Worse than the dissolution of the USA via social unrest? To me, thats a worse possible outcome – but I guess we’ll just have to agree to disagree.

You can’t have asset inflation and wage deflation at the same time without causing tremendous social and economic dislocations. By trying to artificially prop up asset prices (while not addressing the multi-decade wage stagnation/deflation), they are forcing Americans into poverty even faster than they would with deflation. As it is going now, we are losing purchasing power by the day. This is the worst of all possible outcomes, IMHO.

Ca renter – thats debatable isnt it. The masters of the universe decided we were looking at a potential deflationary feedback loop. If it were true, we would not have “creative destruction” via the levers of supply and demand but just “destruction” as people in all sectors did the rational thing and held out for lower and lower prices (ignoring the fact their personal balance sheets were getting lower and lower due to others doing the same thing).

Not only is mere “destruction” not a societal good, it carries with it the potential for tremendous instability. Can you imagine what would be the popular response if the govt merely sat back and said “we wont intervene, long term it is good for you”???

That type of response is a recipe for revolution. Dont think it cant happen here? The US is less than 300 years old. Empires that lasted thousands of years longer than or grand experiment are long gone. If they could go the way of the dinosaur, so could we.

The argument for the lost decade a la japan is that it allows society to adjust, slowly to the inevitable. There is no revolution in japan because younger generations grow up in the system and thats all they know. They dont remember the good old days, nor do they expect them.

It was a faustian bargain indeed. Rip the band aid off at risk to your survival, or ease the pressure out slowly over time.

Not saying they made the right choice, nor am I saying that revolution was even a likelyhood, but thats the argument.

Like shadash mentioned above, there is a lot of money out there desperately looking for good investments. If the banks were allowed to fail (while depositors were protected via FDIC), others would have taken their place. The added benefit would be the re-pricing of risk. Interest rates would be higher, and people would be more cautious about borrowing and lending.

What we saw during the credit bubble (which includes our current market, BTW) is NOT good for our economy nor for our society. Low interest rates and easy money might keep unemployment numbers lower than they might be otherwise, but they lead to even bigger problems down the road.

The “Greatest Depression” has not been averted, it’s only been delayed.

And this was 3 months ago – govt manipulation hasnt changed, extend and pretend hasnt changed, nothing has changed, and yet, the group still couldnt come up with a realistic prediction.

Just goes to show how far the expectations of the bloggers here are detatched from reality…

Are you counting houses and condos?

Perhaps you are excluding contingent listings but then I don’t see why there was a drop from 11,457 in August to 8,149 in September.