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The post is a little long today, but I think you will agree, it's worth the read. After all, if affects you.
U.S. News ─ Housing continues to take a pounding and economists continue to find work making up new reasons why. However, having predicted the downfall of housing and reporting the reasons for the sudden drop some two years before the present economists became interested, we need to move on to the next phase of the great charade.
A short re-cap may be in line for some of my new readers. In summer of 2003, the coroner was summoned to check the pulse of the U.S. economy, which was highly suspected of being dead. The alert coroner detected a faint pulse and immediately sent for the good Dr. Greenspan, who prescribed lowering the dose of interest rates to 1% and starting a continual I.V. of American Greenbacks until such time the patient arose from the grave.
Responding to such treatment America stumbled back on to its feet and borrowed money with the fervor of a day after Thanksgiving clearance sale. After all, interest rates that low had not been seen since 1958. This is often referred to as the "time warp" or "any port in a storm" approach to economic revival. It is also termed the "unsustainable" or "life support" method. The patient is going to die, just not as soon.
Housing caught fire and home construction grew on the bodacious profits of home construction for as long as home construction was profitable, which wasn't long. Thus, the moniker "unsustainable," a term banned from FED meetings.
The new scam...er, direction, did work long enough for Washington to report a complete economic recovery bolstered by timely and responsible FED actions that had successfully mired Middle America hopelessly in debt. Together with the brisk war economy, things were definitely looking up for Americas' most wanted...I meant to say, most wealthy.
Any economist worth their salt could see the wreck coming, and boy it was a doozy. The insurance carrier for this contrived carnage was, who else, America's Middle Class.
Alan "Cash" Greenspan and "Bronco Ben" Bernanke predicted a soft landing for housing. They also assured us that the housing sector was not large enough to bring down the economy. So much for requiring our FED Chief to have a handle on economics 101. But, the massive housing failure wasn't their fault, the banks "done it,"