Lawrence York

The Real Threat of the Housing Bubble

Interesting data. It certainly backs up the marketplace reality that there is not yet enough inducement to buy. Also noteworthy is the fact that bank/brokerage capitial reserves are severely strained. Banks only keep 5% on deposit for housing loans so the decline in housing values has significantly diminished their ability to lend. The Fed is obviously helping and praying time will turn things around. The unfortuate case is that this 'help' delays the tipping point being reached as it delays final repricing of mortgage loans that were made based on excessive valuations. I think the Fed's focus to shore up balance sheets and timing bet to fix the problem may prove to be the highway to printing money as a final cure.