SEARCH BLOG: ECONOMY
On July 29, 2006, I wrote:
Here's what is not being said: the existing home market is far worse than the new home market. People who have lost some of those 1.2 million jobs can't sell their homes and can't pay for them. Watch for an avalanche of repossessions and then see what happens to the housing market.Yesterday, CNNMoney.com wrote:
Once again - Ben Bernanke, you have screwed the pooch!
On September 18, 2007, I wrote:
NEW YORK (CNNMoney.com) -- Existing home sales sank 8 percent last month, to the lowest pace on record, according to the latest reading on the state of the battered real estate market released Wednesday.
Sales of existing homes slowed to an annual pace of 5.04 million in September, compared with a revised 5.48 million sales pace in August, according to the National Association of Realtors.
Last month's decline marks the largest since the current measure of existing home sales - which includes multiple-family dwellings - began in 1999.
As expected, the Federal Reserve cut its funds rate to 4.75%.So the only question is how long will it be before I will be able to write:While this give a psychological boost to Wall Street, the fundamental problems in the housing and credit markets remain. This may help some with adjustable rate mortgages or home equity lines of credit, but the new and used home sales will not miraculously respond with significantly greater activity.It's the right direction, but as I said previously, I think a 4% rate is really what is needed to turn the economy back on the right course. The rate may not get there, but more cuts will be needed with employment rates down and foreclosure rates up.
Unless the bottom end of the housing chain can purchase homes, the rest of the chain will stay slack... and that will continue to be a major drag on the economy.
"The Federal Reserve lowered its lending rate to 4% in response to the collapse of the U.S. housing market and massive numbers of foreclosures that threaten the banking and mortgage sectors."Oh, it will get there, but the Fed will try taking it in chunks.