A shocking figure came out last week. In the US, fewer new houses were sold last month than in any month since they started keeping records in 1963.
How is it possible? Simple. The houses that would have been sold to today’s able buyers were built and sold years ago. That’s what excess credit does. It doesn’t really enlarge or enrich an economy…it stretches it, bringing things that would have happened tomorrow forward, to yesterday. Only a certain number of people every year can afford a new house. If in 2005, you give credit to buyers who won’t be ready for many years, or perhaps never – who will buy a new house in 2011?
By the time the bubble popped in ’07, there were few able buyers still looking. And then, a US federal tax credit program in the fall of ’09 and the first part of ’10 finished them off. That program expired a year ago. Housing has been an empty husk ever since.
The latest data show more remarkable developments in time travel. You have to see it to believe it. And even then, you rub your eyes and wonder. In the US, the financial sector is riding high. Again. After bringing the whole world economy to its knees three years ago, profits for the industry are back where they were before the crisis began 4 years ago. For every dollar of corporate profit made in the United States of America in 2011, nearly 30% comes from shuffling money.