The economy

[galadhelsul]

The bailout bill passed the House today, after failing on Monday. Since it already passed the Senate, it will probably be signed into law this evening or weekend. All the idiots that thought this bill had to be passed because otherwise the stock market would keep falling until it destroyed everyone's 401(k) balance can now rest easily with the

Comments

[vfish]

Housing: I still think that funds from any bailout should have been directed primarily toward shoring up the mortgage market. For far less than $700 billion, the government could easily ensure that virtually no home mortgages go into default. A program of renegotiating predatory mortgages would have offered great assistance to the homeowners, effectively injecting liquidity into the consumer base required to make our economy function. Banks would have gone along with the plan because it's better to recover their money at a lower than expected interest rate that take huge losses associated with foreclosure. Housing prices would likely continue to decline (as necessary post-bubble), but at a more manageable rate because fewer homes would be dumped back into the market due to mortgage default. I'll defer to economists on the issue, but it feels that the optimal long-term solution would find a way for housing prices to level off and effectively be flat until increases in income and/or inflation bring house prices back in line with

[galadhelsul]

On housing, you have picked the Japanese 20+ year recession option. This recession will last until incomes are back in line with house prices. In most of the country (geographically anyway) house prices can be held level until incomes rise 10-20%. But in the densely populated areas where most people live, house prices have to fall by a fair bit because we can't raise incomes far enough. In the Boston area, houses are still overpriced by more than 50%. That represents about 10-15 years of income growth during normal economic times. We may never get there in a continual recession. And Boston's housing bubble is small compared to many other cities