The problem with the housing market is that new and younger buyers can not even get started... Prices are still way too high...
The last 10 years of the bubble in house prices were really people "trading up"...from one level to the next...
Of course with the crash a lot of them got caught with an expensive house...which is now going down in price ...not up...
So
the entire thing was really like a Ponzi Scheme...the "next sucker"
would always bail you out... That ended in 2008.... And it will likely
not come back for a generation...
A sure sign was that houses
were more expensive than the rent they could generate...any asset is
only as valuable as the income it generates...
The FED has put
interest rates at zero...or below...to discourage saving...and encourage
speculation...or "investment"...and "reduce competition" for housing
prices... (Because if your Bank CD pays .01%...you might buy a house
instead)
So savers have been pretty much wiped out by the ultra-low rates...during this Depression.
So
this Depression has a long way to go...and my hunch is that the worst
is yet to come...since Obama has been using Keynesian economics...to
"jump start" an economy where the "economic engine"...ie the
production... is in China...!
The Keynesian "jumper cables" are
jumping the battery in the US...but there is no follow on effect
...because there is no engine...ie "plant and equipment" in the US...
This is nowhere near what
Keynes had in mind... And that is actually why Krugman is wrong...he
still thinks there is 'something to jump start' here in the US...
Most
of these Last Daze of the Dollar...have gone to building and boosting
the Chinese and Asian economies where most so called "American"
companies actually make their stuff now...
Put another way...if
the government gives me $500 for free...as "stimulus" ...I'll gladly buy
a Chinese made TV...! But all the stimulus goes to China...or stays as
profit in "American" companies...so they can make more high margin
stuff in their Chinese plants...
