Dean Baker
Dean Baker
Dean Bakeris an American macroeconomist and co-founder of the Center for Economic and Policy Research, with Mark Weisbrot. He has been a senior economist at the Economic Policy Institute and an assistant professor of economics at Bucknell University. He has a Ph.D. in economics from the University of Michigan...
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People are really stretched. They are banking on everything turning out right for them. That they won't lose their jobs, that they won't run into unexpected expenses. They're betting that the housing market will continue to appreciate.
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Builders will keep building as long as they can keep getting these prices. But I think there's a glut developing clearly in some markets and that clearly will put downward pressure on prices.
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With the housing bubble now having generated comparable levels of unsustainable wealth, the economy faces even greater dangers today than it did when the stock market crashed.
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Until the psychology starts to shift or interest rates jump up, the market will probably stay strong, ... So far we haven't seen that. We've had a lot of stories on housing bubbles lately. Maybe that will affect the psychology.
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People are always trying to explain the lack of questions as saying there's a consensus around monetary policy, but there's anything but a consensus on monetary policy. What upsets me more than anything is no one is asking serious questions.
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It does pull a lot of money out of people's pockets. Even if it doesn't go back up much, it translates to a 50-to-60-cents-a-gallon gas tax. But for the borrowing that people were willing to do, it probably would have led to recession.
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It could be a very big hit. I'd say there's a 10 to 15 percent chance of negative growth if we see a spike in interest rates, or a really big jump in energy prices.
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I think their intention is to get people who are loyal and that does raise problems. It's clear that they're looking at this as a sales position.
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Hawaii's home prices suffered in the 1990s because of economic trouble in Japan, ... If home prices in California reverse, it will have ripple effects.
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Historically, rent prices and sale prices have moved together.
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I wouldn't necessarily predict this would be a trigger, but I wouldn't rule it out either. It wouldn't surprise me if you see money leaving the secondary mortgage market, leading housing prices to fall.
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There is a large psychological element behind current housing prices,
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He was the one who had the courage to let the unemployment rate fall. Very few people thought the unemployment rate could fall that low.
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He consciously promoted the housing bubble as a way of boosting the economy.