And this is the biggest news of the week for people like me who are hoping home prices here is Southern California come down…. way down.
This one from Bernanke was the lurking weapon to end all weapons in the house price war. I admit to being shocked that it came first from the lips of someone with so much responsibility for managing financial risk in our economy. If the government starts to offer guarantees to investors in home loans up to $1 million, then we can all go back to our rentals and give up. With no risk-pricing discipline on home loans, there’s no effective limit on how much the market can be pumped up.
