Hopefully something to keep us a little more on track.

"The bear market continues; home prices are back to their March 2004 levels,"

You better not blink as they go by, because those 2001 prices will be here before you know it.

I predict a bottom when you get a condo with your happy meal.

Anonymous @ 9:24/28am that's perhaps a rhetorical question isn't it?

No jobs. Period. Depression.

Now stating that, every worker should prepare for this contingency--that will no longer be working.

However, I assure you that some people regardless of age when faced with starvation, will in fact work until they die, no matter what they are doing.

...which may involve them pushing on a wheel that generates enough electricity to keep the plasma t.v. on that they watch while pushing the wheel...

Recall additionally that these are repeat resales with no consideration for the original sales price or any decline in thte first resale.
The S&P/Case-Shiller Metro Area Home Price Indices use the “repeat sales method”
of index calculation – an approach that is widely recognized as the premier
methodology for indexing housing prices – which uses data on properties that have
sold at least twice, in order to capture the true appreciated value of each specific sales
unit.

Slave Revolt, simply perfect. A supply siders wet dream to a tee...

--
Thanks, grower for the hallow in the sky question.

Jas

"So how do we keep these people gainfully employed?"

WE don't - THEY do - when are we going to stop being Mommies to other adults?

It's time for a snip for everyone's favorite neighborhood philospher...mr baudrillard

/snip
For example: it would be interesting to see whether the repressive apparatus would not react more violently to a simulated hold up than to a real one? For a real hold up only upsets the order of things, the right of property, whereas a simulated hold up interferes with the very principle of reality. Transgression and violence are less serious, for they only contest the distribution of the real. Simulation is infinitely more dangerous since it always suggests, over and above its object, that law and order themselves might really be nothing more than a simulation.

/end snip

so, in conclusion, prepare for another crisis...

Byz....

Let them decide. There are not any good choices here anymore. I took to gardening 10-years ago - I also do tractor work. Many older guys like me are working at fast food joints - it's not pretty or glamorous, but it keeps the wolves at bay. The idea then is to live cheaply - THAT I DO know about!

foilhatgrrl

wi represent!

Cobradriver, that is unreal.

Some comments I read on CR are bleak. It goes something like this: feds are incompetent or worse, no stimulus package is enough due b/c states can spend money fast enough or retrain workers fast enough so continued downward spiral in financial markets and economy is inevitable leading to complete financial and social collapse (gd2). Some who make such comments gleefully boast about how they have prepared for such a scenario.

It seems to me that the government will not allow this to happen and is taking the steps necessary to avoid gd2. The combination of: virtually zero fed funds; various rescue packages (aig, gse's, banks, extended unemployment benefits, states soon); obama's stimulus package; low gas prices; fed's buying of asset-backs (credit cards, student loan debt, etc.) make for a powerful counter-balance to the housing mess.

So what does CR really think about the current mainstream forecast for a stabilizing economy? Will we have recovery in 2010?

Black Star Ranch(Unrated) writes:
Byz....
Let them decide. There are not any good choices here anymore.

You need to think this issue over some more.

It seems to me that the government will not allow this to happen and is taking the steps necessary to avoid gd2. The combination of: virtually zero fed funds; various rescue packages (aig, gse's, banks, extended unemployment benefits, states soon); obama's stimulus package; low gas prices; fed's buying of asset-backs (credit cards, student loan debt, etc.) make for a powerful counter-balance to the housing mess.
Jackrabbit | 12.30.08 - 9:55 am | #

There are several flaws in your scenario.  The first is your assumption that all crises are the pervue of government and the corollary that government can do something effective.  Second bad assumption; either government nonparticipation or merely ineffective partcipation will lead to GD2.  Third and most erroneous is your assumption that we are experiencing a "housing mess."  The real estate implosion is a symptom not a cause.  Financial engineering practices were tested to destruction with predictable results.  What you are suggesting is that more financial engineering is a cure not a disease.  Might as well prescribe leeches for a case of massive blood loss. 

"does the state let surplus labor starve?"

Of course not when possible. There may be a time though when "the state" ISN'T around to babysit. Many people in the past 50-years haven't used the brain God gave them to find a way out of the chaos - look at our state now - there's never been a bigger percentage of idiots roaming THIS continent - and we voted them in.

All I'm suggesting is it's time for people to be doing a lot more thinking about tomorrow before burying their head back inside their arse for the evening.

Jackrabbit(Unrated) writes:
It seems to me that the government will not allow this to happen and is taking the steps necessary to avoid gd2.

You missed the part where there's "many a slip between cup and lip". Policy is only as good as the people who frame and implement it.

The problem is debt levels relative to wages, not house prices.

The combination of: virtually zero fed funds; various rescue packages (aig, gse's, banks, extended unemployment benefits, states soon); obama's stimulus package; low gas prices; fed's buying of asset-backs (credit cards, student loan debt, etc.) make for a powerful counter-balance to the housing mess.

What will you say when the Treasuries market cracks? I mean, get a response ready. Don't tarry.

foilhatgirl...yep, another cheesehead here. The weather is driving me crazy but it does have its benefits... The past few years have reinforced why I moved from CA many years ago.

We pay farmers to plow under crops as a form of price support.  Why not start paying banks to D9 REOs? 

the question stands: will the the bailouts+stimulus, etc. be enough to save us from the worst (which could maybe buy some time for necessary longer-term reforms).
Jackrabbit | 12.30.08 - 10:13 am | #

You are already assuming in the question that there exists some level of government intervention that will cure our financial problems.  There are two possibilities you are excluding; could intervention make things worse?  And could it be that no amount of intervention is enough? 

in response to jr at9.55;yes to your question. sooner or later all this tarp and other monies will find its way into the general economy.mish would have you believe credit destruction(currently going on )will out pace credit creation. rest assured your govt. will print money no matter the consequenses to avoid deflation.it is far too painful for debt holders as debt is paid back in harder(worth more)dollars.since 90% of us owe more than we are worth, this will lead to years and tears of painful debt repayment and a stagnant economy.this your govt. WILL NOT allow. i promise.

There are two possibilities you are excluding; could intervention make things worse? And could it be that no amount of intervention is enough?

Rob Dawg,

Doing nothing is NOT an option if the debt money system is to survive. Absent credit growth, the system would implode. No joke.

CR - Speaking of charts - you may want to plot monthly time series of the HPI change relative to the peak 2004-2008 for each MSA. It is quite interesting to see how similar the decline trajectories look for PHX, Las Vegas, SF, LA, SD, Miami.

From the last thread:
Anonymous (Ken Cooper) writes:
Brilliant - I hadn't thought of seeding it with 'hitler' and 'nazi'. Perhaps we could break godwin's law?
Anonymous (Ken Cooper) | \t \t \t \t12.30.08 - 12:28 am | #
------
Yes, Ken, I started putting other "bad" words into your filter just to cut down on some of the noise.

Unless it is something that almost everyone agrees should be filtered out (e.g. Market/Investing Spam), I see you haven't to come up with a filter list, but like AdBlock, having a list that could be optional would rock.  ^_^

Doing nothing is NOT an option if the debt money system is to survive. Absent credit growth, the system would implode. No joke.
Angry Saver | 12.30.08 - 10:21 am | #

Liquidity cannot cure solvency.  Liquidity cannot replace velocity.  The banks can and will hold cash longer than the Fed can print.  The Great Deleveraging is here and it is scary but not as scary as the consequences of attempting to avert the inevitable. 

The Great Deleveraging is here and it is scary but not as scary as the consequences of attempting to avert the inevitable.

backstage voice: "CUE THE INEVITABLE!"

rob dawg is one of the many reasons i lurk here (i do miss you know who )

he question boils down to this, does the state let surplus labor starve?

Before any moral or ethical considerations, I would posit no, as funding the dole is least cost in comparison to state failure (yes, even for those dirt farming for the last ten years). Viz the references by other posters to the Bonus Army march...
citizen energyecon | Homepage | 12.30.08 - 9:53 am | #

Welfare has always been more about preventing riots than wealth transfer - opposition to this was the 'moral basis' behind the early welfare reform efforts. Especially in places like Wisconsin where they paid a lot of money to get skills to people so they could be employed - keeping them on welfare would have been MUCH cheaper short & long run - the taxes these people paid for low income jobs never covered the cost of the training but did push thousands into the workforce even this jaded lib thinks the Wisconsin effort was a smashing success [and I give kudos to GOPer Tommy Thompson for initiating it].

32% price drop here since peak - Oh well, I guess I have to die in this desert tin box. If nothing else, my property taxes are getting to where I can afford them.

If I understanding correctly, everything that the GOVT/FED is doing is slowing down the collapse of the US/GLOBAL economy...
Anonymous | 12.30.08 - 10:33 am | #
Mssrs. Smoot and Hawley thought exactly the same thing. 

If nothing else, my property taxes are getting to where I can afford them.
Black Star Ranch | 12.30.08 - 10:32 am | #

that's what is supposed to happen. absent of exogenous shocks the economic system will collapse down to a stable state. price and value are too far out of alignment and the result is instability.

Rob Dawg writes:
The banks can and will hold cash longer than the Fed can print.

Hence the Fed will have to stop being Mr. Nice Guy and go Swedish on the banks.

yes r. dawg people can converse in an agreeable manner. you are correct in your mortgage nos.,the real problem lies in the garbage created as derivatives using inflated mort. values.deleverage is a bitch as many banks are finding out. my thought is that our govt. will go to the brink of hyperinflation to prevent another 1930s.short of a world war they simply have few options.govt. wont dissolve or go away we are still part a big part of the pie.

The perp walks need to get rolling in 2009. The sight of J. Dimon & K. Lewis shackled at the head of a long line may do a lot to help restore some sense of confidence.

Is this the place where I can say that Scottsdale, AZ is a completely pointless wasteland?

Wasn't it always? I did a art show there, and thought it was the poster child for cancerous growth and tackiness.

Speaking of the coming mommy state...

Who's Yo Daddy in '09 ?

Obama: The College Years - Photo Essays - TIME

Look the feds are doing their best to stem the tide and create an inflection point in the housing debacle, but they've got to bail out the CC industry here soon.
The bigger question is when do the Japanese, Chinese and Saudi cash-in and start repatriating by selling bonds for domestic investment. That'll blow the doors off the whole kaboodle. Yep.

The sight of J. Dimon & K. Lewis shackled at the head of a long line may do a lot to help restore some sense of confidence.
bearly | 12.30.08 - 10:45 am | #

The situation is much akin to late Republican Rome.  A consul or proconsul was immune from prosecution as long as he was in office.  This led to extreme abuse of office to stay in office.  With full disclosure, the bankers would be in tumbrils, not in shackles.  I assume that they will manage the situation so that the disclosure will never occur.  Buying off Obama has bought them years, and that formula will work on his successor as well.

The problem with W2 (that's WI's version of what used to be AFDC) is it only works when there's a supply of jobs to be had. It assumes one gets a job somewhere, and in the '90's that wasn't a problem. Now? One only gets so many months of "training" and then the cash is cut off...
foilhatgrrl | 12.30.08 - 10:40 am | #

There has been a lot of talk in the more progressive W2W states (Minn, Wis for example) to extend & expand training if the jobs aren't there. I have some experience w/ this from family members and there is at least the glimmer of hope that it won't completely blow up if UE goes up.

The verdict is clearly still out but it at least points us at policies that seem to be going in the right direction.

This SNL video aptly describes the current eCONomic & financial wisdom.

Bad Idea Jeans •
VideoSift: Online Video *Quality Control

We certainly don't have a shortage of "BAD IDEAS".

It must be in our GENES.

Folks, the answer is right under your nose.

17k for a new condo in Florida. Today. Now.

Now start thinking policy.

Exactly.

Rob Dawg: yes.

markets DO trump governments. markets are the aggregate decision-making of billions of individuals based on their appraisal of relative value of one good to another. when you manipulate them exogenously it hinders the ability of their participants to make sound judgments about their own lives or the future. because you've taken away any sense of security about that future, they have no recourse but to speculate in the market you've rigged. when they collectively react by withdrawing their support of a market they can no longer trust to help them make those judgments, you have to let it happen, and be ready to help.

Aren't you concerned that your recommendation for Fed reading is a little advanced for them?
Rob Dawg | Homepage | 12.30.08 - 10:51 am | #

Please, sir. I don't like this trick, sir.
My tongue isn't quick or slick, sir.
I get all those ticks and clocks, sir,
mixed up with the chicks and tocks, sir.
I can't do it, Mr. Fox, sir.

CareerBuilder usually send me jobs saying: "Find a job that pays over 100k"

Today I get one saying: "Find a job that pays over 80k"

Signs of wage deflation?

My apologies. The Condos are not new.

Anyone here read Player Piano by Vonnegut? We're possibly approaching a time when there are no jobs for all the willing and able.

RE The fed has 'got to bail out the CC industry here soon'.

Why???

Other than political corruption I mean. Bankruptcies are the solution. Let the banks that took stupid risks fail. The value of credit card losses is signicantly less than the value of bad mortgage debt. It's a smaller hit, and the lenders should be required to take it.

The credit system that we have lived in for the past decades is gone and will not come back in our lifetimes. The losses, when they are revealed, and they will have to be, no matter how much the ruling classes resist this, are simply too big. What is at risk in the derivatives trade alone is more than all the money on the planet.

"markets are the aggregate decision-making of billions of individuals based on their appraisal of relative value"

Correct. Markets are inexorable in setting price, but not decisive in making policy, which is a political phenomenon.

For example, government can subsidize prices, such as by providing public sector security for the Mid-East operations of private energy companies.

Anyone here read Player Piano by Vonnegut?
Mel | 12.30.08 - 11:01 am | #

There is actually tremendous financial wisdom in the fictional travails of Lazarus Long, the extremely long-lived space traveller in Robert Heinlein's books.

As he travels from planet to planet, it may take him several hundred years to revisit where he had earlier thrived as a businessman.  In every case all of his stashed paper assetts were always junk, due to bankruptcies, politcal upheavels, or currency debasement.  He always had to start over, because it was simply impossible to save.

A little enriched uranium was the closest thing to universal money.

Rob Dawg...those numbers echo what we're hearing from our clients. They're figuring if they can crawl through the next six months, they'll survive. (Industrials, mostly small to mid-sized, mostly private...)

Looks like we have quite a ways to go before home prices bottom out.
GloomBoom | Homepage | 12.30.08 - 11:00 am | #

And the economy to bottom - I tell my clients/customers this will be a five year ordeal if we are lucky so plan for that at least. It's not what they want to hear from 'the field'.

American history rarely had the poor storming the castle--usually because of the opiate of dreams or drugs. That's gonna end soon. By lowering standards for the armed forces, this administration has "trained" some criminals in warfare. That's gonna hurt.

--
Please understand what is really going on in the UK, the US, etc.

Quoting Roger Nightingale of UK (not the exact quote but close):

"Governments are taking the money out of the private economy and giving it to the banks and financial institutions. It is good for the banks but very bad for the private economy outside the banks."

This is an evil act equivalent to taking of the property by the government and giving it to a select group of the chosen, who happen to control the governments and the central bankers.

Let us debate this.

Jas

And the economy to bottom - I tell my clients/customers this will be a five year ordeal if we are lucky so plan for that at least. It's not what they want to hear from 'the field'.
And what if it never comes comes back?
What is plan B then?
What if we actually have to obey the Second Law of Thermodynamics?

Laissez-faire was, roughly, the traditional policy in American depressions before 1929. The laissez-faire precedent was set in America's first great depression, 1819, when the federal government's only act was to ease terms of payment for its own land debtors. President Van Buren also set a staunch laissez-faire course, in the Panic of 1837. Subsequent federal governments followed a similar path, the chief sinners being state governments, which periodically permitted insolvent banks to continue in operation without paying their obligations.[1] In the 1920–1921 depression, government intervened to a greater extent, but wage rates were permitted to fall, and government expenditures and taxes were reduced. And this depression was over in one year – in what Dr. Benjamin M. Anderson has called "our last natural recovery to full employment."

Herbert Hoover's Depression by Murray N. Rothbard

Correct. Markets are inexorable in setting price, but not decisive in making policy, which is a political phenomenon.

For example, government can subsidize prices, such as by providing public sector security for the Mid-East operations of private energy companies.
Watson | 12.30.08 - 11:10 am | #

agreed. but these short-term price floors become permanent features (it's hard to pass up free money) and in the long-term either the market goes away or prices adjust relative to the artificial constraints. and an institution always evolves to exploit the situation (i.e. corporate farming) which ends up hurting the people it was designed to aid (i.e. small family farms). minimum wage floor is even more amusing since it both inflates wages in the long term and incentivizes illegal employment.

As he travels from planet to planet, it may take him several hundred years to revisit where he had earlier thrived as a businessman.  In every case all of his stashed paper assetts were always junk, due to bankruptcies, politcal upheavels, or currency debasement.  He always had to start over, because it was simply impossible to save.
Plantagenet | 12.30.08 - 11:11 am | #

That is the story of the human race - you can't save today's 'production' for tomorrow's 'consumption'... all you can do is defer consumption today to buy a claim (a call if you will) against production of consumables in the future... if the 'call' isn't honored or the production isn't there (for whatever reason) then you are screwed. THAT is the true essence of ALL saving & investment. It is a fundamental that seems to be missed by just about everyone and for the life of me I don't see how or why it is so hard to understand.

BTW I did not learn that in econ class - I learned that at the foot of my father as a child. Oh and I also read Heinlein - terrible author, interesting stories.

The current financial debacle is really not a “liquidity” crisis as it is often euphemistically called. It is a crisis of overgrowth of financial assets relative to growth of real wealth—pretty much the opposite of too little liquidity. Financial assets have grown by a large multiple of the real economy—paper exchanging for paper is now 20 times greater than exchanges of paper for real commodities. It should be no surprise that the relative value of the vastly more abundant financial assets has fallen in terms of real assets. Real wealth is concrete; financial assets are abstractions—existing real wealth carries a lien on it in the amount of future debt. The value of present real wealth is no longer sufficient to serve as a lien to guarantee the exploding debt. Consequently the debt is being devalued in terms of existing wealth. No one any longer is eager to trade real present wealth for debt even at high interest rates. This is because the debt is worth much less, not because there is not enough money or credit, or because “banks are not lending to each other” as commentators often say.

Can the economy grow fast enough in real terms to redeem the massive increase in debt? In a word, no. As Frederick Soddy (1926 Nobel Laureate chemist and underground economist) pointed out long ago, “you cannot permanently pit an absurd human convention, such as the spontaneous increment of debt [compound interest] against the natural law of the spontaneous decrement of wealth [entropy]”. The population of “negative pigs” (debt) can grow without limit since it is merely a number; the population of “positive pigs” (real wealth) faces severe physical constraints. The dawning realization that Soddy’s common sense was right, even though no one publicly admits it, is what underlies the crisis. The problem is not too little liquidity, but too many negative pigs growing too fast relative to the limited number of positive pigs whose growth is constrained by their digestive tracts, their gestation period, and places to put pigpens. Also there are too many two‐legged Wall Street pigs, but that is another matter.

Growth in US real wealth is restrained by increasing scarcity of natural resources, both at the source end (oil depletion), and the sink end (absorptive capacity of the atmosphere for CO2). Further, spatial displacement of old stuff to make room for new stuff is increasingly costly as the world becomes more full, and increasing inequality of distribution of income prevents most people from buying much of the new stuff—except on credit (more debt). Marginal costs of growth now likely exceed marginal benefits, so that real physical growth makes us poorer, not richer (the cost of feeding and caring for the extra pigs is greater than the extra benefit). To keep up the illusion that growth is making us richer we deferred costs by issuing financial assets almost without limit, conveniently forgetting that these so‐called assets are, for society as a whole, debts to be paid back out of future real growth. That future real growth is very doubtful and consequently claims on it are devalued, regardless of liquidity.
-Daly

Why, specifically, is there any reason to believe that government/society will be overwhelmed to point of total collapse? Why is it that some CR posters think it's prudent to prepare for such a collapse, making comments to the effect that: "I'll be prepared for the rioting and mayhem"?????
Jackrabbit | 12.30.08 - 11:20 am | #

There is no reason to believe collapse is inevitable but every coordinated effort to date has in many peoples' opinion pushed us closer.  Everything I need to know about the economy I learned in the aviation industry.  My test pilots were the best of the best.  They still wore parachutes.  Indeed the more prepared we all were for worst cases the less likely it was that we'd face them.  We've tested some financial theories to destruction.  In this case it appears that both leverage and derivation don't work as they were supposed.  That means we have to deleverage and unwind.  Just how much are you planning on spending to unwind the $182.2 trillion outstanding notional value in US derivatives? 

Six Degrees of Kevin Bacon:
Six Degrees of Kevin Bacon - Wikipedia, the free encyclopedia

Madoff’s Latest Victims: Kevin Bacon and Kyra Sedgwick
Madoff’s Latest Victims: Kevin Bacon and Kyra Sedgwick -- Daily Intel

foilhatgrrl writes Is this the place where I can say that Scottsdale, AZ is a completely pointless wasteland?

...and then she gets back to scrubbing the Pabst Blue Ribbon stains from her 50-year-old Bayview bungalow.

Sorry to say, but if prices drop any further out there, I'm leaving you here and I'll be off to Snobsdale.

"Also Tuesday, GMAC said that as a result of the funding, it will lower its minimum credit-score requirement for retail consumers to 621 compared to the 700 minimum level set two months ago."

LOL. I wouldn't lend to them without a backstop or sufficient risk premium either. The funny part is that the behavior that made them a bad debtor in the first place doesn't suddenly go away by giving them a loan. In the end you can't trust a person you can't trust.

“an institution always evolves to exploit the situation”

And so our presumably democratic government must react periodically to tweak economic policy. It’s pretty clear that economic policy can’t be left solely in the hands of private actors.

--
"who said in the face of the 1930s liquidate ,liquidate ,liquidate,."

robert,

Andrew Mellon of very famous banking family. He was the Treasury Secretary. Whether one likes it or not, he was right. Now, we have softies in power. Spoil, spoil, and then spoil some more. That is how a nation breeds doomers. And we have our Baby Doomers in power now.

Jas

dryfly said: "Thank you Sebastian - I'd been expecting that. Be interesting to see if it moves product & at what price.

You having a good holiday down in NC?"

An excellent holiday, my friend, thank-you for asking. Far fewer cases of hypothermia and frostbite than in your neck of the nape.

I'm not calling the bottom for the automobile market, either, but clearly as money and credit become available things will start to move...even if it is at a glacial pace.

Sebastia

We followed him at a safe distance. Hoping he would lead us to the packs lair. Stopping at the local International House of Pancakes we observed him as he slid into a booth already occupied by others of his species.

We had no doubt of who they were as they all were wearing T-Shirts from bands who, the last time they had wrote or performed anything new was at least 30 years ago.

--
"I'm not calling the bottom for the automobile market, either, but clearly as money and credit become available things will start to move...even if it is at a glacial pace."

Sebastian,

I hope that you have learned some humility after being blind to the reality for so long.

Some of us know you for lot longer than others. I will report if I detect any progress.

Jas

I'm not calling the bottom for the automobile market, either, but clearly as money and credit become available things will start to move...even if it is at a glacial pace.
Sebastian | 12.30.08 - 11:45 am | #

Ya it will take time to fully bottom - not sure what the terrain will look like on the other end of the valley but there will be an 'other end'.

Likewise, the rise in house prices is a claim against future production. If future generations don't experience real growth, the price is unsustainable (as we are witnessing).
Broward Horne | Homepage | 12.30.08 - 11:51 am | #

Ya well maybe someday we'll all be sadder and wiswe instead of just sadder.

I think molotov cktls will be my 2009 drink...

cd | 12.30.08 - 11:55 am | #

Shaken or stirred?

Cobradriver writes:
"We are going to be crushed here in Florida."

Any word on those luxury tower condos on the river in Ft. Meyers. Originally sold for +$500K; by Oct. '07 you could roll bowling balls down the lobby any time of day. Must be caked with dust by now.

Also curious whether the brokers are still flying all those UK, Deutsch, Swiss and Canadian flags out front.

Two more bottom-feeder occupations that may go TU:

Virtual Mansions developer

Sky-dining entrepreneur

Re the latter...they strap in your butt & hoist you up 100 ft. for a gourmet dinner with wine (and no bathrooms). A seat at the table costs about $500.

Priceless.

I beg to differ on average credit score in U.S.

just did a sampling of large S.Calif credit applications this month..
cd | 12.30.08 - 11:55 am | #

I can see 723 as a possible median. There are large sections of the US with better credit scores than Cali or Florida - I can't find the data now but remember seeing it a while back. FWIW Texas had the worst credit scores - not sure why that would be but it was. The Dakota's & New Hampshire had the best... The difference between best & worse was pretty surprising.

Dawg, agree on the solvency point, but liquidity is the only potential replacement for velocity. MV = PQ
Dirk | Homepage | 12.30.08 - 12:14 pm | #

but increasing money supply doesn't do anything if that money is withheld from the money markets. a bank can save just like an individual can, and for exactly the same reasons. attempting to 'force' the money out with irrational interest rates may or may not help, as the agent can always choose to allow the wealth destruction anyway, and continue to withhold its savings.

Why does everyone seem so negative? We're moving a lot of people from nonproductive pursuits like realtor and mortgage broker to something else.

We're greatly reducing the cost of living. The bigtime winners in this will be people with little or no debt, who live in the (former) bubble markets, and who have decent jobs. They will be able to live near work and relatives if they want.

In places where a home was $5000 a month in 2006, it will soon be $1800-2500. That's a gigantic relief to employees and employers. More people and jobs will move to LA, SF, and Miami over the next several years. They will especially be doing mid to high wage jobs, because the people doing low wage jobs were primarily renters.

If you're a renter in CA who is just about to get married and both of you have jobs, it's massively better than 2004-2007.

If I read CS right; SF is back to 2002.
Wonder when my renter will move back into the market. He is a contractor and who sold out at peak, just like we did.
Just snowshoed up to the RR tracks from the cabin. Great snow up here now so all you skiers call in sick, strap the skis to the car and come get some runs in. BTW California is toxic. Please stay away and drive housing prices down for us.