COLUMN: 10-17-2007

The housing slump in the USA is a good thing. I know that is a very controversial statement to make, but it's clear that home prices in many areas of America were rising obscenely due to speculators and this is the only way to correct this massive injustice. A similar example on much smaller scale was the selling of Sony PS3 gaming systems during last year's holiday season. The overpriced system (retail price of $599) was being sold for as much as ten times that price in the run up to the launch. After the launch, the price dropped like a rock as it became clear that as many as 60% of the buyers were just buying the system to resell for a profit. When it comes to people's homes, it's a little more difficult to swallow as you are essentially having to make people homeless to correct the market, but those people could never actually afford to live in those homes and so it's hard to find sympathy for those who let their greed put them in an unfortunate position. We should treat these people in the same manner as those who have gambling addictions that caused them to lose their homes and other assets, not any better and not any worse. Prices should be allowed to fall back a reasonable level and interest rates should be lowered, but not the extent of causing another bubble to form. This is the only reasonable course of action unless we want to be in the same bad economic situation a few years down the road.