Thursday, September 2, 2010

Propping up house prices isn’t useless…

Home truths for complacent economists

..it's good for the banks (and of course we need a financial system - read "THIS financial system" - don't we?). US tax credits pulled forward housing demand, which of course is slumping with the ending of the credits. What was achieved by the credits? Well, they enabled sellers to get a higher price, courtesy of the taxpayer. This was good for the banks holding the mortgages that otherwise would have been underwater. But it also meant that buyers paid more than they otherwise would, so they'll lose when they sell. And what about the banks etc. who issued those new mortgages? Not to worry, they're insured by Fannie/Freddie/Taxpayer. Is the government propping up the market primarily for banks or for homeowners? I think it's the former. (Article ends with a bleak outlook for the economy.)

Posted by icarus @ 10:14 PM (841 views)
Please complete the required fields.



One thought on “Propping up house prices isn’t useless…

  • The house always wins, with no mention ever of the billions earnt and consolidated whilst the bubble was forming.

    A tiny oversight. The winners got the bail outs. The losers got the hard reality of impending debt and dwindling equity.

    The answers to mysteries always comes from the question of who stands to gain?

    Reply
    Please complete the required fields.



Add a comment

  • Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
  • Please note that any viewpoints published here as comments are user´s views and not the views of HousePriceCrash.co.uk.
  • Please adhere to the Guidelines

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>