There’s doom and gloom everywhere you turn. The S&P is plumbing lows not seen for ages. Housing markets continue to crater. Everywhere you look economic growth, industrial production, export volumes are falling off cliffs. Is there anything to feel good about?
I think there’s one aspect to the current economic and financial crisis that has had too little attention (Dean Baker is a notable exception). The value of the houses and 401-Ks of my generation may be plummeting, but that’s creating the opportunity for a younger generation to purchase assets that were both out of reach and clearly overpriced. That’s not a call on my part for the employed young to rush out and buy houses and stocks — the worst may well be still to come. But it’s when some stability returns to markets, people who were previously priced out of whole swathes of expensive places like the Bay Area will be able to buy. It’s also healthy that more people may view the benefits of home ownership versus renting with some skepticism. It’s not for everyone.
Rather than the many cries for action to boost the housing market, we should be glad that asset bubbles are deflated. It’s a transfer of wealth to younger generations, even if that’s painful for my generation. Let’s hope that when economic growth emerges from our current travails, it has firm foundations and isn’t based merely on an unsustainable bubble.