I sit here doing my various things, all the while listening to that hated Liberal NPR, usually the station at Sacred Heart University, which as its name implies, is associated to the RC church; after watching that fat guy on "60 Minutes" last night, the right wing agenda of the RC church is clear. May be NPR isn't quite the Liberal Bastion. So, anyway.
The news minute just ran, and one topic was the existing home sales number, released this morning. It was down, and the home price the lowest in nine years. The reporter questioned an economist with the realtor lobby, who asserted that home prices have to rise because the population is growing. There's a reason economists are held in such disrepute, and such crap "analysis" is a big reason. For that statement to be true, then there never would have been a Great Recession in the first place. House prices rose in the face of stagnant and falling real median income just because the mortgage companies, then the banks in their lemming fashion, fudged the numbers to *force* prices up. Builders were the ones who made out on the deal; build them expensive, sell them expensive, leave.
Without a rise in real median income, folks won't be buying houses at any price higher since the mortgage payment is 1/4 of gross median income, and without the fudge factor, prices must return to historic norms. That's been the serviceable level for a very long time. It won't change, and Steve Jobs will see to it. For every added dollar that goes to a mortgage company is a dollar that Steve can't put in his pocket. One needs to ask the obvious question: where does the cash come from to buy iPads and iPhones and all the other iCrap present and future when median income is not rising? The answer, in the short term, is trading a nice living room for Steve's toys.
Steve's toys is a metaphor, to curb flummoxed responses, for any and all discretionary spending.
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