Can we all safely agree that real estate as an investment is an awful idea now?
Good. Now explain to me why the entire stock market needs to tank when the housing market does? Explain to me why China Sky One Medical has to go down, when they do absolutely no business in the U.S.? Does the market think the Chinese won’t get sick now that Mr. and Mrs. Smith can’t sell their house?
I can’t speak for the Chinese, but that kind of logic makes me sick.
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Ed's Talking Stock 
Ed, Your mistake is thinking there is logic driving the market!
Mike,
I expect just a LITTLE logic from the markets!
Ed,
> I expect just a LITTLE logic from the markets!
Funny thing, I was saying the same thing when the market was going UP based on earnings “enhanced” with cost cuts and share buybacks but nothing along the lines of organic growth. The market was illogically ignoring the more relevant, forward-looking economic data.
Nobody should know this better than YOU who is an avid reader of David Fry…
Logic- No Emotion- Yes How could you be suprised with a bad resale housing number for July. We drove number higher with subsidy. We had to expect this. Just a buying opportunity for the big guys.
From CNN:
Plunging home sales could sink recovery
http://money.cnn.com/2010/08/24/real_estate/existing_home_sales/
bsdgv,
Was there a recovery? I must have been asleep. 😉
Seriously though, we all knew the housing market was overvalued, and needed a serious correction after several decades of run-up.
> Was there a recovery? I must have been asleep.
Yes, there was a pseudo-recovery jacked up by first-time home buyers credit which stunted the decline in housing prices for a 6 months.
http://calculatedriskimages.blogspot.com/2010/08/existing-homes-months-of-supply-and_24.html
Better yet, there was even a wholesale pseudo-recovery jacked up by $787B stimulus which stunted the recession for about a 1.5 years.
Now that the “recoveries” are wearing thin and Obama has no political capital, we are back to reality. The funny thing is the wise people (bulls) on Wall Street are still asleep. One needs a sledge hammer to drive the message home!
bsdgv,
I’m still waiting for the “change I can believe in” to kick in…
> I’m still waiting for the “change I can believe in” to kick in…
Under these circumstances, you’re gonna have to wait for a loooong time.
According to Krugman, the size of the stimulus was too small to get the economic engine running. As I understand, we needed twice as much…
Like many things, the stimulus also has a critical mass under which it does not create the desired effect. Imagine you are cranking your car’s engine with half-full battery. Nnnn-Nnnn but not RRRRRR. Even the Great Depression required a full size world war to come to an end.
ed, I believe we have had change but I sure don’t want to beleive in it
bsdgv,
I think the “hair of the dog” approach is not exactly what we need. It didn’t work for FDR, and it’s clearly not working for Obama. Japan tried the “more spending” approach, and the only thing saving them is the fact that most of their mountain of debt is held domestically.
Here is the solution:
1. Cut government spending. As long as the government is deficit spending, they will be sucking up capital that businesses need.
2. Cut taxes. We have to keep more money in the economy. Shoveling it to the government, whether by bonds or by taxes, hasn’t helped.
3. This last one is optional, but it’s a solid idea that would help. Eliminate the middle man between the Federal Reserve and the people. Funneling money through the banks is a futile exercise, if the banks aren’t lending. The next time the Fed decides to hand out money, it needs to be in the form of a check to ALL Americans, not just the banks.
I think you put too much faith in the concept that the businesses will save the country by saving themselves. You always discount the reality that businesses “invisible hand” have the propensity to destroy themselves and the country’s economy. Businesses always need a father figure (the government) to make them behave.
Saying that less taxes and small government will save us after 30 years of Republican ideological dominance that has led us to the current economic collapse is just sad.
bsdgv,
I didn’t say anything about deregulating businesses. In fact, I believe “too big to fail” should be accompanied by a heavy dose of regulation. But small businesses should not face the same regulatory burden that large businesses should, otherwise you stifle economic growth.
And explain to me how government has gotten smaller under the Republicans? Last time I checked, it grew under those 30 years of “Republican ideological dominance”. The Republicans showed some restraint in growing government, but they were no better than sober Democrats.
The seeds of the current economic collapse stretch all the way back to FDR (one can make the argument for farther than that, but that’s a political subtlety). We can thank FDR for giving us the wonderful idea of government-financed mortgages. That was brilliant, wasn’t it?
Ed,
Another day has passed arguing about this and that.
In the end, we could not find a way to save America. 🙂
Thank you for giving us this opportunity to vent our frustration.
Seems to me that 30 years of “rep ideological dominance” is a miss statement. What about Clinton. Ed’s no. 1 statement is so true. With the government consuming all the money there is none left over for small bussiness. The government does not make money they just consume money. Ed we made “to big to fail” larger. bsdgv we don’t seem to agree on much but I do agree that Ed deserves a great big thanks for the forum he has provided us.
bsdgv,
We all feel it. The only difference between you and I is that I don’t believe government can be fixed. You can make it bigger or smaller, but you can’t make it work efficiently, unless the people support it like they did in WWII. You can’t expect that kind of efficiency from government most of the time.
Mind you, I am not an anarchist. There are some jobs that only the government can do, such as national defense. If we can get them to do those things right, we can handle the rest.
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