Sunday, March 23, 2008

On the Housing Bust

A recent Bloomberg financial article pointed out an extremely interesting fact:
The U.S. housing recession has arrived literally on the doorstep of Federal Reserve Chairman Ben S. Bernanke.

Bernanke lives in Washington's Capitol Hill area in a four- bedroom, 2,600-square-foot house he bought new in May 2004 for $839,000. Almost four years later, it may not be worth any more, according to real estate records and local agents.

Bernanke's timing wasn't the best -- values in the area peaked a year later -- and he is hardly alone among Americans living in an investment that's turned cold. His situation shows that the slump that began with distress in the subprime market is now engulfing wealthier neighborhoods, including some in the nation's capital.

Now, I'm a little surprised that even the Fed can't avoid economic problems, but I think this should serve as a wake up call to anyone who thinks the economy is still peachy. I've read another article that one nonpartisan economic think tank has called our current economic situation a "recession of choice." Add to that a little financial illiteracy and I start to worry that we'll need a little more than a new economic policy and a new president to get through this. Especially since democracy seems so contingent on a strong middle class.

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