The Cookie-Cutter Theory
I submit two pieces of evidence.
Exhibit A: Houses became easier to buy in 1999.
http://www.snopes.com/politics/business/easescredit.aspExhibit B: Houses are increasingly built in cookie-cutter conformity and quantity
Need evidence of that? Look around any town in America, and you'll see it. It's our dirty little secret, staring us straight in the eye. Millions of mass produced, cheaply built houses with recently planted tree saplings in the front yard. It looks as if someone altered the entire American landscape with a house-sized cookie-cutter.
Here's a recipe that uses both of these ingredients together.
Start by making it easier to buy houses.
Immediate result? Demand for houses goes up, home prices go up.
So land developers see these high prices, and to capitalize on the market, they build as many cheap Cookie-Cutter houses as possible, which they sell at an inflated price. Exhibit B is a result of exhibit A.
Eventually the boom in demand cooled, but the supply was firing on all cylinders. Now the prices are falling. As the money starts to dry up, the demand suffers even more. Things get worse.
Economics 101.
But that's the problem. What's the solution? Let's back up.
Why did it become easier for houses to be bought in the first place? The answer is because the Tech Bubble was bursting, and things could be looking bad.
We essentially created the Housing Bubble to takes the Tech Bubble's place intentionally.
WHICH WAS GOOD!
We created so many new jobs in construction and all the related industry. We gave people a chance to put their money somewhere besides the stock market, and the economy moved on rather than grinding to a halt.
Of course, now that Bubble is bursting, those jobs are going away, and people are losing money. I'm sure whoever (Greenspan?) had the idea of creating the Bubble in the first place knew someday it would burst, but didn't count on it happening so soon on account of the Cookie-Cutter Theory.
Or maybe he thought the Housing Bubble would give us all the time we needed to think of where to go next, how to create new jobs and new investment. The next bubble.
Unfortunately, we've spent the last decade complacent and comfortable, carefree of the job we had to do and the deadline we had to do it.
Now the Government bailout/rescue has prolonged that deadline. It isn't, nor was it intended to be, the solution to our problems. It is intended to buy us some more time, to work on the problems we've been avoiding for too long.
This is not the time to wonder what solutions tomorrow may bring, but to get working today! We want something that is simple and indefinitely sustainable, but that is the opposite of life, my friends!
Without suffering an even more difficult collapse, we will have to create new jobs and new investment by innovating a new Bubble! It's hard, and it's temporary, but so is life. This is the only option.
So, ideas?
For starters, the US Federal Government should create a new constitutional amendment to require solar panels on all new homes and buildings constructed in this country.
The plus sides of this plan are astonishing:
1. Costs the government very little
2. New jobs
3. New investment
4. Regulates the housing supply, letting prices raise again
5. Increases the value of new homes
6. Green energy
Not only that, but such a bold and innovative step would be a first in the world! America would immediately be the world leader in renewable energy, environmental issues and climate change.
There are probably dozens of criticisms one could make of this plan. But something has to be done, and unless you have a better idea today, it should be this.
Maybe it's not ideal, maybe it's not simple, and maybe it's not going to last forever.
But in the end we have to make it through the day and have hope for tomorrow. Every generation is given problems. This problem is ours to solve right now. We can't just drag our feet, and hope everything takes care of itself. This needs to be done.
