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View Diary: Housing Crisis, Potential Recession Loom Large in Battleground States (174 comments)

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  •  Yes, thank you. (2+ / 0-)
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    opinionated, JG in MD

    The employment situation is one of the concerns I was trying to get at in my posts. If this were "only" housing, I'd say the solution would be a simple free market one (if incredibly ugly).

    I'm just not seeing it as being that simple... and I see some viable neighborhoods getting torn apart in the meantime.

    The law is slacked and judgment doth never go forth: the wicked compass about the righteous and wrong judgment proceedeth - Habakkuk 1:4

    by vox humana on Tue Nov 27, 2007 at 09:51:45 AM PST

    [ Parent ]

    •  Unfortunately... (6+ / 0-)

      the solution was never to let the bubble inflate in the first place!  Free money via the Fed rates less than inflation and the complete lack of regulation inflated the bubble.

      Now we are all going to pay, from the people will ruined credit ratings, to the people stuck with huge mortgages based on inflated prices who will be underwater for years, to homeowners with paid off properties who are paying higher taxes, to people stuck in the aforementioned deteriorating neighborhoods, to the generalized economic malaise (if not recession or depression) that is going to come from the hangover.

      I don't see any political solution now, because the basic problem in a massive credit bubble is unserviceable debt tied to unjustified "asset" prices.  Worse than that, we have a hollowed out economy that has become too reliant on selling houses to each other and debt to foreigners.  I think the deeper structural problems of the economy will begin to manifest on a large scale that will be worse than the immediate effects of the housing bubble.

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