Problems in the housing market are a cause of the downturn as well as a consequence of it.
The biggest disappointment of Barack Obama’s term is how he made health spending the top priority, thus throwing America’s economy off track for jobs to recover after the 2008 financial crisis in housing.
Now Mitt Romney is proving he too would be ineffective to solve problems in housing.
Planning to Fail
He’s failing to plan for what’s needed most now to stimulate economic growth: housing is neglected as an issue on Romney’s campaign website.
I understand the potential threat to national security that can come by neglecting the cause and consequence of an economic downturn for a middle-class still anchored underwater with mortgage debt worth more than their houses, less flexible to pursue jobs after seeing bailouts of the same corporations Romney describes as people.
For example, an upward inflection in the 100-day simple moving average for Treasury yields related to 30-year mortgages shows how recovery could be thrown off track again.
The Fed further explains:
Six years after aggregate house prices first began to decline, and more than two years after the start of the economic recovery, the housing market remains a significant drag on the U.S. economy. In a typical economic cycle, as the economy turns down households postpone purchases of durable goods such as housing. Once the cycle bottoms out, improving economic prospects and diminishing uncertainty usually help unleash this pent-up demand. This upward demand pressure is often augmented by lower interest rates, to which housing demand is typically quite responsive.
Housing Foundation for Growth
I will recommend fiscal policy necessary and expedient to solve problems in the housing market through 4% growth in the economy.
We can’t afford four more years without a president with a plan for a housing market most likely to guarantee middle-class dignity at minimum for every American.
Promote the general welfare for ourselves and our posterity. We have not yet begun to succeed — join me
John M. Collins, Military Strategy (Washington: Brassey’s, 2002).
Kathleen C. Engel and Patricia A. McCoy, The Subprime Virus: Reckless Credit, Regulatory Failure, and Next Steps (Oxford: Oxford University Press, 2011).
Financial Crisis Inquiry Commission, The Financial Crisis Inquiry Report: Final Report of the National Commission on the Causes of the Financial and Economic Crisis in the United States, Authorized ed. (New York: Public Affairs, 2011).
Roy T. Meyers, ed., Handbook of Government Budgeting (San Francisco: Jossey-Bass, 1999).
Mitt Romney, “Issues,” accessed April 23, 2012, http://www.mittromney.com/issues