New Capitalism: Overvalued assets must not be allowed to decline

[jeffrey]

Your house isn’t worth as much as you’d like it to be.

That’s probably no surprise right now. Maybe it’s unkind to rub it in. But a harsh appraisal has been one simple bit of reality to hold onto amid the frenzied, hysterical, high-pitched panic that seized leaders of government, business, and finance throughout 2008. In less than a year, vast swaths of American finance have been effectively nationalized, and the “Washington consensus” of more-or-less free market economics has come under the kinds of attacks not seen in a generation.

Why did this happen? Because your house was overvalued. It probably still is. But the watchmen of capitalism have chosen this time to act on a strange new form of economics. According to the new thinking, the value of an asset—even or especially an asset universally viewed as overpriced—must not be allowed to decline. This kind of economic intelligent design, endorsed by Republican and Democrat alike, even holds that a price decline cannot be a rational outcome in a competitive environment. Rather, it must be evidence of “market failure...

Houses of Pain: When did declining home prices become politically intolerable? - Reason Magazine

[PrincessPerky]

If my house really is worth this much, than how on earth is some kid fresh out of college supposed to buy it?

I see no reason why having a roof over my head should cost this much in a modern world. IT isn't like my kids can go build a house cheaper, or choose to live smaller (mine isn't that big)

Holding tight to the inflated values hurts our children in addition to the economic implications, folks need to stop looking at their net value and start thinking of the big picture, and in the big picture, some eggs WILL be broken, but maybe in the end if we play it right, the farm yard will be a safer place to roost.