This is now officially the worst housing crash since the Great Depression. Putting aside hyperbole new home sales fell 80 percent from 1929 to 1932. Those years, if you know a bit of history were not model years for the U.S. economy. In fact, the economy imploded in spectacular fashion at that time thanks to time honored Wall Street speculation and massive debt leverage. So a fall of new home sales by 80 percent during those years would be expected. Over this duration the Dow Jones Industrial Average fell 89 percent. Now compare this to our current situation. New home sales from their 2005 peak have now fallen by 82 percent! However the Dow Jones is only off by 13 percent from the peak reached in 2007. The big difference in this crisis is that we had a Federal Reserve that bailed out big banking interests under the pretense of saving the housing and consumer market. Yet how can you save a housing market that by definition is too expensive for the immediate population? Going on four years of this crisis I’m sure many now understand the finer points of crony capitalism. Hope Now, HAMP, foreclosure moratoriums, and other methods of saving the housing market were largely cover for a bigger bailout scheme and most of you were not included.
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