Mortgage foreclosures are up 72% nationally: this is a pretty serious problem for the US economy. And frankly, I'd rather see credit tightened even if it leads to a slow-down in the housing market because right now a lot of the prices out there are not based on anything even closely resembling reality.
And by the way, the National Association of Manufacturers is a trade group, not some sort of unbiased think tank. It's research and predictions are highly suspect, for example its chief economist's publication just two years ago of "Why the Real Estate Boom Will Not Bust".
On the other hand, skeptics of the red-hot housing market driven by subprime investors such as Dean Baker (see here as well) and Barry Ritholtz have been way ahead of the curve in predicting the housing market slowdown, but unfortunately their advice has not managed to seep into the American consciousness.
Update (6/28): Dean Baker discusses the "deflating housing bubble" at TPMCafe.com here. He concludes that:
The real problem [with the housing bubble] was the failure of the Fed to take the housing bubble seriously. It decided that its mandate to pursue “price stability” has nothing to do with asset prices. Alan Greenspan and his successor Ben Bernanke stood by smiling as house prices nationwide rose an average of 70 percent above trend levels.
When the market corrects and the full extent of the damage becomes apparent, redefining the Fed’s responsibilities should be a top priority. The damage from the creation and disappearance of $7 trillion dollars in housing bubble wealth swamps any possible damage that might result from a rise in the core inflation rate from 2 percent to 3 percent.
The home and renters insurance enables one to safeguard his home, like life insurance or the home insurance or even dental insurance and any other insurance deal does.
0 comments:
Post a Comment