Monday, June 06, 2011

Dean Baker: "Dan Balz and the Washington Post STILL Don't Understand the Housing Bubble"

This is as clear an explanation of why housing prices collapsed, and why they will continue to fall for a while, as you will ever read.

1 comment:

Anonymous said...

Sort of related is Walter Russel Mead's "The Death of the American Dream". Long, but worth reading.

June 2, 2011
The Death of the American Dream I
Walter Russell Mead

June 3, 2011
The Death of the American Dream II
Walter Russell Mead

For eighty years we have defined the American dream as an owner occupied family home, preferably with a nice swathe of crabgrass-free lawn around it. The home mortgage was the centerpiece of a society of consumers based on debt-financed living. It was life on the installment plan. The latest downturn in the housing market is one more grim signal that in its current form, the American Dream is going the way of the dodo.

. . .

This isn’t the first time the American Dream has died. The old dream — your own farm rather than your own home — once dominated American culture, politics and family life as much as the family home ever did. The slow and painful death of that dream was one of the country’s core preoccupations in the first half of the twentieth century. The death of the new dream is likely to be a big deal as well.

. . .

Part of it is the breakup of the blue social model. In the heyday of the old economy, the average American job was long term — lifetime employment in the car factory, working for the phone company or the local bank, or working for the government. A thirty year mortgage with steady payments made a lot of sense in a world of lifetime employment. Today’s careers are more volatile — even when things go well there are ups and downs and, often, spells of unemployment between gigs.

. . .