Monday, January 26, 2009

An Economic Mystery

Journalists are puzzled by a strange economic phenomenon reported today:
US home sales unexpectedly rose in December as buyers took advantage of much lower house prices, industry figures have showed.
How could this have happened? Maybe home buyers received a "stimulus"... no, there are no stimulii for regular folks. Turns out that housing prices fell precipitously this year. Oddly enough, economists think that the rebound in sales - a 7% rise over November - was caused by buyers taking advantage of low prices. Funny how that works.

The government should re-read this little piece of good news, and remember that buyers respond to prices. People don't think the world is ending, or that they won't be able to pay their mortgages over the next few decades. They do think that buying a house for cheap is smart, and their willingness to buy and sell at the right price is reviving a flagging sector.

Maybe if the rest of the economy were left to its own devices, prices in other sectors would fall, too, and things would get moving again. However, the administration will probably decide it's not worth taking that risk: instead, prices should be controlled and failing businesses in favored sectors should be "stimulated". We can't leave the economy in the hands of ignorant citizens!

3 comments:

inos said...

oh, the sarcasm!

David W. said...

what u have been saying

http://www.boston.com/bostonglobe/editorial_opinion/oped/articles/2009/01/28/an_overoptimistic_stimulus_plan/

Chops said...

That's a great article, W. Now all we need are representatives who listen to their constituents as much as they listen to their donors and party whips.