Nick Gogerty of Designing Better Futures has come up with another of his highly entertaining and educational videos, this time focusing on a longitudinal comparison of housing prices by geographic area compared to household income. Aside from the obvious inflation in prices during the bubble years, the video should make those in the administration think if another credit bubble is just what this economy needs. The only long-term solution for our economic crisis is not to repeat (continuously) the mistakes of the past, but to focus on improving per capita incomes by whatever micro or macro means available.
Until that occurs, every ensuing "rebound" will be simply yet another asset bubble, each with an increasingly shorter duration, until the mechanisms to reflate the bubble expire. However, if the bubble approach to economics is overturned there will be huge losses for Wall Street and a large percentage of the already decimated banker community will end up collecting unemployment benefits. And neither Larry Summers nor Obama's other closet advisors want that outcome. So you might as well prepare to see a sequel of this chart in 5 years, when the HHI is the same, but the house price amplitude is a multiple of the one exhibited here.
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