RE Boom Takes Over The Economy
Ms. DiMartino at Dallas News has article that reaches some questionable conclusions. "The Bank Credit Analyst research firm published three statistics on the housing industry this week that show how heavily the economy is leaning on the housing market."
"•Real estate lending represents a record 53 percent of bank loans.
•Housing accounts for a record 29 percent of household assets.
•Residential real estate has captured 35 percent of private investment, the highest in 35 years."
"This recovery's been driven by asset appreciation, which draws its sustainability into question. To feed the machine, lenders have all but dismissed any pretense of lending standards. This has introduced unprecedented credit risk into the financial system."
"Of course, the Fed is doing all it can to prevent this 'accident' from happening." I can't agree with that. How about all the liquidity injected into the system? Funds rates aren't all the Fed does. And could the ridiculous lending go on without Fed approval, and are generations of lending standards abandoned just by accident?
"'The Fed is uncomfortable about the housing boom,' the report said, 'but it has a tiger by the tail because the fallout will be severe when the bubble bursts.'"