Finding bottom

Should the president fire his economic team, as John Boehner said?
That’s a nice piece of political posturing from a man who wants to be House Speaker. The president’s team, of course, reflects his own thinking, and that’s the real problem.

The administration hasn’t done the economy any favors. Take the housing market, for example. It’s a case of basic economics. If interest rates are at their lowest point in decades and yet sales of existing homes fell by 27 percent in July, that means supply and demand are out of whack.
And why are they out of whack? Largely because government programs — home-buyer credits, mortgage relief — have artificially propped up the market and kept it from hitting bottom.
When home prices fall to a level where they meet demand, sales will pick up again. This blog says it better than I can.
You can blame unemployment for the housing problems if you like. Just remember what caused this recession in the first place. The housing bubble, inflated by easy credit, creative financial instruments and a failure in government oversight, fueled massive debt backed by non-existent equity.
We don’t need any more government programs to stem the slide. The market has to find bottom, painful as that will be.
There is an upside, however. As prices drop, housing will suddenly become much more affordable — unfortunately, only for those who have jobs.