I have to say I find Geithner rather sensible here when he says asset prices need not be higher than they are now.
Geithner is right, and I'm glad someone has finally said it, but even leaving the possibility that house prices return to '06 levels is utterly ridiculous. I've asked this about a million times, and I've yet to get an answer from any of the bulls: What part of "Houses are too expensive to clear the market" do homeowners, banks, talking heads, and the idiots who rule us not get? It costs far more to pay the mortgage than the house will fetch in rent. The P/E ratio is out of whack (technical term). The mortgage requires debt levels far above the historic norm without a change in real variables that would justify the the appreciation.
All together now: Houses are too expensive. Conservatives want live babies so they can raise them to be dead soldiers. - George Carlin
The only real debate should be about sharing - all the inflated gains went to a very small group, and the pain is most widely shared, especially, as always, there is collateral damage: when you fall back to the ground after jumping, you hurt more when you touch the ground than if you had stayed there. In the long run, we're all dead. John Maynard Keynes
