Interesting topic we have here. Brian sees government intervention as a good thing as he looks at things from a “today” standpoint rather than taking a took at the long term effect.
A stimulus may have been needed to fend off a potential collapse in 2008, but continued intervention can cause dramatic long term issues, which I believe are now right around the corner. The FED purchased mortgage back securities to push rates down, the banks kept inventory from flooding the markets and our government incentivized just about every bank to stay afloat.
At the end of the day the evidence is staggering. Some coastal areas that are lacking inventory are seeing 2005, 2006 prices. The banks are not only making money on their distressed property, but in some cases their subsidies make them more than the actual loan balance. The FDIC is involved in the payback process to many, but those funds will be short lived.
Does intervention help? Short term, most definitely, but the long term is my concern. The next 6-12 months will be a telling time for this country and San Diego. I believe America is on the verge of some very big changes and that we have some very large financial issues brewing. I didn’t believe America had the ability to control the markets as they did, but at some point free markets will dominate and a collapse is inevitable. We can only hope that the government will somehow detach itself from the housing market and realize that the housing market has to fix itself. Housing Bubble 2.0 is being created as we speak, the only question is how will it burst??
