For those who continue to wonder why I and many others consider even the mainstream media to be intellectually sloppy at best and flat wrong quite frequently, consider the continued references to a supposed “housing crisis”. Today’s LA Time article “A federal cure for the housing crisis faces obstacles” reminded me of this, however one cannot open a paper or magazine without seeing something similar. What’s happening now is not a crisis, it is a resolution to a crisis. The easily available and obviously ominous mortgage statistics from 2003-2007 described and ever-increasing crisis for anyone with even a slight knowledge of historical boom/bust cycles in finance, however the media basically cheered this on with no critical thinking to be heard. The Housing bubble was only a good thing if one thinks rising property taxes, widespread misery, and wasteful misallocation of capital is a good thing, but let’s consider a few of the good things the bursting of the housing bubble in the in the United Kingdom, Spain, the United States and Australia has brought about:
Housing is becoming more affordable and will become much more so. Why aren’t headlines screaming “More great news for lower income people!”?
The morally reprehensible of duping of unsophisticated people into taking on debt they cannot reasonably be expected to repay has come to a halt
In the US at least, Amateur Housing Speculation infomercials have been replaced by that-old stand-by, the Abdominal Gizmo infomercial
The inability of the financial industry to resist the temptation of the boom-bust cycle has been demonstrated for anyone who will think of recklessly investing in the next Boom cycle
The complete inability (or lack of desire) of the popular media to report the completely predictable has been demonstrated yet again
Labor in previously undersupplied fields such as truck driving is now much more plentiful
Incessant talk of housing speculation has died down
Less farmland is being turned into subdivisions
Frugality is coming into fashion (see Cool to be Frugal )
Savings coming back into fashion might not be too far behind which would be a true ray of hope for the US economy, at least given the reduction in imports it would likely entail and the corresponding improvement in the balance of trade
Perhaps a future post will address why the same fallacy applies to the term “credit crisis” however this will have to do for now.
Eclectic Wealth is intended to educate and entertain, however the information contained, while beleived to be accurate is not gauranteeed and Eclectic Wealth is not responsible for any investment decisions of any kind. The Philosopher King may hold postions in referenced securities.
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