May 31, 2011
Home Prices—Further to Fall?
Graph of the day shows home prices from S&P/Case Schiller index, which tracks the 20 largest US cities. Think we can’t fall further? Consider that Fed’s “cheap money policy,” often cited as the helium inside the housing bubble, has been pumping since about mid-2001. Now, the helium is still pumping in (i.e. Quantitative Easing 2 + 0.25% Fed Funds rates) and the balloon is STILL slowly deflating. It seems less and less likely that the Fed will, in a timely way, end its policy of pushing, pulling and carrying the US economy in a monetary wheelchair.
