2 things for a sunday

I was watching Some Economists and dipshit politicians debate the economy on Meet the press this morning, Also there was a documentary on "the dust bowl" last night.

BTW the documentary was Awful, but did bring up this in 1929 the price of wheat peaked at $2, Then fell to .40.... Finally bottoming out at .20.... All in the face of the "bread basket of the world" becoming a dust bowl for 10 years.

So, The economic debate talked about how Prices for housing had completely outstripped Wages. Now that we are trying to stop the housing Deflation... What will the result be on wages?

Housing prices in the past 10 years have increased 70%.

so to hit proper equilibrium, Housing needs to hit a balance between wages and price.

Median House prices:

2000 $169,000
2005 $240,000
2008 $181,300

Wages havn't increased in over 8 years, and to be honest "real income" is probably lower, though Deflation has helped "Real Income".

So, If we believe that prices were in equilibrium in 2000, that means we still have 20% decline in housing prices to hit equilibrium.. Either that or wages have to go up 20%.... And this doesn't take into account reduced demand, Reduced credit availability, and that prices will need to overshoot to the downside.... But if home prices still need to deflate... what else needs to deflate?

So, My original thesis was that if we don't let house prices come to equilibrium, we will get Wage Inflation. But looking at the numbers, we are close to that equilibrium, though price discovery will keep prices volatile for some time, But Even if prices stabilize at this level, it's only 20% inflation.... Still not taking into account how we have to "Bleed off" an oversupply of houses.


I Saw this.... Wholy shit...

The Great Depression has reached Detroit. The average price of a home is now $18,513 and unemployment has reached 21%, and it’s expected to get worse. Detroit is facing a crisis of epic proportions that officially puts Detroit statistically (and real term) on par with the great depression. Many readers of Tribble Ad Agency are advertising centric.. and due to the rash of layoffs within all Detroit Advertising firms has put the city on the map for the wrong reasons.