The upside to lower housing prices

Most of the problems with the economy stem from the lack of growth in disposable income. As housing prices climbed, people resorted to using crazy financing schemes to afford to live in houses because their incomes did not keep up with the cost of housing prices. That bubble had to pop and it popped hard, but there is a good side to it.

Lower prices mean that people can afford housing again. If incomes are not rising, the only way to have more disposable income is to lower other high fixed costs - like taxes or housing. As costs to purchase houses have come down, so have the costs of renting. This does not help people trying to sell or rent housing, but it does help people renting and helps people buying houses. Each of these people getting cheaper rents and cheaper housing gets more disposable income and this adds up. Normally, housing prices would rise to soak up some of that disposable income but housing is weak now and people aren't buying.

Higher housing prices cannot be sustained without having higher incomes.

There is some bad news in all this. Most of the foreclosures have been at the low end of the market. The banks are holding onto the higher priced properties hoping that prices will rebound so they do not have to sell at a loss. They are trying to prevent the collapse of the housing prices at the upper end of the market, but I think the prices at the upper end of the market have to collapse a bit before they fall back in line with the lower end of the housing market.

Will we have a mix of deflation and inflation? Deflation of housing costs with inflation of non-housing costs? It feels like it.

Corruption of government

Sad to say that our government in the United States is corrupt and broken. It seems that no matter what you try and do, there is always some interest with money that wants the system to remain broken and our elected representatives show who they really work for when the demonstrate their inability to help the majority of the people.

Our government has lots of information about us when it comes to filing taxes. When we send in our tax forms, the IRS and state government compare the data to see if we're being honest about our income. For the majority of people, the government could fill in the tax forms for us and just have us sign the forms and write them a check. I wouldn't have to lose a couple of days gathering slips of paper and filling out the forms.

The state governments have tried to prefill the forms for people to make the taxes easier for people but that apparently pissed off ... the unnamed firms that make the money selling software to help you do your taxes. Of course, it's in their interest to make sure the taxes are as complicated as possible. So every year, millions of people fork over good money so they can have the software help them navigate the rules around the tax forms. Absolutely insane.

We seem to have a lot of industries that cannot survive changes that would make this country a better place so they work to ensure that they can earn their undeserved fat profit margins. I blame the companies that continue to work like this (and there's a large list) and I blame the politicians that are unable to stand up and do the right thing.

Makes me sick.