Thursday, May 19, 2011

Not content to leave bad enough alone

Somewhat aged but still relevant...

Last week we reported out on falling housing prices and how that may not be such terrible news as it very possibly meant that the expiration of the Keynesian gimmickry as applied by the administration to the housing market was letting housing prices find their historical market value (see graph at link provided above).

We warned, however, that this most recent spate of "bad news" would be a cue for Team O to spring into action as the only solution to failed statist policies is more statism. As if, on cue:

Obama said his administration was looking at ways to extend programs to help people struggling with mortgage payments on houses that had lost much of their value.

"We're going to continue to work with Congress to see if we can propose more legislation to encourage longer loan modifications," he said. "We are trying to expand the loan modification program to reach more people."

We get it. We really do. We understand the urge to do something about a bad situation and it goes doubly so when you feel you and your team are the smartest kids in the room but believe it or not, sometimes, and the housing market right now certainly qualifies as one those times, it's best to do nothing and let the market unwind by itself to get all the poisons and bad actors out of the system.

As it is, however, any actions taken by the feds will merely prolong the zombified state of the market forestalling any true recovery.

Will we ever learn?

1 comment:

SarahB said...

Do they really think these homeowners are going to be enough to tip the scales in 2012?

And I agree with your earlier post that falling housing prices is a necessary correction and was destined to happen...something we factored into the purchase of our home last year. I keep saying, if this is obvious to a dyslexic artist like myself, it shouldn't be rocket science to anyone who makes a living watching the economy.