Wednesday, September 21, 2011

Grocery Workers Voting on Contract

I would urge any grocery workers who may read my blog to vote in favor of the deal reached between the union leaders and the grocery chains that operate Ralphs, Vons and Albertsons. The contract preserves their own health care fund, although I am not sure how affordable it will remain under Obamacare. Although there might never be a good time for a strike, the following U-T headline indicates that striking now would be especially unfortunate:

Poverty rate in county hits 30-year high

More county residents faced financial hardship last year than at any other time in the past three decades, a record reflected in the poverty rate’s sharp rise and stagnating median household incomes, according to new data from the U.S. Census Bureau.

I am also afraid that the housing market will also remain down until the government stops intervening, as predicted in today's Wall Street Journal.
Economists, builders and mortgage analysts are predicting the weakened U.S. economy will depress housing prices for years, restraining consumer spending, pushing more homeowners into foreclosure and clouding prospects for a sustained recovery.
Home prices are expected to drop 2.5% this year and rise just 1.1% annually through 2015, according to a recent survey of more than 100 economists to be released Wednesday. Prices have already fallen 31.6% from their 2005 peak, as measured by the Standard & Poor's Case-Shiller 20-city index.
Our current problems starting with the mess in the secondary mortgage markets, partly the result, partly the cause of an overheated housing market. Continued efforts by government to prop up the market will cause more economic weakness which will in turn continue to push people into poverty. Somehow, keeping home prices high is compassionate.

Exit question, does a double dip in housing prices forecast a double dip recession?


  1. Don't we still have a whole bunch of foreclosures that were put off?

  2. Exit question, does a double dip in housing prices forecast a double dip recession?

    I think its moot. We're already there.

    The question as I see it is, is it better to prop up the housing market to avoid the devastation of a huge wave of foreclosures, or take the lumps and let things find their ground state. I haven't a clue. Clearly letting it collapse maximizes the public's pain. Lower home prices might sound good, but who can get a load these days to take advantage of them.

  3. Kelly, there are a lot of investors sitting on cash who have been moving into the housing market as prices have fallen. The sooner we hit market clearing prices the sooner the recovery starts, because investors start fixing the places up for resale or rental. This kind of activity jump starts the whole economy.