Can we regulate Greed? Part One...

I believe that we are reaching the bottom of this real estate downturn. I say this due to the fact that of the news of housing starts have reached their lowest level ever since records of this have been kept beginning in 1959. We have reached the bottom, but is it the final bottom?

With Obama now looking to mend the pain of the mortgage crisis it may begin to heal the lending portion of the real estate business. With the fact that NO ONE has been able to get a mortgage at this time, despite the billions that we have given banks, they continue to NOT lend. Once people are able to borrow again they will get back to wanting to own a home, or borrow for their businesses.

The housing boom also created a huge inventory of new homes. When the lending shut down the amount of homes on the market dramatically began to increase due to no sales. With the additional foreclosure market adding to the inventory it simply added more inventory on top of inventory. This halted the new build construction industry nearly overnight.

As the construction market nearly stopped completely one of the largest industries began seeing high unemployment and reducing wages through more competition.

Usually, when new housing slows, the remodel business picks up. This didn't happen due to the fact that banks shut down most people's HELOC (Home Equity Lines of Credit) hereby nearly stopping the residential construction business overnight. As banks shut down lending, business couldn't get money either, thereby shutting down the commercial tenant improvement business as well.

I believe that Obama must get some rules to the financial industry to distribute the bailout money. We have reached a point in which the government, which is deeply entrenched in the financial industry with money at this time, must also be deeply entrenched in how it orchestrates these funds. We have reached a point of social finance, but the legislators are refusing to accept this and go there fully. Too late, my friends. The money has exchanged hands and it is now time for the rules of the game to be set. If we don't find ourselves accepting a socialistic approach to finance with full disclosure and accountability Wall Street will find new avenues to bleed the system and once again stifle the necessary growth for the country.

Greed must become regulated in order for this crisis to end.




This, the 257th entry in bloggoland! Thanks for reading and coming back. I always enjoy the comments, emails and the banter!!


(c)Copyright 2009 Doug Boggs