Can you say re-Housing Boom?

This from the International Herald Tribune:

“The U.S. Senate on Wednesday voted to expand the economic stimulus package with a tax credit for homebuyers of up to $15,000, a provision championed by Republicans as addressing a root cause of the U.S. recession.

The vote to add the tax credit, at a cost of about $18.5 billion, came as Senate leaders seemed to be finalizing their negotiations, with moderate lawmakers in both parties pushing to reduce the overall cost of the $900 million stimulus measure and to focus it more tightly on provisions that will quickly spur spending and create jobs. The vote came as President Barack Obama met with centrist lawmakers to address concerns about the package.”

This is the main problem when it comes to trying to fix the economy. It doesn’t matter what tools the government attempts to use, they are just trying to bring us back to the status quo. Of course, the status quo is the boom. It is very hard to sustain a boom. This can sometimes cause a bigger bust or a bigger boom and then a a bigger bust.

Sure, we may think it is a good idea to give tax credits but tax credits act as incentives and they push consumption and savings in a different ways. This is trying to make people reenter the housing market and cause another boom. Like I have said before we should not become fixed upon consumer spending. We should allow the market to correct the governments interventionist problem.

The rest is here.


Published in: on February 6, 2009 at 1:38 pm  Leave a Comment  
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