Home Prices

             

What the government could have done following the first signs of financial distress in the new construction market a few years ago in 2008-2009.

                       

One way was to have government buy up at bargain prices all the unsold tract homes in bubble-infested areas, such as Arizona, California and Florida. This would not have been a bailout for the builders. They would have suffered losses.

                       

The action would have dried up the major excess supply of real estate and stopped the ongoing, adverse psychology that kept reducing values of the rest of the nation’s perfectly good real estate that was not too overvalued. The cost would be relatively very low, compared to the many billions and even trillions we have expended.

                       

The federal government, through one or more of its agencies, could have guaranteed all the loans of banks, the way the FDIC insures deposits. Fees would be charged the banks for the guaranty.

                       

No bailout funds from taxpayers, no phony stimulus funds which really amounted to political slush funds. No poor psychology that could make banks wary of loans to small business; thus more job creation. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole tweets.)