One, housing prices are simply too high.  It seems the speculating and the easy mortgages managed to drive up the prices faster than simple free market forces would have normally.  Just look at a graph and see the rather steady curve followed by the spike in the last few years. 

And now all the bailouts.  For what?

I would like to think the Government and our politicians care about regular people and their housing.  But I really doubt it.  The simple reality is that the government is coming in to the "rescue" to stop, slow down or minimize the drop in prices of Real Estate.  You see, this precipitous rise in real estate has been a huge stealth increase in property taxes.

Am I saying that Government oversight turned a deliberate blind eye to the frenzied speculating and mortgage lending to allow these rising real estate values to enhance government revenues?  I can only point out the obvious, but to state frankly that collusion was involved is a waste of time.  However, one other obvious thing is that Media is not connecting these dots either.
 
A friend in the Mortgage business explained to me that these sub prime mortgages were designed specifically for real estate speculators; people who had no intention of being in a house long enough for the inevitable rate increases to kick in.  The speculator would "buy" the house with no down payment and then put it immediately up for sale, at a considerably higher price of course.  Then perhaps a working family needing a place to live would come along and buy it allowing this speculator to make money out of nothing.  The speculator would sometimes do this with no real capital investment of his own, none.  I am not trying to judge the fairness or morality of this practice at all. I'll leave that to others.

So how did these sub prime mortgages suddenly become available for working families or people just starting out?  I don't know.  I can only point out that the result was that more homes were bought and prices continued to rise.  My mortgage banker friend did tell me that these sub prime loans were never intended for people wanting a long term financial arrangement on a house they intended to live in, accumulate equity and be part of the great American Dream of Home Ownership. 

So who was minding the store?  I'm supposed to believe that all this happened behind the backs of Bank regulators and our Congress? Oh well, maybe it did.

As for the notion that now all these sub prime mortgages are being "bundled" and then sold to larger finance houses and then invested into government bonds is just too surreal to wrap my mind around. But then, knowing that a banker always makes money using other people's money, no money at all or negative money makes it all simple again.  Of Course! Eureka! Yet, I have to wonder why OPM (Other People's Money) is not an acronym I see in scholarly reports about the Housing meltdown?  This doesn’t take into consideration what I hear about are the mean old industry "fringe" lenders taking advantage of people who didn't know any better when signing up for a "it's too good to be true" Mortgage.

But, meanwhile, back here on the ground, my purchasing power has been cut by more than in half. Any tax cut received has been sucked back up in energy costs and housing. The ethanol scam is now putting pressure on food costs, further eroding my purchasing power and those are just the highlights.  Property taxes are up and now the lenders are giving a five year reprieve on the mortgage rate hikes. By the way, that allows the banks to continue receiving the hard earned money of working families while I seriously doubt any of them (the families) will be building any kind of real equity.  I do see a trend here, but to state it plainly would of course "smack" of conspiracy theory.  Conspiracy theory indeed; that reminds me of one more thing I would like to point out about purchasing power.

Yes, the power of my dollar to buy has been severely curtailed, but it seems the purchasing power of the ones who purchase my labor or services and perhaps yours, too, has been enhanced proportionally.  Put simply, housing, energy and property taxes have risen way faster than my ability to stay even, dollar for dollar, while the value of my work takes the hit.  How about your work?  I thought so.  But then again, even the speculator has to work harder now (psssst, that was a joke).

Still, life is good, no point letting it all get you down.  Besides, no one likes a sore loser.  And yes, we losers have a lot of company these days, perhaps none more than the simple saver.  The return to cheap money will cheat the saver out of even a decent return for his diligence. 

Nonetheless, live long and prosper to the speculator.