Sunday, January 11, 2009

Bethany Mclean on Meet the Press

Here is a quote from today's Meet the Press:

MR. GREGORY: I want to quickly touch housing, Bethany. A lot of people believe that the economy will not begin to recover until housing prices truly bottom out. Should the government be in the business of either trying to bail out homeowners or reversing the slide in housing prices? Is that really a way to cleanse the economy?
MS. McLEAN: Well, I think the scary question here is what's the right level for housing prices, and can we--should the government be involved in determining that? One of the big issues with housing is that the, the price of a house has so radically outstripped the growth in income in recent years, and if you don't get that back into whack and you try to hold housing levels--housing prices at a level that is artificially high, I don't think you fix anything over the long term. You may address a short-term issue, which is that the continued decline in housing prices is going to be traumatic, but I think you've pushed the issue off for another day.
Ms. McLean also had another gem on the current Keynesian conventional wisdom infecting Washington.

MR. GREGORY: What's your big question about the stimulus plan?
MS. BETHANY McLEAN: Will it work, and how do we pay it back? We've gone from a few years ago the conventional wisdom was the economy's just--going to be just fine, housing isn't a problem. A couple of years ago it was the subprime problem is contained, this is only an issue of bad mortgages. Now the conventional wisdom is let's spend our way out of it. So as someone who's always a little bit terrified by the conventional wisdom, I'm terrified by that large question: How do we pay it back? What happens if it doesn't work?
I hope more people are thinking along the same lines.

1 comment:

Noz said...

That's always been my take on this stupidity of trying to help homeowners and keep the prices high.

Frankly, most of these people were in on the greed train. Some obviously fell on hard times, but for the most part they wanted to make money like the crooks in wall street and where ever else.

So it pisses me off to no end that these home owners are whining little bitches talking about they didn't see it coming or how they got had by the brokers and agents.

Well, my answer to that is that if they got had then they A) were too dumb to begin with and should not have gotten themselves involved in something they didn't understand or B) they were in on it.

From my limited experience working in a loan office as side job, I can safely say that they were in on it.

This mess will not sort itself out if home prices don't correct IMO.