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We didn't learn from the housing bubble?
15 years ago
For a little bit of context, here's an article on forbes.
http://www.forbes.com/2010/08/27/ay.....k-watkins.html
It appears that the U.S. government hasn't learned its lesson from the last housing bubble that burst. At least they must not have if they want to give home buyers more direct subsidies this time.
Really!? The government created this mess by indirectly subsidizing homeowners (by allowing unreliable people to get loans), and now they want to do the same thing again, more directly!?
The last housing bubble grew as a result of the fed backing loans to unreliable home buyers. Demand (and therefore, prices) increased. When these people couldn't pay back their loans, they tried to sell. Prices plummeted. The bubble burst. People who couldn't pay back their loans now had houses that were worth a lot less than they'd bought them for, and had loans to pay back. Disaster.
And the government wants to do this again!?
Even if they learn from their mistake with the loans and just give a direct subsidy, they're still artificially increasing demand. If you take the loans out of the picture to prevent the collapse, you'll still get prices rising uncontrollably for the same reason that they're rising uncontrollably in the medical industry. Subsidizing buyers creates artificial demand.
If we pursue this course, the housing market is going to follow a similar course to that of the medical industry. Prices are going to keep rising, the government is going to continue subsidizing home buyers so they can afford the more expensive houses, and this cycle will continue until we wind up with an Obama Jr. campaigning to give us socialized housing since nobody will be able to afford it.
We need to free the housing market so the forces of supply and demand can work to make housing affordable. Otherwise we'll see the same disaster that's happening in the medical industry happen in the housing market someday.
http://www.forbes.com/2010/08/27/ay.....k-watkins.html
It appears that the U.S. government hasn't learned its lesson from the last housing bubble that burst. At least they must not have if they want to give home buyers more direct subsidies this time.
Really!? The government created this mess by indirectly subsidizing homeowners (by allowing unreliable people to get loans), and now they want to do the same thing again, more directly!?
The last housing bubble grew as a result of the fed backing loans to unreliable home buyers. Demand (and therefore, prices) increased. When these people couldn't pay back their loans, they tried to sell. Prices plummeted. The bubble burst. People who couldn't pay back their loans now had houses that were worth a lot less than they'd bought them for, and had loans to pay back. Disaster.
And the government wants to do this again!?
Even if they learn from their mistake with the loans and just give a direct subsidy, they're still artificially increasing demand. If you take the loans out of the picture to prevent the collapse, you'll still get prices rising uncontrollably for the same reason that they're rising uncontrollably in the medical industry. Subsidizing buyers creates artificial demand.
If we pursue this course, the housing market is going to follow a similar course to that of the medical industry. Prices are going to keep rising, the government is going to continue subsidizing home buyers so they can afford the more expensive houses, and this cycle will continue until we wind up with an Obama Jr. campaigning to give us socialized housing since nobody will be able to afford it.
We need to free the housing market so the forces of supply and demand can work to make housing affordable. Otherwise we'll see the same disaster that's happening in the medical industry happen in the housing market someday.
