An Interesting Twist

There is yet another letter to the editor in the Marin IJ regarding their initial article about this blog. But this letter is actually interesting. The writer condemns the IJ for publishing the original article (I agree) and seems to be accusing the IJ of trying to cause the Marin housing market to decline -- "Or is this part of an intentional IJ propaganda to help skew the local housing market?" I find that rather ironic to say the least.

The writer then goes on to point out how painful a decline in the Marin housing market will be for both house owners and non-owners alike... job losses, reduced economic activity, lost homes, etc. I totally agree and sympathise with the writer. This blog and most other blogs that discuss the housing bubble point out the difficulties that will arise if the housing market declines. No one wants to see nor experience the pain that will result from a declining, post-bubble market, especially this blogger. But that's the whole point. This bubble is a bad thing on many levels and it is the middle class and the poor who will have to take the initial hit and it will likely be the taxpayer who will have to pay to clean up the aftermath. The bubble is the result of a number of factors (e.g., misleading information, a speculative mania, greed, relaxed lending standards, fear, an overly expanded money supply, to name a few) all of which could have been avoided or at least constrained (I absolutely refuse to believe that we are helpless and doomed to aimlessly blow around like leaves in the wind). If the housing market had remained tied to certain economic fundamentals or at least had not been allowed to stray too far from the fundamentals, then it is likely that none of the "bubble blogs" would exist.

There are only two likely outcomes -- either 1) the housing market will continue more or less as it has been, in which case unaffordability and the debt burden will only increase, or 2) the market will retreat back to something akin to being supported by economic fundamentals. If history is any guide and the market retreats (as this blogger and others thinks is the more likely outcome for the immediate future) then we can either pretend that it won't happen or we can deal with it as proactively as possible. If we choose to deal with the possibility of a market decline, then all we can do now is to prepare ourselves as best we can for the unwinding of the market. But how can anyone prepare for that-which-we-don't-want-to-think-about if all we ever hear is that everything is great, everything will be fine, and the only data that we are exposed to is selected so as to support that conclusion? That's one reason why blogs exist...to tenaciously present the other side of the argument, to express opinions and data that are difficult to consider and that maybe are not politically correct but are nevertheless important to reflect upon. Some blogs choose to show data. Some blogs collect the news from around the country vis-à-vis the housing bubble. Some do both. Most make the argument that there is a bubble or at least that the market is so out of whack that a decline is likely. How else to prepare for a potential downturn? By putting our collective heads in the sand and wishing it would go away? Not me, thank you very much.