by Karl Denninger
Well, no, it's hosing.
And the economy.
The Standard & Poor's/Case-Shiller composite index of 20 metropolitan areas declined 0.8 percent in September from August on a seasonally adjusted basis.
Economists polled by Reuters had expected a decline of 0.3 percent.
Yeah. Remember, it was all going to be ok.
Well, no it's not.
And what's worse is that the cause of this is entirely the government which has tried to prevent asset price deflation - yet that's exactly what's necessary to clear the market!
As Gary Shilling said:
Shilling expects another 20 percent drop in home prices.
"As prices go down, more people get underwater, leading people to walk away," leading to more write-downs by the banks, Shilling said "That will be Act II in the whole drama of the housing collapse," Shilling said.
The big banks must be taken into receivership NOW.
Force the bad debts into the open, write them off, and for each institution that this bankrupts, recognize it and reorganize them.
That's what bankruptcy law is for, it's why it's in the Constitution, and it's the proper move to make.
We should have done it in 2007, we should have done it in 2008, and we should do it now.
Nobody wants to, but this isn't about "wants." It's about what we can realistically support in the economy and whether the debt levels are sustainable.