The housing crisis will correct itself when prices fall far enough for middle income Americans to actually afford to buy a home without resorting to shady financing. That’s happening as we speak. Oil prices will affect EVERYTHING. Just imagine what will happen if we have a cold winter in the Northeast!
final note we are totally bankrupt as private citizens, as local governments, as state governments and as national government. Why do you think they are building toll roads instead of freeways?
The Dow is lower now than it was back in Dec 1999. The dollars has lost half of it’s value since then to the euro.
Adjusting for 10 percent return per year the Dow should be at 27,000 adjusting to the euro the Dow should be at 54,000 to be on course with where the dollar and stock market was in 1999.
Wake up America the Dow is below 1999 levels we have lost 3/4 of our wealth in 9 years.
LOL, The Senate is about to pass the Housing Bill which will bail out mortgage companies who made bad loans and did not even get PMI payments from the bad loans to pay for them when they went south. We the taxpayers are going to foot a $300 billion bail out which is $2,000 per working person.
Senator Dodd who made this bill has had two multi million dollar house loans forgiven by Country Wide. So for a couple of million dollars the Senate is going to give these companies 300 billion dollars.
The last time this happened in the 1980’s savings and loan meltdown we lost $250 taxpayers dollars which was never repaid and we now owe $631 billion from the interest over these loans. Add in this bail out and twenty more years of not paying it back and we will have put out $2.3 trillion for this madness.
This is madness.
Inflation has the bigger impact, hands down. Interestingly, if you dig through all of the rubble, you find that the housing/financial sector problems were also caused by … tadaa … inflation (of housing prices).
The housing price problem is already correcting itself, and it seems to be about half way there. In some markets, prices are already back to where they were in 2000, before the housing bubble took off. In others, they are well on their way.
It looks like we’re ready for a cycle of correction of commodities prices, with first grains and now oil correcting rapidly. It will be interesting to see what actions the G8 takes to drive the speculators out of these essential commodities, such as raising margin requirements from 7% to 25% or 50%.
In the mean time, we all need to fight inflation by driving harder bargains on housing purchases and switching to cheaper food and fuels. Industry can help by switching from oil and gas to coal, nuclear, and renewables. Everybody can help by conserving resources, minimizing waste, and reducing pollution.
I don’t think the market dropped out of its rally because the conjecture about Freddy and Fanny made people panic. I think it reminded them that unreasonable enthusiasm was uncalled for.
Housing is very important to the economy, but housing will be fixed best when it is allowed to fix itself. Prices were too high, builders over built and buyers over bought. All of those need to finish correcting, period.
Inflation is also bad for the economy. And also needs to be dealt with more then fixed. Commodities are higher because (at least in part) of higher demand/supply ratio. The US dollar has been artificially high and globalization creates balance.
We The People, Wall Street, Businesses and our Government all need to get back to basics. Stop borrowing, pay our debts, save some money, reduce waste and consumption, produce more.
And maybe stop trying to become isolated in a global world AND stop worrying about the motes in our neighbor’s eye. Each sweep in front of her own door.
Oh, and don’t buy stock right now.
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Paul, God bless your positive outlook re: the dollar is “less weak” and that oil dipped below $140 – I guess we’re all being conditioned by this perfect storm that is underway and you’ve found some “good news.” But when you say “Don’t fret about Fannie & Freddie?” I’ve got news for you – FRET! We’ve already lost our secondary market/securitization of non-conforming loans and now conforming loans are being threatened? FRET is probably appropriate! We’re in a consumer confidence-less environment right now and I can appreciate trying to find some “silver lining” in our gloomy economy, but sending our housing/financial sectors back into the dark ages is worth fretting about.