The federal government has tried every manner of strange intervention to foolishly support the price of real estate. The trend in unit sales shows very little evidence of success (see below).
Setting aside for a moment the massive stupidity of trying to uphold pricing created by a delirious and mentally-retarded credit bubble, the feds have failed in one obvious area: They haven’t been able to make the monthly mortgage payment for 15 percent of homeowners.
This wildly high number of individual financial failures makes the typical inventory of homes for sale petite and pretty. The consequences for the prices of homes is obvious. Massive new supply leads to massive new losses (see below). I don’t know what fraud they are going to think up to try to cover this up, but I know it will be as dumb as what they have already tried.
The bubble began in 1990. For the last 20 years buyers bought a scam. The terms of the scam kept getting worse and worse until 2006. How many homeowners in the United States of Mortgage Fraud are living in a make-believe world of income-not-required lending and name-your-price appraisers? When do we return to a 120-year price trend (see below) which we ran away from 20 years ago? When will trillions of unaffordable mortgage debt be written off? When do we stop sending fools in to buy both their first home and their first financial failure?
We can break the credit bubble, but we must take chemotherapy. Burn up fake debts. Slash false prices. Fire sale failed banks. Convert equity to wall paper. Convert debt to equity. Rematch the price of housing to income. Make it cheap to own or rent.
We must re-balance the economy. Simply massacre mortgage debt. Tear up all credit-bubble paper. It’s time to get to work. It’s time to get the real economy humming again. We can do that very easily. Crush, kill, and destroy credit-bubble debt and we are ready to fly upward.
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