Thursday, May 19, 2011

9.9% Problems

Charlie at Peach Pundit wins the Understatement of the Week Award:

Georgia still has massive structural economic problems in housing and banking which are limiting recovery.

Yes. Those problems are housing "supply" far outstripping housing "demand," while the banks are still heavily invested in getting the projected return on their financing of the oversupply.

Thus, you have a bumper crop of overpriced homes that no one can afford to buy in the first place, notwithstanding the fact that the banks' money was already lended to developers to build those overpriced homes. And don't even get me started on how the developers increased their profit margins by paying illegal immigrants pennies on the dollar to get the overpriced oversupply built as cheaply as possible.

What happens when you use fake money to build too many homes that cost too much while kneecapping your own working population with illegal hiring practices? Well, then only developers could afford the tens of thousands of homes they were building, and those developers were paying with credit futures based on the belief those homes being occupied at asking price.

Eventually, you reach a point where you have to look at the house of cards that existed before and thank your lucky stars unemployment only got to 10.1% statewide, and that it coming down to 9.9% so soon is an economic miracle. For a GOP controlled state swearing fealty to the almighty invisible hand of the free market, they sure do complain a lot when that hand slaps them in the face.


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