Another Futile Effort

With Fannie and Freddie working on new plans to keep homeowners put, we call bullshit. Same with plans by Citigroup or any of the other banks for that matter.

The problem is that housing is too expensive. The only way the housing market will bottom is for prices to fall. They must fall to the level were they are attractive relative to incomes. The faster this is allowed to happen, the sooner housing will bottom.

We call this another hair brained government action that will only prolong the inevitable.

We often mention psychology, as it is the key to investing. Home buyer psychology has changed. The mania that preceded the crash was of unbelievable proportion. Every last man, woman, and child that wanted to buy, had bought a home. The psychology has changed. There is no need to buy "now", as prices are headed much lower still.

http://iht.com/articles/2008/11/11/business/mortgage.php

Within every mania there is fraud. There always has been and there always will be, as man's nature does not change. We will paraphrase Bill Bonner and note that the fall is proportionate to the deception that preceded it. The entire nation was complicit in the housing "affair."