HOUSING BUBBLE UPDATE: WESTERN U.S.
The Housing Bubble is deflating rapidly in most large Western markets. All major markets in Southern California, except for Riverside, have shown significant declines in the last 6 months. (Riverside has had a 0.0% increase in prices over the last 12 months.) Median home prices over the last 12 months have declined 6.2% in Los Angeles County and 5.5% in San Diego County. In Orange County, CA, prices have declined 0.8% over the last 6 months (12-month figures are not available.)
The 2 biggest non-California markets, Phoenix and Las Vegas, have experienced similar declines. Over the last 12 months, Phoenix home prices have declined 10.5% while Las Vegas prices have declined 4.0%. Below is a modified copy of the charts from Housing Tracker.com.
The above information can be found at Housing Tracker
Inventories are rising even faster than prices are dropping. Home inventories have increased 100% in Los Angeles County, 181% in Riverside, California, and a whopping 267% in Phoenix. As inventories continue to rise, prices can be expected to decline even further.
EconomicPopulistForum
posted by unlawflcombatnt | 4:14 PM
2 Comments:
I have recommended this website ("Economic Populist Commentary") at the old Kucinich forum, Daily Kos, the Thom Hartmann message boards, etc. - especially for analysis of the econometric building blocks of any reality-based economic theory. (There's so much bushwah in the statistics as they are usually cited!)
Anyway, I would greatly appreciate comments of 'unlawflcombatnt' on the current economic meltdown (2008, as of September) - the roots of which were noted by 'unlawflcombatnt' two years ago.
I see this thing as arising out of the collapse of the housing bubble, along with deficit spending and engrossed public debt, over-spending in the "defense" sector, "free" trade and immigration/outsourcing policies (particularly as they have developed over the past 10 or 15 years), disastrously unenlightened resource management, continuing top-heavy income and wealth redistribution, and, the rise of short-term get-mine-now-and-the-hell-with-everything-else thinking (over the past half-century) on the part of the financial elite or corporate management class (not to mention the general public and the political class). Plus, of course, a culture of corruption permeating the body politic as well as the corporation world.
But first, here's my take on the classical Keynesian economic theory that I find supported by 'unlawflcombatnt' and the opposing 'supply-side' theory that claims to provide a valid critique of the Keynesian theory:
QUOTING 'unlawflcombatnt':
"Capital, without labor, has NO value. Furthermore, without demand for production, neither capital or labor will be used to create wealth."
"Cutting taxes on the top 2% is supposed to increase investment. But there's a catch to this "theory." There needs to be something to invest in. It's only benefit is to increase the SIZE of our industrial capacity. But current industrial capacity is under-utilized."
"Our current industrial capacity is UNDER-utilized."
"Aggregate demand is absolutely limited by aggregate consumer wealth. The best way to increase aggregate consumer wealth is to balance the 'means of production' with the 'means of consumption'. The capital invested needs to be no greater than that needed to meet production demand. In turn, production demand is created by the 'means of consumption'."
"If resources are un-balanced in favor of the "means of production," there will be insufficient demand to drive production. As a result, there will be less production, and less wealth produced. In contrast, greater wealth would have been produced if some of the investment capital had been re-directed towards consumer income. It would have increased demand, and driven production. Both consumers and business would have prospered. Economic "growth" would have increased. GDP would have increased."
"I think the significance of DEMAND is under-emphasized in current economic commentary. That needs to change. This is not only about the subjective concept of "economic justice". It's also about "economic growth." It's my belief that some downward redistribution of wealth will help the economy."
APPLICATION TO THE HOUSING BUBBLE AND ITS COLLAPSE:
In the Sacramento area, I drive by vacant residential housing - newly constructed (within the last two years) large single-family residences priced at $350,000 and up (although prices are dropping currently to as low as about $300,000). There are signs advertising these residential units, and there is a sales office, but nothing is moving. So, how does this happen?
It doesn't happen because builders are responding to demand - at least not to any demand that is accompanied by the assets or income necessary to purchase these residences. It happens because capital and other resources (typically waivers of building permits and similar fees) are supplied to builders regardless of any measured or known demand. On the same streets, or nearby, I see poverty-level people (probably more or less homeless) pushing shopping carts filled with junk. I conclude that there is a NEED for residential housing, but there is no DEMAND, because demand requires ability to buy.
CONCLUSION:
Supply-side economic theory is a theory opposing governmental intervention in the market EXCEPT when the intervention directly funds or otherwise supports corporate production. What events have shown is that supply-side economics, in practice, supports overproduction through governmental intervention.
Since a market economy already, left to its own devices, generally results in cyclic overproduction, it's no surprise that a governmental policy that supports overproduction can only be expected to result in increased amplitude of cyclic swings in production. Ultimately, of course, supply-side economics inevitably leads to economic collapse.
Should future generations of Americans be put under even more debt burden than they have already been saddled with, in order to attempt to repair the damage done by the supply-side economic policies of the past 25 or 30 years? I am not sure about that, but I am sure that there's no point in trying to fix anything without fixing the fatal flaw in the politico-economic thinking of the U.S.A.: supply-side economics.
In my opinion, while supply-side thinking has been exploited and promoted primarily by Republican politicians (with a very few exceptions, such as Ron Paul), the delusional system itself has its roots in the mainstream thinking of the American people.
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