Martin Wolf: Allow House Prices in the US to Drop
By Barry Ritholtz - January 14th, 2009, 3:00PM
I totally agree with Financial Times journalist Martin Wolf that home prices need to find their own levels:
Journalist Martin Wolf advises against “interfering with the clearing of the [housing] market.” Instead of artificially propping up housing values, he suggests fiscal assistance for those in need.
10/15/08
January 14th, 2009 at 7:58 pm
Agreed. The longer you try to hold up prices, the longer they will take to fall to their natural level in spite of the intervention, and the greater the magnitude of a variety of unintended and unpleasant consequences.
January 15th, 2009 at 4:50 am
For Barry Ritholz,
You’ve recommended Bill Moyers’ interview with James K. Galbraith on his book “The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too” here on The Big Picture. Have you read the book itself? Galbraith, son of John Kenneth, argues that when it has been done aggressively and well, government price-fixing has been quite successful, e.g., during WW II when John Kenneth Galbraith had significant responsibilities for price controls. In this video Martin Wolf offers no argument for his position, as has been so unnecessary for “free market” true believers since the time of Reagan, all he feels it necessary to say is that it would mean “government setting prices”. Nuff said! I think the days of “free” market knee-jerkism are coming to an end with books like James K. Galbraith’s, Jeff Madrick’s “The Case for Big Government” and Robert Kuttner’s “Obama’s Challenge: America’s Economic Crisis and the Power of a Transformative Presidency” and “The Squandering of America: How the Failure of Our Politics Undermines Our Prosperity”. In “The Predator State” the pages dealing with “price control” are 38, 42, 53, 164, 165, 176.