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Economic – Residential Housing Crisis 2.0


The U.S. Stock Market has been somewhat volatile recently. The Federal Reserve has sent a message that it will not alter Monetary Policy ( perhaps short of a second stimulus of some kind, if absolutely necessary. ) The onus now falls on fiscal policy with the Obama Administration and Congress. Banks are still not opening the lending spigot to consumers and small businesses. There are still many problems in the residential real estate market that need to be addressed before our domestic economy can move forward. The following  focuses on just several of many issues and ideas that relate to this topic.

Here are a few insights and ideas. First of all, what can the U. S. Government do to help ? Well, since the Fed. has sent its message recently, it’s only reasonable short-term monetary policy option is a 2nd economic stimulus that DIRECTLY focuses on this issue. On the fiscal side, the President and Congress need to collectively find a solution to DIRECTLY prop up the lending capacity of the big banks through some sort of compromise and / or deal.

Let me go out on a related side note for a moment. Anyone familiar with Abraham Maslow, a past leader in the field of Psychology ? According to Wikipedia, ” Maslow’s Hierarchy of Needs is a theory in the field of Psychology, proposed by Abraham Maslow in his 1943 paper,  A Theory of Human Motivation . Long story, short;  his theory DIRECTLY makes the case that … physiological needs, such as shelter ( i.e.  housing issues ) need to be reasonably met before safety needs, such as financial security can be met. Check it out for yourself . This is about ‘ human nature ‘ ladies and gentlemen; and human nature doesn’t generally drastically change in my humble opinion, especially something as basic and profound as Maslow’s Hierarchy of Needs.

Sometimes, it is possible that too much specialization in certain matters can act as ” blinders ”  and relegate people to operate in their narrow  ” silos ”  with their established theories and models, without being able to look at the Big Picture. In this rapidly changing global economy, one must realize that certain things can subtly change over a relatively short period of time with dire and profound consequences.

We’ll see what happens.

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About Neven's Blog

My blog focuses on FINANCIAL MARKET ANALYSIS & INSIGHT from a macro as well as a micro - level point of view. The information is straight forward, honest, simplifies complex matters, questions some oversimplified matters, all while being as easy as possible for readers to understand. I primarily focus on capital and currency markets by combining insights, analysis & ideas from the fields of finance, economics and geopolitics.

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