsidies is wrong, or we should expect to see housing sales recover soon. We'll know in a couple of months.

Posted by: wmw4 | August 24, 2010 1:26 PM | Report abuse

I agree, same with a car that has a dent in the fender. It can't be really repaired until you've nearly "totaled" the car with dents.

Posted by: fury60 | August 24, 2010 1:26 PM | Report abuse

Under this principal, then why did we extend unemployment benefits to people in which over 90% arent really looking for jobs and lying on their monthly forms. The fed govt and presidents of both parties got us into this mess setting up liar loan programs. These same people need to bite the bullet and continue to repair the economy. Pres Obama started on the right track but instead of getting people back to work and getting lending programs in place that could bail out the housing market (which was the campaign) we all have health care. Which is good because when 50% of the population is homeless and unemployed they will be getting sick more often. The President needs to read the facts and create jobs, fix housing through tax credits and lending progams which will make more jobs and quit throwing free money to people taking extended vacations using the 48 month foreclosure process and "free oppurtunity to lie on unemployment weekly filings". Look how far this last unemployment bill would have gone to create real jobs and help housing.

Posted by: DougGosnell | August 24, 2010 1:32 PM | Report abuse

It's great to know that Mr. Ahrens took Econ 101. I also took Econ 102. Can I get a column in the Post, or am I overqualified?

Posted by: Anonymous | August 24, 2010 1:36 PM | Report abuse

WAPO to readers...don't be mad at Obama and his socialist policies....it's for our own good. What a ridiculous article.

Posted by: Anonymous | August 24, 2010 1:40 PM | Report abuse

Oh, I see! Bail out the government, the banks, and the unions. That's just fine. But when it comes to ordinary folks who do not work for the government, are not bankers and do not belong to unions ... well, then it "isn't pretty," but it's what is necessary.

Keep frontin' for Obama, you guys at the Post.

Posted by: Anonymous | August 24, 2010 1:47 PM | Report abuse

I feel like a cancer patient who has bankrupted their whole family getting treated by an expensive quack, only to be told that the cancer is terminal and I needn't have bothered. But, Ahrens would perhaps argue, it gave me (false) hope while it lasted and made my life better, right?

The problem with this analysis is not that it is wrong on the big question (yes, housing needs to take another big leg down and there isn't a darn thing the government can do to stop it). The problem is that it glides over the financial ruin of millions of "home-owners" who have been hanging on waiting for the market to recover. If 10 million more families slide underwater in this new correction, how will they (and the economy) recover?

This is a Depression people. Dr. Ahrens says get used to it (but don't blame the nice people in government).

Posted by: Anonymous | August 24, 2010 1:51 PM | Report abuse

Obama's mortgage relief program was supposed to save 3 to 4 millions homeowners from foreclosure.

So far, it's saved about 400,000 homes. That's a failure rate of about 90%.

Why can't we FIRE Obama, Pelosi, Reid, and the entire cabal of Progressive lying thieves that created the global economic disaster?

If an employee in a private company performed like Progressives in government, they'd be fired within 90 days.

Waiting for the next election is far, far, far too long of a wait. We need a way to quickly remove incompetent politicians we mistakenly hire at the voting booth.

Posted by: bob59 | August 24, 2010 1:57 PM | Report abuse

Socialism collapses everything it touches.


Thanks Barrack Obama, Nancy Pelosi and Harry Reid. Thanks for nothing.

Posted by: FormerDemocrat | August 24, 2010 1:59 PM | Report abuse

"as the White House said that home ownership was the right of every American"????

What about the Democrat-controlled Congress (Barney "there is nothing wrong with Fannie Mae/Freddie Mac" Frank and his fellow Democrats) who initiated the sub-prime crisis began all this in the first place??

Oh well, this is the WAPO after all, no reason to expect unbiased reporting.

Posted by: giscone | August 24, 2010 2:06 PM | Report abuse


Idiotic, at BEST...

Posted by: Anonymous | August 24, 2010 2:08 PM | Report abuse

There is an underlying assumption in this article that may be true in some locations (that there was a bubble) but its hardly the case in many areas of flyover country. The destruction of valuations in areas where home prices never kept pace even with general inflation has undermined the economic fabric of the country.

We're not talking double or even triple dip here, we're talking death spiral. Hang on to your hats, its gonna be a long slog.

Posted by: magellan1 | August 24, 2010 2:08 PM | Report abuse

Just another "let's protect Obama at all costs, even if it makes no sense" article

Posted by: Anonymous | August 24, 2010 2:14 PM | Report abuse

Talk about misreading the data. This is actually good news for the economy. Note that the numbers are for EXISTING home sales.

There was a huge glut of housing inventory after the real estate bust. That that inventory is being depleted is good news, the recovery isn't really going to happen until new home construction gets rolling again.

Posted by: Anonymous | August 24, 2010 2:18 PM | Report abuse

"To counter the crisis, the government wisely saved the banks, because if the banks went down, everything else would follow. "

...so you're saying that the entire country would have fallen apart if "the banks" had failed?

You do realize the consequences of being wrong with this, don't you. If you're wrong, then all of the actions to prop-up the banks have merely had the opposite of the effect that is so necessary that you had to tout a plunge in market value throughout the rest of your column.

Bottom line is that companies that are parking cash are also draining cash from the rest of the economy. The government props-up the banking system by pumping equity into it, someone has to cough-up that equity. They may have saved the "heart", if your theory is correct (and it's very possible that it isn't) but the heart was clearly defective and now both it and the support actions could be killing the rest of the body. We will have a sound, robust banking system that stands on the ashes of the rest of the nation.

Posted by: Anonymous | August 24, 2010 2:25 PM | Report abuse

“The Obama administration has created an increasingly hostile environment for investment and job creation. The U.S. corporate tax structure is a major impediment to international competitiveness. The government should ‘stop trying to micromanage industries.’"--Ivan Seidenberg, CEO of Verizon, speech before the Economic Club of Washington, June 22, 2010 (president of the Business Roundtable)

Posted by: Anonymous | August 24, 2010 2:29 PM | Report abuse

For homeowners:

the people that got in trouble were the ones that bought a home under false pretenses of the loan-mortgage company. In essence, lying to them that they could afford a $150,000 home.

Then the folks stayed in the home 3 years and took out a second mortgage of equity (HELOC) to buy things (new cars) or get money for their kid's education Invest perhaps. So their debt was beyond their true spending level. Stuck with 2 mortgages.

Then second mortgages were shut off (frozen) and accelerated and you have families who not only could not pay off the second mortgage, but could not pay the purchase money (first) mortgage.
And second mortgages are civil, they can go after you in court for all you own.

Foreclosures went up.
And people walked away because no true help was coming through. The checklist to re-fi according to Make Homes More Affordable program was lengthy and no income (one of the criterias)---would get you a big fat NO from your bank right off the bat. Well hey, no one is working.

Then the banks did not outreach to homeowners who were facing foreclosure or going underwater. Credit reports that were shattered because families couldn't afford their debt on credit cards precursored any loan they were going for. Another criteria of the Make Home Affordable Act. Good credit reports are just about non-existent and below 600 this days. How can anyone get a loan or even re-fi?

Plus they don't use the figures that the states offer as your value of property That's the LPV and FCV you see on your Notices of Valuation (which taxes are based on).

Banks (for a loan or refi) -send out their own appraiser for any re-fi(s). Cost is absorbed into the loan (about 350 for the appraiser) but they appraise the house lower because they know they can.

SO even if your state says your house/property is at 100,000 for example, the bank still has authority to say it's worth lower and boom...you get no loan or re-fi. Banks are loaning at only 55%, not 80% any longer. If you have used up that 55% in a purchase money mortgage with a second mortgage....you get no re-fi because you're underwater.

You get no loan because of credit not rosy, you get no loan become income doesn't cut it, you get no loan because the banks assess your property lower than the state assessment and you get no re-fi cause you're underwater.

Can't win.

Then came unemployment of one of both earners of household money. Foreclosures go way up because no one can pay anything towards anything, much less 2 mortgages or even their purchase money mortgage. This is the reason unemployment has to be extended way into 2012. That's a whole year away. 2011 looks GRIM as all get out.

It's a complete mess. I have lost $28,000 in 3 years on my property value. And it looks to go down more. I don't think we will see increases in property value for the next 5 years, if even that.

Posted by: TheBabeNemo | August 24, 2010 2:32 PM | Report abuse

Yet another WaPo columnist on the Obama payroll. Yes, sir, that's "change we can be leavin'."

Posted by: Anonymous | August 24, 2010 2:33 PM | Report abuse

Mr. Ahrens, you lie! The Bush White House never said home ownership was the right of every American. That was Barney Frank.

Posted by: Anonymous | August 24, 2010 2:33 PM | Report abuse

Plunge in home sales not pretty, but necessary for real recovery....


lmfao....this article takes the cake...

Posted by: Anonymous | August 24, 2010 2:35 PM | Report abuse

"There was a huge glut of housing inventory after the real estate bust. That that inventory is being depleted is good news, the recovery isn't really going to happen until new home construction gets rolling again."

...ah, if it was only that simple.

If the problem is merely an oversupply of housing, then how is that actually measured? What has to change for this oversupply to no longer be a problem?

That's the very tricky part of all this. If the economy has to come to a virtual standstill to correct this situation, then when it recovers, from what state is it recovering? Near-death?

20% sustained yearly increases in the economy starting in 2011 may sound good on paper, until you get to the fine-print where it started when the economy was about 1% of what it was in 2008. And you still haven't come up with a way to actually get the economy to *improve*.

It's the modern equivalent of "where's the beef?"

"Where's the equity?"

"Oversupply of housing" or no, someone has to actually pay for the housing. If the money is not there, and never going to *be* there, to pay off the total # of outstanding loans, then it doesn't matter whether there is an "oversupply" or not: some of those loans have to fail. And that can rapidly cascade, undercutting the entire economy like a tidal-wave.

Posted by: Anonymous | August 24, 2010 2:35 PM | Report abuse

WaPo, are you serious with this article? I think Obama could go out and murder someone and the Post would figure out a way to make him a hero.

And one wonders why the Post has rapidly declining readership...?

Posted by: Anonymous | August 24, 2010 2:36 PM | Report abuse

Sarah Palin in 2012! I bet a few "You Betcha"s and some well timed Tweets would fix this economy right up.

Posted by: Anonymous | August 24, 2010 2:37 PM | Report abuse


Elizabeth MacDonald
“I fear that Americans have been provided a false choice between a little more and a lot more regulation and taxes. We keep hearing more ideas to create jobs and generate growth that almost exclusively require more government spending. Jobs can come from government, but those jobs get paid for by taking money from the private sector, reducing the private sector’s ability to provide jobs…there are many who believe that less regulation, less government interference, less arbitrary regulation when it does exist, and lower government spending will generate more growth and more jobs. I agree with those views."--Edward S. Lampert, CEO of Sears Holdings Corp., 2009 annual report
"Today, manufacturing employment in the U.S. computer industry is about 166,000, lower than it was when the first personal computer… was assembled in 1975…You could say, as many do, that shipping jobs overseas is no big deal because high-value work–and much of the profits–remain in the U.S. But what kind of society are we going to have if it consists of highly paid people doing high-value-added work, and masses of unemployed?"--Andy Grove, co-founder and past chairman of Intel Corp., Bloomberg News, July 1, 2010
"A new semiconductor factory built from scratch costs about $4.5 billion–in the United States. If I build that factory in almost any other country in the world, where they have significant incentive programs, I could save $1 billion [due to tax breaks]."--Paul Otellino, current CEO of Intel, recent speech
“The Obama administration has created an increasingly hostile environment for investment and job creation. The U.S. corporate tax structure is a major impediment to international competitiveness. The government should ‘stop trying to micromanage industries.’"--Ivan Seidenberg, CEO of Verizon, speech before the Economic Club of Washington, June 22, 2010 (president of the Business Roundtable)

Posted by: Anonymous | August 24, 2010 2:38 PM | Report abuse

We're teetering on the brink of a downward deflationary spiral, and the Post wants to see home prices fall even MORE?

Mr. Ahrens needs to get his head out of his you-know-what and realize that this is an economy, not a morality play.

Hoping for more pain to purge the remaining excesses from the housing market is Puritanism run amok -- the same mentality that led Andrew Mellon, Hebert Hoover's Treasury Secretary, to welcome the "liquidation" of workers and small farmers during the Great Depression, in the deranged belief that this would set the stage for recovery.

What we need now isn't lower home prices, but a real economic recovery and lower unemployment, so that the imbalance in housing prices can be eliminated gradually over time -- through faster relative price increases elsewhere in the economy, not a further collapse in real estate values.

The fact that Ahrens doesn't get this is further proof that we have, as Paul Krugman says, returned to the macroeconomic Dark Ages. Also that Ahrens apparently feels he is at little risk of losing his job in the liquidiation frenzy he hopes for. The latter is a real shame -- if a second Great Depression resulted in putting the Post out of business and its prostitute/journalists on the breadlines, I might be in favor of it.

Posted by: Anonymous | August 24, 2010 2:39 PM | Report abuse


but one must understand, the unemployment benefits are going to pay the first and second mortgages. And that's it.

It's not paying for their car loans, electricity, heating and cooling, gas for their SUV. Maybe food stamps are helping out.....but folks on unemployment (which they are not lying on forms, there are no -jobs)---
these folks take unemployment and pay the first most important bill --the house payments...
why...
because the unemployment money isn't even close to what they WERE earning---so naturally--no credit cards get paid, no electricity gets paid...etc.

All goes to the house payments. And I feel for the people who took out a second mortgage. These folks are paying 2300 (and more) bucks for two loans but only get 1300 (if that---have to come from a high paying job to get that much) on unemployment.

Down the tubes everything else goes...with no re-fi possible.
They are maxed.

We will see more blended families in the future, more foreclosures and more homeless.

So folks, don't be so hard on the unemployed people...thinking they are lying or sitting on their butts with a beer....there is nothing out there. And if there is, 5,000 people are in line for it. Kelly Temp Services have lawyers who are taking data entry jobs just to make something. Accountants taking mail room jobs.


Posted by: TheBabeNemo | August 24, 2010 2:47 PM | Report abuse

So is there no depth you guys won't go to to cover for failed policies? I suspect no.

Car makers are recording "profits" ( I thought that was a dirty word these days) because their union pension plans were bailed out by John and Joanna Q Public and their progeny for generations. Seems more likely they would have either failed or, more likely, come out on their own and without adding massive debt. Terrible article but worthy of Reiffenstahl or Goebbels. So in the spirit of this puff piece...GOOD JOB!!!

Posted by: theduck6 | August 24, 2010 2:48 PM | Report abuse

So is there no depth you guys won't go to to cover for failed policies? I suspect no.

Car makers are recording "profits" ( I thought that was a dirty word these days) because their union pension plans were bailed out by John and Joanna Q Public and their progeny for generations. Seems more likely they would have either failed or, more likely, come out on their own and without adding massive debt. Terrible article but worthy of Reiffenstahl or Goebbels. So in the spirit of this puff piece...GOOD JOB!!!

Posted by: theduck6 | August 24, 2010 2:48 PM | Report abuse

Another BFO (blinding flash of the obvious)--things have to get worse so they can get better!! So many stupid things about this article that just want to make you scream, but even that seems unsatisfying...

Posted by: herschel53 | August 24, 2010 2:52 PM | Report abuse

Smart economist; dumb mechanic.

Posted by: dexterpeabody | August 24, 2010 2:53 PM | Report abuse

wmw4 wrote:...Either the analogy to the car subsidies is wrong, or we should expect to see housing sales recover soon. We'll know in a couple of months.

You are either smoking something or you are a fool!

Posted by: numbersch13 | August 24, 2010 2:54 PM | Report abuse

Clinton is a supporter of the Third Way, or Radical center, a centrist political philosophy of governance that embraces a mix of market and interventionist philosophies. The Third Way rejects both socialism and laissez-faire approaches to economic governance, but chiefly stresses technological development, education, and competitive mechanisms to pursue economic progress and governmental objectives. Third way philosophies have been described as a synthesis of capitalism and socialism by its proponents.
In the United States, Third Way adherents emphasize fiscal conservatism, some replacement of welfare with workfare, and a stronger preference for market solutions to traditional problems (as in pollution markets), while rejecting pure laissez-faire economics and other libertarian positions. The Third Way style of governing was firmly adopted and partly redefined during the Administration of President Bill Clinton.
After Tony Blair came to power in the UK, Clinton, Blair and other leading Third Way adherents organized conferences to promote the Third Way in 1997 at Chequers in England. The Democratic Leadership Council are adherents of Third Way politics.
In 2004, several veteran U.S. Democrats founded a new Washington, DC organization entitled Third Way, which bills itself as a "strategy center for progressives." John Kerry of 2004 U.S. Democrats Presidential candidate is also considered to be third way politician, as are 2008 U.S. Democratic candidates Hillary Clinton and Barack Obama.


The Third Way economic theory and philosophy has also been suggested as one of the main factors behind the current recession

Posted by: Anonymous | August 24, 2010 2:59 PM | Report abuse

President Obama, thank you for continuing the collapse of the overpriced housing market.

We know you know what you're doing.

We love you. We trust you.

STOP listening to the noisy, racist critics, and PRESS ON with your Progressive plan.

---your faithful brown-nosers living up your....

Posted by: bob59 | August 24, 2010 3:00 PM | Report abuse

There are those of us who want to purchase a home but are the "backburner" because congress/house has not released addtional funds for the USDA Guaranteed housing loan program....we have been waiting since march and still have nothing to show!

Posted by: Anonymous | August 24, 2010 3:21 PM | Report abuse

This is the biggest bunch of hooey I've seen spewed in a major news publication in a long time. Start with the 'Banks were wisely saved.' line. Do you mean the US financial institutions which funneled much of their stimulus money to overseas banks? Apparently, our major banks didn't actually need 'saving', or they wouldn't have spread billions of bailout bucks to their foreign partners. Or, do you mean the small and regional banks that have failed at a record pace the past two years? They weren't exactly saved, now were they? Give me a break. And, while we're heralding the Bush White House's foolish carte blanche support of widespread home ownership, let's not forget the aggressive role the Congressional Black Caucus and Congressional Hispanic Caucus played in pushing the banks to lend to under-qualified borrowers in the name of fairness.

This article is a total croc.

Posted by: JHG_sec405 | August 24, 2010 3:23 PM | Report abuse

"Why can't we FIRE Obama, Pelosi, Reid, and the entire cabal of Progressive lying thieves that created the global economic disaster?"

Posted by: bob59 | August 24, 2010 1:57 PM |

1. Obama was elected to a 4 year term so deal with it and stop whining. You guys opposed him from the start and that is a big part of the problem.

2. We went through 8 years of your folks in charge and THEY are the ones who "created the global economic disaster".

Posted by: rs12 | August 24, 2010 3:40 PM | Report abuse

all the homes are bank owned....

go figure.

Posted by: TheBabeNemo | August 24, 2010 3:41 PM | Report abuse

anon....same with HUD and FHA loans....on the back burner

and don't forget fannie and freddie---disasters

Posted by: TheBabeNemo | August 24, 2010 3:44 PM | Report abuse

Any bank or CU that loans money today at less than 5% for 30 years on a home mortgage is going to need a Federal bail-out in a couple of years when the inevitable inflation strikes and the value of these loans sinks like a rock. There are still a mountain of foreclosures to come and prices are going to fall for another year or two, and maybe more if the Govt raises taxes, increases regulation, pushes social innovation, and continues its profligate spending. Of course it is a lot easier to create greater equality in the country by driving down the wealthy than it is to raise up the poor, so don't expect any relief anytime soon.

Posted by: droberts57 | August 24, 2010 3:46 PM | Report abuse

How about we fire Bonehead and his cronies.

Posted by: Anonymous | August 24, 2010 3:50 PM | Report abuse

W-shaped? My guess is more like L-shaped. Or an upside-down square root symbol. I.e., lots of sideways action for years to come, with another leg down maybe or maybe not preceding that sideways action.

Posted by: Anonymous | August 24, 2010 3:52 PM | Report abuse

"Why can't we FIRE Obama, Pelosi, Reid, and the entire cabal of Progressive lying thieves that created the global economic disaster?"

Posted by: bob59 | August 24, 2010 1:57 PM |

1. Obama was elected to a 4 year term so deal with it and stop whining. You guys opposed him from the start and that is a big part of the problem.

2. We went through 8 years of your folks in charge and THEY are the ones who "created the global economic disaster".

Posted by: rs12 | August 24, 2010 3:40 PM
=========================================

You've conveniently left out the part of socialist Progressives controlling our economy since 2007.

2007 is the same year the economy tanked.

Progressives took a successful economy and in less than 1 year the Pelosi-Reid Congress destroyed it.

The lying propaganda of wholly blaming Bush has run its course. People know what really happened.

Posted by: bob59 | August 24, 2010 3:52 PM | Report abuse

The sad thing is we can't talk rationally about what went wrong without trying to blame someone else when we all knew something was wrong when it was happening. I mean really how can housing values keep going up 10-20% a year all those years when income didn't? How were people going to pay for these houses? Of course the bubble had to burst.

Posted by: sargon20 | August 24, 2010 3:58 PM | Report abuse

'Deflation' is one of those words that writers must not be able to use in the Post... just like 'torture' and 'peak oil'....

Posted by: Anonymous | August 24, 2010 3:58 PM | Report abuse


I wholly attribute the Post's decline in readership to Mike Wise. He sux.
-----------------------------------
WaPo, are you serious with this article? I think Obama could go out and murder someone and the Post would figure out a way to make him a hero.

And one wonders why the Post has rapidly declining readership...?

Posted by: Anonymous | August 24, 2010 2:36 PM |

Posted by: Anonymous | August 24, 2010 3:59 PM | Report abuse

"Plunge in home sales not pretty, but necessary for real recovery." This is nonsense. Home sales have been plunging for two years.

Posted by: suegbic1 | August 24, 2010 4:04 PM | Report abuse

"Any bank or CU that loans money today at less than 5% for 30 years on a home mortgage is going to need a Federal bail-out in a couple of years when the inevitable inflation strikes and the value of these loans sinks like a rock."

That is if the bank or CU wasn't conservative enough to know who to lend money to, to begin with. In that vein, most credit unions are prudent with their operations and cash flow. Oh, and CUs that market to members who live and work in the MD/DC/VA tech epicenters of the country are also exempt because they tend to be of the lowest risk (higher than average incomes and job stability), and they will more often than not, have the earnings to pay back their loans.

Posted by: Anonymous | August 24, 2010 4:09 PM | Report abuse

Plunge isn't pretty, but necessary for real recovery?

Than why did Obama give out $8000 tax credits to forestall "real recovery"? Why did he add to the national debt to block "real recovery", if a plunge was necessary? Was he trying to prevent or stall the "necessary" plunge?

You and Obama are wacko. Let the market take its course, WITHOUT ADDING TO THE NATIONAL DEBT.

Posted by: bbwk80a1 | August 24, 2010 4:10 PM | Report abuse

Oh surprise surprise surprise.

You paid TOO much for your house and you don't want to admit that you made a stupid mistake.

Suckers.

Posted by: Anonymous | August 24, 2010 4:18 PM | Report abuse

Bob59 Stop throwing around the word "Socialist." You don't even know what it means. To suggest that Congress destroyed the economy in a matter of one year is absolutely absurd.

Posted by: Anonymous | August 24, 2010 4:19 PM | Report abuse

Simple supply and demand says that builders can't keep dumping product on the market while EVERYONE's home value goes through the roof in an *oversaturated* market.

What this says is that there was a disconnect between lenders and the housing market. So...when that becomes obvious, we bail-out the *lenders*.

But even so the problem is not that the economy is cratering, it's that it's returning to what it should have been, given proper lending practices. Meaning a stiff overcorrection for the near-future.

Maybe we should cut taxes even more, undoubtedly that will solve the problem...yes, let the wealthy keep even more money. The economy will ramp right up. Simple as that, really.

Posted by: Anonymous | August 24, 2010 4:32 PM | Report abuse

More liberal lies.


Posted by: Anonymous | August 24, 2010 4:33 PM | Report abuse

franks and dodd..."we must give every family a shot at the American Dream"..so theypass a law forcing loans to made available regardless of credit and with little or no downpayment. Oops..big housing bubble. That is what really happened, so quit blaming Bush.

Posted by: Anonymous | August 24, 2010 4:33 PM | Report abuse

If Obama had let banks fail, and let people lose their savings and homes without doing anything to try to help, then the Republicans would be whining that he did nothing and stood by helplessly as our economy collapsed.

But if he introduces stimulus programs and other measures to prop up the economy, he's a socialist who wants to destroy capitalism.

There is absolutely nothing that Obama can do (or not do) that will stop Republican whining. He can't win.

And frankly, if McCain had won the election, we'd all be in the exact same boat. Wherever you want to place the blame, this mess was created long before the current administration took office, and there are simply no quick fixes -- no matter who is in The White House and Congress.

So, quit whining and grow up!

Posted by: CAC2 | August 24, 2010 4:36 PM | Report abuse

Bob59 Stop throwing around the word "Socialist." You don't even know what it means. To suggest that Congress destroyed the economy in a matter of one year is absolutely absurd.

Posted by: Anonymous | August 24, 2010 4:19 PM
=========================================

We all know what Socialism is, it's what Obama called "change".

Everyone socialist economies but the political fat cat elites get spare "change". Spare change health care, spare change promises of prosperity, shovel loads of manure from propaganda media,....

It's the economy we have today, the beginnings of a welfare state...a ghetto economy.

It's the same system Obama wrote about in his book, "Dreams of my father". His father was a socialist. Obama is an organizer for socialism, he's creating the United Ghetto of America, where he and his cronies are ghetto lords flying around in private jets, riding in limos & living in mansions at our expense.

Socialism has destroyed the European economy two times in the past 70 years (Hitler's National Socialist Party & recent socialist governments), it destroyed China before capitalism was let in, destroyed the former Soviet Union, and is represented by dictatorships in North Korea and Venezuela. Wherever a Socialist economic model is adopted the country's economy is guaranteed to fail. The people who suffer are the productive working class taxpayers and successful businesses.

I see you're writing as "Anonymous", at least come up with a handle.

I don't let anyone tell me what to think, what to read, or what I see with my eyes.

Posted by: bob59 | August 24, 2010 4:37 PM | Report abuse

Until prices fall to where they would have been without the bubble, they will continue to decline.

The other article got it right. It's very difficult for sellers not to think of the "valuation" from 2005 as the real value, and that prices today are a "discount", when in fact the 2005 prices were an illusion.

As for buyers, it's difficult to be optimistic about buying a house and paying taxes on it when the value might continue to drop and rents are cheaper.

Posted by: postfan1 | August 24, 2010 4:38 PM | Report abuse

"Any bank or CU that loans money today at less than 5% for 30 years on a home mortgage is going to need a Federal bail-out in a couple of years when the inevitable inflation strikes and the value of these loans sinks like a rock."

That statement is far too generic to be true. The basic method to avoid such problems is to pick the loans wisely. This is simple risk-management.

Of course that all depends on how much risk you're willing to take.

But here's the bottom line.

BAILING-OUT a capitalist industry that fails to compete in a capitalist market is just going to make matters worse. The inherent principle is the *socialization* of such industries, if they are bailed-out for the good of their employees and customers.

But to bail them out, literally, requires an infusion of equity, and equity doesn't just come out of thin air. For a failed entity to get equity, some successful entity has to donate it. So unless you have open-ended credit, every bank rescue or private-enterprise bailout means that healthy industries will be pushed to the brink of disaster, just to save them.

This is the problem with government action. Someone is going to win. And someone else is going to lose. It's a simple question of who wins, who loses and why. But that isn't always up to a popular vote.

Posted by: Anonymous | August 24, 2010 4:39 PM | Report abuse

hey anon.....did you make this COMMENT section your personal blog today???

In the housing debacle of 1979 through 1984, when housing collapsed---
it was hard to get through and it was 5 years before any bounce back took place. But that was only housing. The other industries were doing fine. One could find a job in those 5 years.
Now there are none anywhere, unless state government hires you, and that is even getting a cut.
No jobs, no housing market.
No jobs, no recovery.

Posted by: TheBabeNemo | August 24, 2010 4:41 PM | Report abuse

-- but that's the nature of this system.

the system either serves the people or the people serve the system .. when people serve the system ... the system crashes and burns. how is it that you do not know this ?

Posted by: AmericanSpirit | August 24, 2010 4:44 PM | Report abuse

Hey all of you Obama bashers! How'd y'all like that statement by the teabaggers to only use the blue and orange metro lines, to stay out of certain neighborhoods, and giving lessons on how to deal with taxi drivers who look "Middle Eastern"? What a hoot, eh? It's more dangerous in DC than in Iraq! Heewack!

Um...stay home. DO not come to DC. Black people and "middle eastern" looking people will rape your women and shoot you in the back for no reason. Stay home. Seriously. It's soooo dangerous here.

Posted by: swatkins1 | August 24, 2010 4:47 PM | Report abuse

Take some notes.

FHA reserves at an all time low. Since a large number of FHA loans were made in the last two years, this also includes all the money collected on the up front premium. Simply, not even close to deal with the defaults on the old loans and the new loans. And, best of all, the lender gets paid off. More Bank Welfare.

Outside the coccoon of the Beltway, things are still a huge mess in the real estate market. People cannot qualify for financing due to credit and valuations. So, the credit enticed some people, who could, to buy. It was nothing more than a bone to the NAR and Banks. Industry and Bank Welfare.

Every single "Program" to help people who have some credit and some income from this Administration has been and continues to be a charade. You could have saved thousands of homes from foreclosure by taking those cute Freddie and Fannie twins and having them and the Fed administer a global refinance program at 3% for anyone even close to a 41% ratio of income to debt. Would have grown a whole lot of consumers again, as well. If the Chinese buy our junky treasuries, they would have bought the mortgage securities, for the same reason you send business gifts at Christmas.

End result - No more bullets left. All the money given to Industry and Bank Welfare. You, the people, get nothing for your tax dollars. Like the result? If not, you'll get to live with it for the next ten years.

Posted by: Gooddogs | August 24, 2010 5:04 PM | Report abuse

The mess has been thirty years in the making, ever since the majority of voters decided to ignore reality and buy into voodoo economics. The way out will be long and transitional, upsetting those who cannot easily deal with change.It will be a longer and tougher slog for Americans who got in over their head on mortgages, piled up credit card debt, and piled on the pounds during the fat years.

The right wing can blame President Obama if they wish. I do not care who they blame, as reality will still be the same. And if McCain had won (what a thought) I am sure I would be blaming him.

Posted by: Anonymous | August 24, 2010 5:06 PM | Report abuse

"franks and dodd..."we must give every family a shot at the American Dream"..so theypass a law forcing loans to made available regardless of credit and with little or no downpayment. Oops..big housing bubble. That is what really happened, so quit blaming Bush."

If that was all there was to it, then they wouldn't be blaming Bush. You forget Bushs' part entirely here: the interest-rate cuts just before the 2004 elections, wave after wave of tax-cuts based on home-ownership and children, the tax-cuts based on earning more than $250k/year, the tax-cuts based on investment returns, all of which contributed to an inflationary spiral, doing 10x as much for families with incomes over $250k as they did for families with incomes between $25k & $50k.

Proof being an increasing gap between the lower and upper income levels of American society.

Americans were forced to work harder for less under GW, given a small increase in salary while their housing costs shot through the roof. Oh but they could take out a loan against the increased market-value. Oh but that meant higher tax assessments, but who cares about those. Outsourcing is another story, that probably would have happened regardless in the name of "corporate efficiency".

The real point is that Congress and the President act together to write and pass the budget. When Bush is president for 8 years you'd have to be a total moron to not see his responsibility for this mess. As well as those in Congress who helped him, which for 6 of those 8 years were Republicans in lock-step with GW.

But now that is neither here nor there. You know the plot and we know the perpetrator, but that isn't going to get you out of the path of the speeding car.

Posted by: Anonymous | August 24, 2010 5:18 PM | Report abuse

"Socialism has destroyed the European economy two times in the past 70 years (Hitler's National Socialist Party & recent socialist governments), it destroyed China before capitalism was let in, destroyed the former Soviet Union, and is represented by dictatorships in North Korea and Venezuela. Wherever a Socialist economic model is adopted the country's economy is guaranteed to fail. The people who suffer are the productive working class taxpayers and successful businesses.
Posted by: bob59"

Are you aware that China still has a centrally planned economy and were you one of the loudest supporters of the transfer of US industry to coastal China by both parties?

Posted by: Anonymous | August 24, 2010 5:39 PM | Report abuse

bob59: you probably should have let at least some people tell you what to read...namely, your schoolteachers. You are so far off I can't even begin to deflate your fantasies.

If you really think we're living in a "socialist regime," comparable to North Korea and the Soviet Union...well, I guess there's nothing anyone could do to change your mind. But you may as well believe that martians killed the dinosaurs and the moon is just a big weather balloon, because those ideas are a bit closer to reality than yours.

Oh - and someone should go over and tell Europe that they're currently destroyed, because they don't seem to realize it.

And save your breath about my "anonymous" post. What, is identifying yourself as "bob59" some marker of honor and bravery on your part? Like you're any less anonymous than anyone else on this board? Please... save your delusions for the mental institutions.

Which, by the way, we would have more of if we were truly "socialist."

Posted by: Anonymous | August 24, 2010 5:39 PM | Report abuse

I agree with most of this article, which is why I find it confusing. It is certainly correct that ham-fisted government interventions like Cash for Clunkers and the housing bill did nothing to fix our underlying problems, and merely postponed the inevitable pain while borrowing trillions from the Chinese.

Most people with even a vague understanding of elementary economics knew this instinctively -- that such programs only stole future sales from people already contemplating a purchase. In a way this was actually better than what the supra-genius PhD academics Obama surrounded himself wanted: bribing people to take on unaffordable homes and cars in order to "fix" a bubble caused by ... wait for it ... people spending way too much.

Again, most sane people knew these government programs were at best a wash, and at worst a crippling sugar binge that our children and grand children would pay for.

So what confuses me is where was this article a year ago? Why does the Post act like this was all expected by them? To the contrary, I remember a lot of glowing articles about how great these plans were and how Obama was really leaping into action on the economy. (The same thing also happened with the health care bill, with the Post and NY Times only running articles months later about the fact that it will actually drive up costs and massively wrench our healthcare into an unrecognizable shape).

Again: if you knew these ideas were so terrible, why did you work so hard to sell them to your readers? Something stinks here, along the same lines as the freaking National Equirer having six (6) reporters chasing Democratic Presidential Nominee John Edwards through sleazy hotel lobbies, while the Post and NY Times played see no evil, hear no evil.

Posted by: zippyspeed | August 24, 2010 5:48 PM | Report abuse

Anon - Not one party, not by a long shot. Systematic looting of manufacturing base of the country was finalized with NAFTA. Lots of collective guilt, here. Bush, the great spender. The Chris and Barney show. Rahm, the board member for 320k in a year. Don't worry about pointing fingers, the reality is here, now and the sky is getting darker in the west.

Posted by: Gooddogs | August 24, 2010 6:00 PM | Report abuse

Greed isn't so good after all? No more houses as ATM machines? Houses are a place to live...not to bet on a horse! Times have changed and just in time! It is a new day. Renting is ok!

Posted by: judithclaire1939 | August 24, 2010 6:06 PM | Report abuse

Bush had us on the road to permanent prosperity in 2008. His tax cuts were poised to lower the unemployment rate to less than 1%. Then America had a brain cramp and elected Obama. It was at that moment Lehman Bros collapsed and the bottom fell out of the housing market. Don't you remember? But it's not too late. If we put the Republicans back in power then we can make the Bush tax cuts permanent and de-regulate the financial markets all over again. It will be Bush never left ad we'll all be rich again!

Posted by: Anonymous | August 24, 2010 6:10 PM | Report abuse

"Socialism has destroyed the European economy two times in the past 70 years (Hitler's National Socialist Party & recent socialist governments), it destroyed China before capitalism was let in, destroyed the former Soviet Union, and is represented by dictatorships in North Korea and Venezuela. Wherever a Socialist economic model is adopted the country's economy is guaranteed to fail. The people who suffer are the productive working class taxpayers and successful businesses.
Posted by: bob59"

Are you aware that China still has a centrally planned economy and were you one of the loudest supporters of the transfer of US industry to coastal China by both parties?

Posted by: Anonymous | August 24, 2010 5:39 PM
==============================

You're detached from the point.

China is a socialist state saved by US capitalism.

I don't support the transfer of US manufacturing to China. That happened because of unions demanding executive salaries for unskilled, manual labor.

Posted by: bob59 | August 24, 2010 6:15 PM | Report abuse

If the problem were a "glut in housing" then we'd be enjoying a "glut of cheap houses"...

seems the simple liberal argument is wrong again.

From it's very premise, the article is unsupported.

Posted by: docwhocuts | August 24, 2010 6:16 PM | Report abuse

Frank,

You are are dopey guy.

We all know things have to hit bottom before they go up. No news there, bright light.

And telling us that a 5, 10, 20, 30, 40 % drop in real estate is in the offing is telling us nothing. Zip, nada, bupkis.

So why are you wasting ink and who pays you to do it?

Posted by: Schwabcycler | August 24, 2010 6:23 PM | Report abuse

bob59: you probably should have let at least some people tell you what to read...namely, your schoolteachers. You are so far off I can't even begin to deflate your fantasies.

If you really think we're living in a "socialist regime," comparable to North Korea and the Soviet Union...well, I guess there's nothing anyone could do to change your mind. But you may as well believe that martians killed the dinosaurs and the moon is just a big weather balloon, because those ideas are a bit closer to reality than yours.

Oh - and someone should go over and tell Europe that they're currently destroyed, because they don't seem to realize it.

And save your breath about my "anonymous" post. What, is identifying yourself as "bob59" some marker of honor and bravery on your part? Like you're any less anonymous than anyone else on this board? Please... save your delusions for the mental institutions.

Which, by the way, we would have more of if we were truly "socialist."

Posted by: Anonymous | August 24, 2010 5:39 PM
==================================

The European Union is based on socialism, and is near financial collapse.

Anyone paying just a little attention to reports about the collapse of Greece, Spain, Portugal, Ireland and the threats to pull out of the Union by some states know the EU has failed.

Socialism is responsible for hundreds of millions of murders, beginning with the Holocaust, to Stalin's purges, to China's Cultural Revolution,...,not to mention the lack of medical care and poor living conditions for the majority of citizens...the same people who aren't so fortunate as to be party members.

Socialism is about creating a group of elite politicians who lord over a poor and dependent citizenry.

Obama and the Progressives are trying to create a socialist, welfare dependent populace. Their way is to collapse our economy and swoop in as saviors, promising government handouts. There's no prosperity in socialist societies unless you're one of the lords living like royalty off taxpayer's backs.

In socialist states people who don't think right are placed in re-education camps, denied medical care, sent to prison or mental institutions.

Posted by: bob59 | August 24, 2010 6:23 PM | Report abuse

Right, and it is all George Bush's fault. We wouldn't be in this fix if he paid as much attention to the economy as he did to tracking down terrorists.

Posted by: Anonymous | August 24, 2010 6:24 PM | Report abuse

These are used houses they are talking about -- sales of previously occupied dwellings. Well, who wants to buy a used house?

Posted by: Anonymous | August 24, 2010 6:30 PM | Report abuse

Wow! All the haters are here in force, not out making the world a better place, or actually practicing Christianity. I agree with Maverick McCain's comment during the elections: "Throw the[Wall St./to include Freddie and Fannie f'ups] bums in jail." Most economists agree that we needed the BUSH INTITIATED BAILOUT, but Tres. Sec. Paulson, our feckless and corporately owned Cong., Supreme Court' and Tres. Sec. Geithner all share the blame for selling us out to Wall St. in the process. We are in deep kimchi, with plenty of blame to go around. But crucifying Obama seems to be what the hysterical mob wants, not the Wall St. Barabbas, but Obama. The mob was wrong then, the mob IS wrong now.
REAL SOLUTIONS:
We need everyone on unemployment to do roadwork, or conservation work everyday they get paid and allowed 1/2 day at the end of each week to apply for a real job...many would "suddenly" find "more suitable" work. Welfare should be optional and those who sign up for this limited, one time, two year program, would be moved, with their family, to abandoned military bases, where they would undergo the kind of "makeover" the military does with[me, for one and]millions of trainees: Shots given, assigned area to keep in order, shown how to keep their area and themselves in order, inspected for same, tested for aptitude and placed accordingly. On the other end of the spectrum, where the more expensive fraud flourishes: Transparency, which currently does not exist, of banks, energy, pharm., auto, and HMO's, to name a few, must be required and the "bums" who orchestrate white collar crimes would be sent to state run prisons...NO FED HOTELS. Corporate "bounty hunters" would be rewarded just as regular bounty hunters are. That would help. These ideas may not be perfect, but I made suggestions to fix the problems we all face, that is better than just hating.

Posted by: Anonymous | August 24, 2010 6:35 PM | Report abuse

"Under this principal, then why did we extend unemployment benefits to people in which over 90% arent really looking for jobs and lying on their monthly forms."

a) you don't know that.

b) even if they are, then you have to consider that they are getting at most 40% of their pre-tax income at their previous jobs. So instead of apparently being overcompensated to actually do work, now they are probably undercompensated to look for new work which will probably pay them a lower salary but possibly will actually be worth the money of hiring them & paying them. So it's an increase in efficiency which is a good thing. Probably we could use more of that.

c) UI compensation is much more effective in supporting the local economy because people on UI don't have money to waste buying frivolous items, most of which are made overseas. So instead of a position earning 10x as much and wasting 9x the money on goods produced overseas, they are on UI earning 1/10th as much wasting 1/9th as much, possibly matching their foreign expenditures with their domestic ones. This isn't a problem for us as a nation, it's a very-good exercise in moderation and efficiency up and down the supply-chain.

One reason why China continues to prop-up the American debt market. They know that in the long run they will make out like bandits. For those on UI with an outstanding market for their work, they will return to work at an equitable pay rate when the market is strong enough. For those without a market for their work, they will fall off the UI rolls into destitution. It's basic market economics.

Posted by: Anonymous | August 24, 2010 7:06 PM | Report abuse

The usual dufus's here continue to rant about Obama. They point the finger but have offered NO solutions. Repeat - NO SOLUTIONS.

As I recall the Republican "answer" to the Bush economic implosion is more of what got us into this mess:

-Cut taxes on the rich
-More corporate welfare
-Let GM/Chrysler fail costing the US hundreds of thousands of jobs and the loss of a critical US industry
-Eliminate unemployment insurance
-Lower the minimum wage
-Let the banks fail

Add this all up and you have another Great Depression. All good if you have plenty of money. Not good if your an average American.

Posted by: Anonymous | August 24, 2010 7:32 PM | Report abuse

You want to get our economy back on track?

--Stop subsidizing the big, politically connected banks.

--Eliminate the morass of federal regulations and agencies that kill small businesses or discourage their formation.

--Lower taxes on both individuals and corporations, and cut the size of the federal government to match.

--Stop encouraging reckless personal behavior and encourage savings and thrift.

It's not really a Republican vs. Democrat thing. Both parties are sending down the patch to Big Government ruin.

Posted by: Anonymous | August 24, 2010 7:43 PM | Report abuse

Waht do you expect from a liberal newspaper? The sky is falling?
Well, it is, but they don't think we're intelligent enough to understand that. Well, at least the people in the Metropolitan Washington are - and they're probably right.

Posted by: Anonymous | August 24, 2010 7:45 PM | Report abuse

WAPO will stop at nothing to protect Dear Leader.

Posted by: logicprevails | August 24, 2010 8:12 PM | Report abuse

Frank Aherns displays a classic lack of economic IQ.

He says:
"Intuitively, they knew that their $300,000 house really wasn't worth $600,000, as the market was telling them"


The market *by definition* tells you what a thing is worth. Nothing has an intrinsic value. Not gold, not autos, and as you now realize not houses.

The value goes up and down based on supply and demand. If the demand goes below supply, the price must drop. That's macro economics one-oh-one.

Frank, I think what you're trying to say is that right now there is little demand for houses so the price must fall for the market to reach equilibrium.

It also points out the follow of Obama trying to prop up the housing market. To what end? If the prices must drop, better to do it sooner rather than later so that the market can rebound sooner. Right now, Obama propped up housing prices for 2 years, which means it will simply take 2 more years for the housing market to recover.

When people say Obama is a socialist, I'm not sure what that really means, I know that policies like propping up housing prices hurts everyone in the end.

Posted by: Anonymous | August 24, 2010 8:32 PM | Report abuse

Home ownership is not a right! It's a priviledge and a HUGE responsibility. Some people are not prepared to undertake such a physical and financial responsibility. Having Congress mandate that Fannie & Freddie should lower underwriting requirements to make home ownership to those whose financial situation and credit rating can't support the decision is a recipe for disaster!
www.CherylLPeck.com

Posted by: cherylsbooks | August 24, 2010 8:39 PM | Report abuse

Great news! Now please tell us once again how continued massive immigration into the United States, both legal and illegal, during sustained high unemployment is really just part of this "economic colonic . . . . Not pretty but necessary". Because, you know, while I get the orifice reference, something other than "colonic" comes to mind.

Posted by: Anonymous | August 24, 2010 8:57 PM | Report abuse

Ahrens,

Are you nuts?

Bailing out the Banks/Wall Street was the worst ***king decision.

Bank of America SUCKS.

Wells Fargo SUCKS.

Citibank SUCKS.

etc. etc.

All those corporate SOB's should be in JAIL.

Posted by: mdpilot | August 24, 2010 8:58 PM | Report abuse

MY HOUSE IS NOW WORTH 185,000 LAST MONTH IT WAS AT 177,000 SO YOUR LOOKING AT LAST MONTHS DATA. CHECK ZILLOW.COM AND SEE FOR YOUR SELF. IT'S GETTING BETTER SLOWLY

Posted by: Anonymous | August 24, 2010 9:40 PM | Report abuse

NOPE

You are just afraid to admit that the USA PREPPERS and TEA are driving a boycott of any money for Obamaland and it's plans.

Posted by: Anonymous | August 24, 2010 9:52 PM | Report abuse

I love all of these anonymous comments. I would remain anonynmous, too, if I was contributing such nonsense. Read today that law suits for defamation and libel are on the increase for the ranting and raving bloggers....anonymous is the new blogging. In short, the bailouts were necessary to prevent total collapse.

Posted by: Anonymous | August 24, 2010 9:55 PM | Report abuse

The week, starting Sept 3 through the Oathkeepers NOT ON OUR WATCH formal posting of orders that they refuse to obey 'notice given' on the DC mall, there is expected to be a large photo op of tents.
Apparently , millions, and millions, and millions, of REO homless,unemployed , underemployed, TEA. Preppers, are beringing pup tents for a Depression photo op cature bigger than the CIRCA 1930 of tent cities in DC.

It is expected to display visible from space tents in the tri state area.

Breadline photo material for Obama' own breadeline Statue (similar to Roosevelt's) will be taken.

Apparently, denial of reality will no longer be Obama's option.

Posted by: Anonymous | August 24, 2010 10:23 PM | Report abuse

It wouldn't be smart to dismiss the value of a delay in housing value declines. Putting that off for a year reduces the number of mortgages driven underwater by a given loss of value by around 3%, a few million homes.

The more housing prices decline, the more millions of underwater mortgages and foreclosures we still have to face, but the longer it takes to get to the bottom, the fewer homes need be lost.

Posted by: lonquest | August 24, 2010 10:56 PM | Report abuse

"

Socialism collapses everything it touches.


Thanks Barrack Obama, Nancy Pelosi and Harry Reid. Thanks for nothing.
"

...you do realize that the US hasn't practiced pure capitalism since the Great Depression, don't you?

Posted by: Anonymous | August 25, 2010 12:03 AM | Report abuse

"Socialism has destroyed the European economy two times in the past 70 years (Hitler's National Socialist Party & recent socialist governments), it destroyed China before capitalism was let in, destroyed the former Soviet Union, and is represented by dictatorships in North Korea and Venezuela. "

dude socialism didn't destroy Europe, even once much less two times, rampant capitalism and nationalism bordering on racism destroyed Europe, twice, not just once.

And a socialist USA helped them to get back on their feet, both times.

Russia rejected capitalism so severely that they swung to the other extreme, sowing the seeds for outright cronyism through control of a "communist" market. The same for China.

In any case no "well-managed" system will fail, by definition. You ask for a poorly-managed system to not fail, well it's not clear that failure is inescapable in such cases. But one can hardly expect rats to take over a ship made of wheat and not eat it to the point where it sinks.

Posted by: Anonymous | August 25, 2010 12:09 AM | Report abuse

The government has tried propping up home sales with little affect. The reason is that homes are still over valued and people are nervous about the state of the economy and prefer to sit and wait rather than take on more debt.

Get more people back to work and things will change.

Posted by: Anonymous | August 25, 2010 2:16 AM | Report abuse

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Posted by: Anonymous | August 25, 2010 2:23 AM | Report abuse

There is no problem with my bankruptcy,pay day loan do not care for the bad credit history ,so this is the best option for me.

2872

Posted by: Anonymous | August 25, 2010 3:07 AM | Report abuse

Of course. I agree. Existing overstated stock has to be destroyed for new houses to be build moving the sector in the right direction. This is simple productive economy common sense. Existing homes make nothing directly to promote the productive cicle of any economy. People inmediatly hired to work. Profit growing enough for bussiness. It is also acomplished by new stuff and when reached it is the only way to improve the private sector. A bubble alwys has to finish destroying unuseful stocks which are only the source of costly debts making nothing directly to move the productive economy.

Posted by: Vercinget333 | August 25, 2010 5:05 AM | Report abuse

Moreover. It has more sense to put people working to destroy the present giant stcok of unused houses rather than trying to hold them at their debt cost. Surprised? It is what a war makes. And a war was the final solution the past century for growing again. Existing stock cannot launch any quick recovery on the private sector. The solution of any bubble also has to be some neccesary destruction. Lets make them giving jobs to the people.

Posted by: Vercinget333 | August 25, 2010 5:13 AM | Report abuse

Keynes words (not literally): Give the money to bussiness with the less possible productivity. Give money to those ones who need labor force more than others. Put the new labor force to work building the most unuseful good you can imagine. Hire other neccesary people working to bear it to the deepest place of a lost mine which needs the most labor force to make the job. Finally more people to close such mine. When it was made the private sector will come and will be able to take apply laisez-fair advice. Yes. Which can be the neccesary stupid to promote such stupid actions? Only the government with its political needs can be. No more will make such seemingly nonsenses.

Posted by: Vercinget333 | August 25, 2010 5:26 AM | Report abuse

The reason home sales has dropped is multifactorial, i.e., more than one cause. Perhaps primary is that good, permanent, moderate wage jobs have not been created by the stimulus. The stimulus was too small and too late, and provided only a band-aid. The second reason is that lenders have become risk adverse, you can't blame them after the near collapse of the financial institutions in 2008. Who is going to lend money to someone with a temp job in the service sector which is notorious for firings on short notice? The overall malaise is due to our movement away from manufacturing and into the service economy. Until the country again becomes a true manufacturing giant that it once was, homes are going to be out of reach for many.

Posted by: Anonymous | August 25, 2010 1:18 PM | Report abuse

Mr Ahrens is ignoring several factors that contributed to the housing price rise was Wall Street taking on loans that were, in many cases, bad to begin with and rolling it into securization on a global basis(cheap money was pouring into this country at 6% of GDP.

As segments of borrowers were tapped out, they create yet new loan products to be peddled to people who did not previously qualified. Add to the mix the mortgage brokers who chose not to have their skin in the game for the decision they made and house flippers both trying to cash in on the real estate boom.

In the end, it is too much debt as it has been previously reported the % of debt in relation to GDP is now 92.8% down from its 100% in 2007 is contributing to the sales decline while the banks has been risk averse.


====================

Bob59:
Your statement smack ignorant of facts except for the propaganda you've been listening to.

Posted by: Anonymous | August 26, 2010 10:45 AM | Report abuse

Time for someone to say it. Forget throwing money at the top. That won't solve anything. Throw the money at the bottom and pay off the mortgage of everyone in the USA.

Normally, I'd say "moral hazard" but I think that ship sailed with the bank bailouts.

Pay it all off. Homeowners stay in their houses. Nobody is in house debt. Suddenly, there's money available for consumers to buy things and spending goes up.

If you have to transfer private debt to the public sector to save the economy, this is the way to do it, not stealth loans to banks at the fed's discount window.

Posted by: Anonymous | August 26, 2010 10:55 AM | Report abuse

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