Economic decline in America will continue as long as real estate values are declining
Statement presumes facts not in evidence. This statement is basically wrong. It assumes a ponzi mentality, ignoring that eventually the person who will live in the house for a while will have to buy it at a higher price (reducing their discretionary income after mortgage payments, discretionary income that buys cars, saves for retirement, buys computers.. etc). Wage has to support the prices of the houses because at some point, you have to have someone new buy in.
4. 40% of the economic activity in Southern California was based on housing
NOT! You are forgetting that Cisco, Sun Micro, Oracle, are primarily located in California, along with BAE, Raythen, Northrup Grumman having a large presence and not to forget Disney, Industrial Light and Magic(), Pixar. I could continue with yet more large companies, facilities etc being in California.. how about JPL – NASA??
The only way to a real recovery is to allow home prices to drop to a sustainable level where people are not spending most of their money just to make the next mortgage payment. With house prices high, just the speculators, banks and government win. Everyone else loses. No value is created by ‘shuffling’ money, and that is all that the governement, banks and speculators really do.
