The ‘wealth effect’ in reverse

By Ken McCarthy
Real Econ TV

When house prices were going to the moon, government hacks and financial news media hucksters crowed about the “wealth effect” of the booming real estate market. Home owners felt “rich” so they borrowed and spent more which stimulated the economy – building supplies, contractors, furniture and carpet sales, etc. It was just one big party.

But now that the boom is going into reverse, few talk about the “wealth destruction effect” of a stagnant and declining housing market.

For those this the courage to look, here’s what the downside
of the slope looks like.

Watch The Golden State, not so golden

4 responses to “The ‘wealth effect’ in reverse

  1. Scary…esp. when we may be faced with the same issues: what to leave behind, what to take with us…this was mighty depressing to watch. But very informative.

  2. right… that’s what I thought. People leave things behind because they have nowhere to take them. go with what you can carry.

    altho…. I would be sure I had my birth certificate. like the guy said, tho, no doubt – that person was over stressed and not thinking clearly.

  3. i’m reading a book about secession right now… even if unsuccessful in complete terms, I believe a push like this can force huge chunks of power away from empire

  4. righto… it’s long past time for the tree of liberty to be watered with the blood of tyrants

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