Real-world Bad:

Home prices tumbled in 3rd quarter
U.S. home prices fell 4.5 percent in the third quarter from a year earlier, the sharpest drop since Standard & Poor’s began its nationwide housing index in 1987 and another sign that the housing slump is far from over, the research group said Tuesday.

So, then, this hypothetical situation would also be Bad, correct?

Gasoline prices tumbled in 3rd quarter
U.S. gasoline prices fell 4.5 percent in the third quarter from a year earlier, the sharpest drop since Standard & Poor’s began its nationwide fuel index in 1987 and another sign that the fuel slump is far from over, the research group said Tuesday.

Wouldn’t that be just terrible?

High gasoline prices are bad but low house prices are also bad. We’ve all heard about how bad they both are.

So, um, are high milk prices good or bad?

Doesn’t it depend on whether or not you’re a milk buyer or a milk seller?

I’m also wondering about the mimeograph machine slump. That’s been going on for decades and is just going to get worse, at least as far as I can tell. What are we going to do about that?

This housing slump must be absolutely killing the first-time home buyers. How can a young couple with a baby on the way possibly afford to purchase a home with prices down 4.5% and looking to fall even more?

Will someone please decide once and for all if high prices are good or if they’re bad?

Stupid market economy.


  1. Housing prices coming down on its own wouldn’t be a problem. The problem is we live in a debtor nation that hemorrages nearly a trillion/year in trade deficit. The cheap money that caused the price of houses to skyrocket was a result of that deficit and now the bill is coming due. That’s why our monitary values are collapsing, which is going to be real damn inconvenient given the fact we’ve off-shored most of our manufacturing capability. But what the hell, it sucks to be stupid and it should suck to be stupid.

  2. Will someone please decide once and for all if high prices are good or if they’re bad?’ Why, it can be both! Hey, if I sold my house tomorrow I would be lucky to break even. And I might get a deal on the new place but frankly, with my purchasing power, we’re talking a few grand one way or the other. Not really life-changing circumstances, you know? Now if I was to sell my home in MA and move to a place where houses are just less expensive, that might be different. Once I recouped the moving expenses, and adjusted to making less $$ as well. Eh.

  3. I think you are both fundamentally missing the significance of what’s occurring here. The issue isn’t housing prices or even subprime lenders. That just happens to be the straw that broke the camel’s back. The root of the problem is politicians, Republican and Democrat, who have sold out their country for foreign cash. No country has ever sustained the kind of debt this nation has run. 7% of GNP last year! 5% is the threshold economists consider dangerous for the collapse of a nation’s currency.

  4. Dfens, Well I can only speak for myself when I say that not only do I not grasp the significance of all this, I also can not bring myself to care much. My personal influence on the problem(s) is zero, and regardless of the outcomes I will surely be f*cked. I do what I can with what I have to work with, taking care of what I can. Everything else is going to have to take care of itself.

  5. Low housing prices are bad and high prices on everything else is bad if a Democrat is president. If a Republican is president, any pricing news is bad, and a sign of the end of the United States. According to Paul Krugman, at least.

  6. What is happening with our trade policy is similar to what is happening with immigration, legal and illegal. It is also similar to what’s happening with weapons procurement. They count on you not knowing and not caring. That’s how they get away with this crap. There are things you can do. This is primary season. This is when you get a real choice. This is when you need to be talking to candidates and letting them know what your issues are. Even if your primary candidate does not get the nomination or win the vote, their stand on your issues could shape the debate. Often the issues of real significance never get debated because no one forces the candidates to speak to them. That’s why we have campaigns that focus on style over substance. That’s how we got duped into voting for that idiot George Bush. His economic policies have simply been a continuation of those Clinton began, so there’s blame to go around, but when it comes to paying the bill, the buck won’t stop with them, it will stop with us.

  7. Gas prices falling hurt you if you are investing in an oil company or invested in mutual funds with energy stocks. If you are investing in transportation companies or driving to work, you are in luck. The housing issue is a bigger concern when you consider the health of the mortgage industry. Sure, lower housing prices are good for first time home buyers, but what about the folks who can’t sell their house because they owe more on their mortgage than it is worth? Defaults and foreclosures are way up. First time homebuyers also get hurt when they can’t get a mortgage because lenders have had to tighten lending guidelines because of increased risk. Rates also go up when investors are unwilling to buy the mortgages. First time homebuyers have to save more and wait longer to afford the payment. I recently heard a bank economist predict that prices may still fall another 10% in the NE market, not a good thing for the banking industry. Who will pay for this? I bet it won’t be Charlie Prince who just resigned as Citicorp’s CEO. As usual the little guy and taxpayers will pay for the fat cats greed. It’s also interesting to note that in the light of Citicorp’s 15.5 Billion in write-offs due to mortgage related investments planned in Q4 and Q1, Abu Dhabi Investment Authority just invested 7.5 Billion in Citibank. I wonder if George Bush is calling in his markers?

  8. Housing prices, gas prices and our status as a debtor nation are unrelated issues. Though on the macro economic scale they do tend to influence one another. Housing prices were the result of sustained federal reserve policy to keep interest rates low and a tax policy that encouraged speculation in real estate. As the housing bubble got progressively worse, banks had to lower their standards in order to maintain their ‘historic’ rates of growth. Then the fed reversed the rates and the bubble burst. US industrial output measured in terms of the total US economy has shrunk, but in absolute terms the US’s industrial output has expanded over the years. The issue is that industrial employment has declined over the years as capitol has replaced labor. (Historically, agriculture is prime example of the replace of labor with capitol.) That said, while in absolute terms the US industrial base has never been bigger – many of the low margin/ high labor, industries have been exported overseas.

  9. US industrial output has remained the same because they’ve outsourced the manufacturing of parts to overseas companies and only continue to exist as assembly plants. GM, Ford, Chrysler, Boeing, and Lockheed exemplify that trend. The jobs they export are low skilled, low wage jobs, all right. These would be typified by all the engineering and machinist jobs that have been exported. As for that trillion/year in cash we’ve been hemorraging, you think that none of it has come back in the form of housing loans?

  10. Wow! Murdoc posts some bright consumer news and the forum implodes with depressive vitriol! LOL! Guess that’s why many pols show thought the ‘economy’ is still doing well, many people are anxious or pessimistic about the country. One thing Dfens said, that I can heartily endorse is the difference, or more accurately the lack thereof, between elephants and donkeys. The Bushites have made it vividly clear there is very little difference anymore between the two major parties. All that talk of small taxes and government has become nothing more than that! Eisenhower and Reagan must be turning over in their graves. Did I mention thanks for the horrendously expensive war and incompetence?

  11. You want depressing, here’s part of Drudge’s preview of Pat Buchanan’s new book:

    ‘America is coming apart, decomposing, and…the likelihood of her survival as one nation…is improbable — and impossible if America continues on her current course,’ declares Pat Buchanan. ‘For we are on a path to national suicide.’ The best-selling author and former presidential candidate is on the eve of launching his new epic book: DAY OR RECKONING: HOW HUBRIS, IDEOLOGY AND GREED ARE TEARING AMERICA APART. [The book’s release date has been moved up to this week. It ranked #237 on AMAZON’s hitparade Monday morning.] This time, Buchanan goes all the way: ‘America is in an existential crisis from which the nation may not survive.’ The U.S. Army is breaking and is too small to meet America’s global commitments. The dollar has sunk to historic lows and is being abandoned by foreign governments. U.S. manufacturing is being hollowed out. The greatest invasion in history, from the Third World, is swamping the ethno-cultural core of the country, leading to Balkanization and the loss of the Southwest to Mexico. The culture is collapsing and the nation is being deconstructed along the lines of race and class. A fiscal crisis looms as the unfunded mandates of Social Security and Medicare remain unaddressed. All these crises are hitting America at once — a perfect storm of crises.

    I’m a regular Polyanna compared to that guy. But you know what, Pat’s been right a lot recently.