It’s becoming common knowledge that the housing market is being propped up by government.
Greenspan told us long ago that there is no bottom until housing stabilizes. But government programs have not allowed the excesses to be worked out and so we remain in a Linday Lohan economy© – every time the withdrawal pains flare up we just pop another financial pill. While many people believe that government can just print money forever, that is really not the case. The markets will put up with quite a bit of abuse but it government gets too wild with the printing presses then the so called Bond Vigilantes – those who buy government debt – will demand much higher interest rates and that will be the end of the big borrowing. Government is trying to fill the shoes of banks which have all but abandoned the US housing market but the economy is way too big for government to continue to do this. Common sense and math will certainly prevail in this matter and housing prices will fall as a result. The best bet is to stop digging a deeper hole by putting down the shovel.
