Happy listings!

It seems to be a common theme for those in the public eye to over promise and under deliver. The problem we are facing is a growing money supply even in the face of higher rates, which theoretically should slow growth down. Now that M3 isn’t published, who knows the actual figure and rate of the money supply growth. Even taking a cursory look at M2, raising the rates has not dampened the credit spending by many Americans. But with the recent open market activity, the Fed is reversing course. Initially they stated that the subprime market was contained. It is very apparent that this has the potential of bringing the economy into a recession.

Here is the issue. Anyone studying this market realizes there is a bubble in many metro areas. The bubble was fueled by lax lending standards and easy credit. Wealth created by this bubble was pumped into the economy. Consumption is two-thirds of the economy. So a decline in housing wealth will reverse everything for this primary reason; folks are now trying to buy homes on more conventional terms meaning incomes are starting to matter. As you’ve seen from the multiple examples here and elsewhere, incomes are incredibly disconnected from current market rates. Hence prices need to decrease or incomes need to explode in the next few months.

The government seems to have no problem running up massive deficits. Somehow they keep spending and pumping money out of thin air. No new taxes and no cuts so guess where the money comes from? Can it be a dollar worth 30 percent less? Or what about under reported inflation in housing, health care, and energy.

@chessnoid,

Glad to have you on board. We have a good community here. It is interesting to look at current stats on credit cards. It seems like many consumers are using credit cards as bridge loans. That is, something is happening either with mortgage payments or monthly cost that are requiring consumers to use their credit cards at a higher rate. It’ll be interesting to follow bankruptcy numbers in the next few months to see how deep this housing impact will hit consumer wallets.

One things I like too note is that I recalled when Ben Benanke was first being inducted as the head of the Federal Reserve he had to go before congress. He stated to congress that the US Goverment needed to do something about the massive debt, social security, medicare, savings and that Americans needed to stop consuming so much and save for tommorrow.

Any feedback on this subject is appreciated. (DR Housing Bubble)