Economists and politicians alike have mulled over what to do about the housing market. Should the government intervene or let people take their medicine? Kevin S. Price of Interlake Capital Management
opts for the medicine:
Only in the most short-sighted sense is a bottom in housing (which we intend to mean a stabilisation in the price of residential real estate) necessary or good. A further purging of the truly perverse excesses that have barnacled the American economy over the last few years would serve us all better in the long run. Less leverage. More affordability. Higher savings rates. More discretionary income for other stuff. More productivity.
No self-respecting elected official will touch this argument, and we understand why. But let’s be honest: That doesn’t make it any less compelling.
He’s right that no politician will touch that line of reasoning, especially in an election year. However, in a time where only 30% of Americans say they are going to spend their rebate checks, maybe people are ready for some straight-talk. (Probably not.)
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