Monday, 30 November 2009

Sjuggerud: Why the government will do everything possible to hold up home prices


Monday, November 30, 2009


By Steve Sjuggerud in True Wealth:

Federal Reserve Chairman Ben Bernanke has bull-horned his strategy for years. And his strategy is he will not let prices fall in the long run. He will do whatever it takes – print money, cut interest rates to zero, buy trillions worth of investments nobody else wants. (He's done all those things.)

The government is doing all it can, too. Just [recently], the Obama administration extended the $8,000 first-time homebuyer tax credit, it added a $6,500 provision for move-up buyers, and it increased income limits. It'll keep Fannie Mae and FHA on life support.

While I mentioned the Obama administration, this is not a partisan deal... Every congressman knows he needs housing to go back up again to get reelected. When 25 out of every 100 voters are upside-down on their houses, they're going to be unhappy voters. So the congressmen think, "If I could just sprinkle a little fairy dust and make their house values go up again, I'd have a much better chance at getting reelected."

So the most important "fact" is that the government will do everything it possibly can to prop up the housing market. And it will keep going until it succeeds.

Crux note: To learn more about Steve Sjuggerud's True Wealth – and how to legally avoid paying taxes on Social Security income – click here.

More on government boondoggles:

Value guru Dreman: 10% inflation coming soon

The bankruptcy of the United States is now certain

Ron Paul: The Fed will self-destruct when it destroys the dollar