As Jeffrey Tucker over at Mises.org said, “the rock was thrown up but it is falling down again.” Go figure. Just because the government is…well…government doesn’t mean they can negate the laws of nature. At least that’s my opinion. I suspect they may think different about it.
Everyone is shaking their head and bemoaning these housing numbers which make mark (gasp!) a double-dip recession. This reminds me something slightly related…last week on the news they interviewed a lady who worked in Chicago as an economic advisor to a financial firm. She was talking about the bad unemployment numbers and what that meant to the economy. She had an oh-so-sad look on her face, and spoke in such a mournful voice….her whole 2 minute blurb came down to something like this, “these numbers mean that there are more Americans out of work who have been out of work for a long period of time…and that is just sad.” The government is ruining our nation, and you can say, “oh my, this is sad.” Of course it is sad. This whole recession would not have occurred if there were no Fed, no government intervention…and this is “so sad”?
So about these housing numbers? Good news…or bad news? Well, it depends on how you view the economy. Here’s an example I use. Frankly, I haven’t used it before, because I just thought of it. So here’s an example I will be using. The government tells us the economy is like an anorexic woman…(don’t mean to be sexist, it just seems that women have a higher tendency to be anorexic than men, I want to keep it somewhat realistic) and that if we lose any more weight, we’re going to be in serious trouble. They say we can’t lose any more weight and stay healthy. But us Austrians view the economy as a slightly overweight woman (again, I don’t mean to be sexist…these politically correct rules are really getting annoying), or more truthfully, an obese woman who is going to die of heart disease or whatever awful thing they say happens to overweight people. In order to save this obese woman, she must lose weight. This extra baggage is killing her. Don’t ask me why–I did biology 2 years ago, how can I be expected to remember any of that now!?–but she is dying. So the Austrian wants to put her on a rigorous diet to help her lose the extra weight…and save her life. In a way, we can look at these housing numbers and imagine the woman standing on the scale and saying, “yay! I’ve lost 27 pounds!! I feel better already!” And the government is standing there shaking their head going, “oh my gosh, this poor woman lost 27 pounds! She’s nearly skin and bones…what are we going to do? We’ll have to take her out to McDonalds for every meal for the next week, maybe we can help her gain some of that back.”
We could, I suppose, feel bad for the individual fat cells (I vaguely remember they are somehow related to, or called, lipids…?) that were lost, I mean, they were good cells, it wasn’t their fault that the woman was dying.
And we do feel bad for the millions of people who have homes they can’t afford, are struggling to pay the bills, or have already foreclosed on their beautiful houses. But these were the people who should have bought a modest Cape Cod instead of a mansion. These were the people who sensibly would have rented an apartment instead of a gargantuan of a house. And who do we blame? The government. The blame is laid squarely at the feet of the Fed for funding this bubble…this buffet, you might say.