RedRiver

Former Fed Governor Mishkin Slams 'Paul Bill': Are We in Wonderland?

I found it extremely revealing today listening to Bernanke's answer when asked, "so, how do you see us getting out of this?". He said there are only two ways, one - raise taxes, two - reduce the level of entitlements (of the elderly). Shouldn't one answer have been to grow the economy? Oh, that's right, the Fed's job is only to protect the banks (Goldman Sack's US) regardless of the expense to the people. End the Fed. It's the only way to be sure.

Did the Fed and GSEs Avert a Crisis?

The nadir or lowest point of the housing market would be the point at which you can identify support. Here in Phoenix that point is 2001. The city was thriving/growing, housing was affordable 2.6 on the Harvard (AI) affordability index. AI = median home price/median household income. Now its 4.8 (actually went up in 2007). That's the same AI as Santa Barbara! Does anyone really believe that making Phoenix as expensive as Santa Barbara is a good business decision?
So, not being a "economist", it would seem we have a ways to fall before "the market/the buyers" come back out and buy. The current median home price is around $242,000 and the current median household income (citydata) is $61,863. So 61,863 X 2.6 is $160,843 or, a 34% decline needed to get back to balance.
Obviously the more propping up we do, the longer it will take the market to fix itself. The ramp of pain will just keep getting longer. Having just read The Forgotten Man and just seen the Fed Lending Graph I am not at all comforted by any of these moves. Lynch said it best, Mr. Market doesn't care about you, doesn't know your name. Probably doesn't care about how much equity we have lost or, how safe our families are now. That was our job.
But then again, I'm not an economist. Not a buyer either.