So, the venerable Alan Greenspan thinks we’re at a 50% chance of a Recession. I suspect he means a real one, as opposed to a rhetorical one. A real recession is, what, 2 consecutive quarters of negative growth. It is not an adjective to be bandied about by those advancing an agenda. It is a contracted economy, with an actual slowdown in production and a loss of employment.
Let’s then be clear. Up till now, we have not been in a recession. Regardless of how it feels. In point of fact, our economy has steadily, if sometimes falteringly, grown. This is an extremely important fact. Why? Because if you think we’ve been in a recession now, just wait.
According to Greenspan, the current looming crisis “…will continue to be a corrosive force until the price of homes in the United States stabilizes.”
Finally someone said it (and that someone warned about it at least a year ago). The price of homes in this country, at least in my neck of the woods, has been ridiculously absurd, with shabby houses at one point selling for 80k being flipped faster than burgers at MacDonalds to prices exceeding $300k INSIDE OF TWO AND THREE YEARS!
I suppose now we have to find a way to blame government for our lack of financial common sense and inability to say, “No. That house is OVER-PRICED. AND I DON’T CARE WHO ELSE MAY BE STUPID ENOUGH TO BUY IT!” Let alone, “No! I won’t pay for that house, because I won’t then be able to put furniture in it!”
Perhaps, if more people had done this, the housing market, that wound up vanquishing the initial post 9.11 potential for recession, would have softened, and we’d have had a minor recession earlier (that so many predicted). I don’t know.
But as an observer, it’s struck me for a long time that there’s been something deeply amiss in housing prices that’s completely violated common sense.
Eventually, however, reality sets in, and I don’t know if it’s in the government’s purview or power to waive a magic wand and make the hard truth disappear.
Obviously, I hope no one gets hurt in the coming shakeout. Yet, in some way I am also fearful of practices that blatantly fly in the face of reality.
In our greedy grab for increased wealth, we have apparently ignored the actual cost, thereby revealing that while we have acquired so very much, we have, in reality, valued very little.