Fed's Bullard: Not Feasible,Desirable To Reflate Housing Bubble Friday, February 24, 2012 - 11:36 -- By Vicki Schmelzer NEW YORK (MNI) - The U.S. housing market continues to faces significant "headwinds, St. Louis Federal Reserve Bank President James Bullard said Friday. Bullard offered his observations on a piece "Housing, Monetary Policy and the Recovery," co-authored by Michael Feroli, chief U.S. economist at JPMorgan Chase, Ethan Harris, co-head of global economic research at Bank of America Merrill Lynch, Amir Sufi, professor of finance at The University of Chicago Booth School of Business, and Kenneth West, professor of economics at the University of Wisconsin, which was presented at the Forum, sponsored by the Chicago Booth School of Business. "The authors counsel that…[READ MORE]

The housing bust began when subprime borrowers were unable to make payments on their 2/28 loans. Subprime borrowers have less resources than other borrowers, so when they experience any financial distress, they immediately implode. The collapse of subprime in 2007 led to a large number of foreclosures in 2008, and housing began its death spiral. I have been bearish on high end properties since the beginning of the housing bust. So far, reality has not met up with my most dire predictions. Despite this fact, my basic analysis of the situation hasn't changed. The high end is going to come down, and it will be very painful for those who have been spared to worst so far. Market observers who…[READ MORE]

Many issues compete for our attention in the wake of the housing bust. In the sidebar of the blog is a list of topics of interest I write about frequently. However, the importance of these issues is not equal. Underlying most of them is the central problem of the housing bust: moral hazard. Every decision we make in life has consequences. If we save regularly and invest wisely, the consequences are wealth and peace of mind. If we spend foolishly and speculate wildly, the consequences are periods of feast and famine, delusions of grandeur, enormous entitlements, and when times are tough, unbearable stress. Positive results come from good decisions and visa versa. That's how people distinguish wise from unwise and…[READ MORE]