Take the personal feelings about Bush completely out this for a second. Here’s what you are looking at. We have a huge bubble, and we have very recent experience with the fallout of the last (tech) bubble. Many People felt the pain of that burst, even though there was a ton of speculation there, too. People invested in the stocks like crazy, were happy as anything as things skyrocketed, but lost their savings and retirements as things came screaming back down. And if they didn’t get out, all they could do is remorse about their speculation. There was no bailouts. Government didn’t do anything to help these people with shattered dreams and wrecked finances. After all, they lost money in the stock market. But it was just money. They weren’t injured, they didn’t lose family, they didn’t lose shelter. They speculated and lost. End of story.
But now, we have another huge bubble, this time in housing. But I think this bubble is much more “real”. We have a nation of homeowners from ALL classes that don’t want this bubble to burst. We also have a nation of lenders, brokers, realtors, investors, etc, that don’t want the bubble to burst either. And they will be very vocal about it. And they will plead to anyone necessary in government to prevent them from losing their assets. Losing their well-being! Losing their shelter! (even though they could rent, but nobody ever seemst to mention that).
And so whoever is in office – Bush, Clinton, Obama, Guliani, whoever – are going to have to respond to this. And Bernanke is going to hear the pressures to lower interest rates. At first, I was convinced that this bubble is going to pop. Very loudly and very quickly. But given the political ramifications of this issue, I’m not so sure anymore. And if all the Bush-bashers out there think he screwed up today, don’t think it’s over. There is going to be much more screw-ups on this issue by him and Bernanke. But it doesn’t stop there. You can bet you’re a$$ that if a Democrat takes office, they will do anything to save Mr. and Mrs. Poor Homeowner. And probably do even more than Bush did today.
And I’m very impartial about politics. I am neither Democrat nor Republican. And I want the housing market (in San Diego) to crash and burn. I just think that politics could very easily keep this bubble fully inflated for a long time. Especially with elections coming up. I wish it weren’t true, but these kind of political decisions you heard about today are certainly not over. In fact, I think it’s just the beginning folks.
