If I had a better grasp on economics and government, I’d be better able to answer exactly how the government could intervene and slow the bursting of the bubble. One tool that I can think of at the federal level would be to slow or stop the rising Fed interest rates. Although the Federal Reserve is technically a separate entity, I am sure that they are vulnerable to political pressures similar to those seen at other levels of government.
I’d be curious to see if any politicians mention housing prices as a part of their platform coming up in mid-term elections. I haven’t heard any buzz up to this point, but then again I haven’t really been looking for it. I would think that IF the government were to intervene in any way, it should be sooner rather than later given the slow pace at which they move. But in reality it will probably be more of a reactionary or emergency-type of response. Isn’t that how Prop 13 came about? Did any policy makers see that coming beforehand? And did they try to do anything about it before things got too crazy?
