this is as good a place as any to start -- a marketwatch story on the latest US home-sales data:
"WASHINGTON (MarketWatch) — Financial markets overreacted to the news Wednesday that U.S. sales of new homes fell about 17% in February to a seasonally adjusted annual rate of 250,000, a record low and quite a bit worse than the 290,000 rate expected by the MarketWatch survey of top forecasters."this is a case of 'you had to be there' to appreciate the clusterfuck that eventually became the collapse of the housing bubble in 2007. the unmitigated greed that characterized the times was stunning in its brazenness and heedless exuberance. buy this and flip that was the national obsession, because prices were heading up like a rocket, and the sky was the limit.
no one, no where, saw the end coming -- or dared even try to talk down the exuberance that was stampeding all the lemmings of the nearest cliff.
i recall watching a UCLA economist on UCTV back in 2006, the university network shown on satellite TV, talking about housing prices in california. he assured the audience at his presentation that the market wasn't in a bubble situation, that the fundamentals were sound, and that any overheating could be dealt with in a calm and rational fashion -- without a wholesale meltdown of the market.
he seemed like a reasonable voice, gave a nice, credible presentation which probably convinced most of his audience. but it was all bullshit -- totally wrong, totally missing the most obvious evidence that required no academic credentials or inside industry knowledge:
housing prices were rising beyond any corresponding increase in the value of the assets themselves. that is, these houses, while doubling in price, were still the same houses on the same streets -- having undergone no improvement that would explain or justify the rising valuation. how could this not only be sustained -- how could it be explained?
indeed, there was no good explanation. it was merely a bubble, a mindless run-up in prices which at some point was bound to collapse -- leaving the majority of people taking huge losses, while the insiders who ran the scam came about with gigantic paydays.
while the government came in to rescue the big bankers by socializing the toxic mortgages -- and adding them to the national debt -- there was no rescue of the people who got caught out in the middle with underwater mortgages. they either had to pay or lose the properties they'd bought.
some of them thought they were wheeler-dealers, playing the market and making a killing, while others were just trying to be a part of dubya bush's "ownership society", but either way, their fates were similar -- no bailouts for the average person, while the banksters and the shareholders still hold tons of bad debt, though they refuse to take a "haircut".
when all the houses are valued at what they're worth, we'll be making progress. and once all the bad debts the banks hold are marked to market, and the chips are allowed to fall where they may, then maybe we'll finally have cloture. not before -- and maybe not ever!