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The Post Still Doesn't Know About Falling House Prices
A Washington Post article discusses the state of the economy and prospects for an economic stimulus package passing Congress and being signed by President Bush. When assessing the state of the economy, the article notes the subprime mortgage crisis, slow job growth, rising unemployment, higher oil prices, the latest rise in the trade deficit, and a fall in consumer confidence. Falling house prices did not make the list.
The latest data show house prices falling at an 11 percent annual rate. This rate of decline implies a loss of more than $2 trillion in housing wealth over the course of the year. If this rate of decline continues it will have a much larger effect on the economy than any of the items on the Post's list.
--Dean Baker
COMMENTS (4)
It's not clear how an economic stimulus package benefits anyone but the wealthy. Economic stimulus + low interest rate = bubble, which only lands more money in the hands of the wealthy. There has to be significant policy changes to benefit the people who actually need help.
Posted by: Anonymous | January 14, 2008 9:27 AM
For Bush to put forward a fiscal stimulous package is the height of hypocrisy. What ever happened to the invisible hand, supply side, deregulation and tax breaks for the rich? Now that it all falls down he gives out our tax money for corporate welfare to save the bankers and tax rebates to stimulate consumption? Keynes Lives.
BTW did anyone notice that we are paying interest now on our tax money because we have borrowed for our budget? What is worse, a tax and spend Liberal or a Borrow and Spend Conservative who takes from you tax+interest?
Posted by: Daniel in Madison | January 14, 2008 1:09 PM
Dean,
Asset mispricing is too easily understood as a system malperformance, so 'they' like to leave it out.
Besides bemoaning the darkness, I invite you to use the chart below for light/lightning.
On a real basis, as of mid-Sept. 2007, home prices have dropped ca. 19.5% of the difference between the peak levels in mid-Jan. 2006 and the inferred “WILL return to” levels. See last chart, updated 12/26, at
http://homepage.mac.com/ttsmyf/RD_RJShomes_PSav.html
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