The Home Price Mess is the GOP Key

Stocks dropped today on yet another lousy housing report. This is a problem that is just not going to go away anytime soon and even if there was a quick fix the Obama administration would not be able to identify it-let alone resort to the free market principles required to allow it to work.

Liberals are holding fast to their silly explanations for what caused the economic slump, market crashes and high unemployment. They blame Wall Street or resort to their tired mantra of “tax cuts to the rich”. It is sad. Among the voters this just shows a real deep lack of intellectual curiosity. Among the elected politicians it shows a dangerous ignorance.

We’ve already covered the ripple effects of sub-prime loan packages that destroyed Bear Stearns and Lehman along with many smaller players here: LINK

But let’s just focus on home prices and home owners for a minute.

How bad is it?

Let’s look at some charts. The Case Shiller Index / (Prices in real terms) and one other chart show a bubble peak in Q1 2006 with prices now reflecting 2000 levels. See here LINK and here LINK. Or just Google it and find your own data source. (Note: Chart one reverts to default and you need to play with it to isolate the decade.)

We are now moving back closer to the long term average. There is no guarantee that we don’t dip below that line at least for a while.

By that measure almost every home purchased in these last 10 years is worth less today because the buyer paid more than the long term trends and averages (bubble prices). Those buying near the 2005/ 2006 peak may be experiencing devastating declines. Not all these buyers were “flippers” or scammers. Many were hard working kids who’d saved for a down payment and jumped in fearing that prices would go even higher. Everyone was victimized by this insane liberal housing policy. Some are or will be bankrupted by it. Some will have credit scores destroyed. Kids college plans may be altered. Retirement postponed. The construction industry has been destroyed. Every sector of the economy is feeling the fallout. It will take years to repair-longer if Washington keeps making the same mistakes.

There are some topics that may not appear on your radar screen. Is there anyone unaffected by housing prices. Is there anyone reading this who does not own a home or plan to?

With the remarkable exception of Barney Frank, Democrats are refusing to acknowledge that Fannie Mae and Freddie Mac need to be shut down. Most of them are trying to keep or expand CRA. LINK and LINK

This year’s elections are crucial. We need to punish the Democrats for supporting Obama’s socialist agenda and we need to be sure the GOP embraces some core principles best outlined by the various TEA parties and the “Contract From America”. LINK

We need to hold their feet to the fire and we need to get informed, get involved and get ready for 2012 and beyond. Stay angry.

Pat Duggan

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Published in: on August 24, 2010 at 4:10 pm  Leave a Comment  
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