Housing Market II

Matt Bouchard’s Adventures in Real Time
Even while on the road here in Ko Samui, Thailand do I find it important to keep up with the daily news. Fortunately for the contemporary backpacker/traveller this is not a difficult thing to do given the huge presence of internet “cafe” everywhere the traveller’s moneies go.

Unfortunely the Economist magazine is in short supply on the beaches here - for some reason - but a good friend JL sent me the link to an important article this week:

http://www.economist.com/business/displaystory.cfm?story\_id=5381959[](http://www.economist.com/business/displaystory.cfm?story_id=5381959)

The article touches on a number of fundamentally interesting ideas and topics. What is the purpose of the Federal bank; to control inflation? to ensure maximum employment? to provide as smooth an economy as possible? Or, is there a housing bubble and how will it effect the economy? How will the change of Chairman from Greenspan to Bernanke effect the Fed policy?

In short, the Economist article is grim as can be, and I’ll confess I agree with them. Its simply getting too late to be able to properly solve the problem of the massive credit expansion and consequent housing bubble: too many people have too much to lose now.

Of course, as typical in bubble/ponzi schemes, it is those with the least that get hurt the most, often loosing everything; just is the price of propping up the bottom level of the pyramid when it collapses on top of them.

So this year may prove grim. As I wonder around Thailand and Malaysia I can see the damange a major financial crises can do. While the US financial structure is definitely more robust, it is not unbreakable, and the forces currently at work in the mortgage enterprises are absolutely huge.