Sunday, June 2, 2013

News flash: Austerity doesn't work, and housing bubbles are bad

The first point about today's news is that Al Jazeera is reporting about how Austerity is not working in Europe (a shocker to those of us who read statistics and have studied history)

Sound familiar?

The second point is that American housing prices have once again raised above their long-term average adjusted for inflation.

The government needs to stop providing subsidized loans for housing, because it creates a bubble that doesn't help consumers and only really creates an incentive for large banks to take out large loans buying houses as an investment that doesn't appreciate in intrinsic value and after the inevitable crash doesn't appreciate relative to inflation. This creates a surge of demand that is unsustainable (because the bankers aren't living in the houses, only with the hope to turn them over once their price is 10 times their intrinsic value) and every bubble must pop. This doesn't benefit Americans, because it means those of us who haven't purchased our houses yet are going to pay more than we should. I haven't purchased a home yet, so this is bad for me and every other American who doesn't own a home.

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