Hey, Dems, Must Be Time To Raise Taxes!

A whole host of factors...suggest that housing demand is likely to dry up at the very time when the market is characterized by oversupply. The mounting trouble in the sub-prime market space has already resulted in the shutting down of 30 sub-prime mortgage lenders and defaults on sub-prime mortgages are expected to result in around 500,000 foreclosed homes returning to a saturated market over the next six months. To make matters worse, the resetting at higher interest rates of around US$500 billion in Adjustable Rate Mortgages is only likely to compound a difficult situation in the sub-prime mortgage space, while the generalized tightening in mortgage lending standards is likely to further restrict overall housing demand...Housing Market Blues, Desmond Lachman, TCS Daily, 3/23/2007

Can't deny it any more. Except for a few spots, such as New York City, the tulip market in housing is over. What a brilliant time for the Democrats in the House and Senate to be talking about raising taxes. With housing sales drown, savings risings, what a fine idea to take the people's savings away, depressing consumption even further!

Sharply lower residential construction activity and employment alone could shave a full 1 ½ percentage points from GDP growth in 2007. More important still, in the same way that increasing home prices induced US households to run down their savings when the housing boom was in full swing, declining home prices could induce those same households to replenish their depleted savings. Since household consumption constitutes 70 percent of GDP, any attempt by households to rebuild their savings through lower consumption expenditure could have a large impact on the overall economy....(Housing Market Blues, continued.)

Given the current cabals that dominate Democrat politics in the House and Senate, it wouldn't surprise this writer at all if a serious attempt were made to revoke tax cuts, which would suck hundreds of billions of dollars out of the private economy, and, as we also know, would have the effect of ultimately suppressing government revenues as well.

As mentioned here on occasion, knowing anything about historical consequences from actions is a prime qualification for serving as a liberal Democrat in national office. So don't expect any of the current radical cabals in the House and Senate to pay attention. The only good thing is that this will probably cause a major recession in time for the 2008 House and Senate elections. The Democrats will no doubt blame the disaster on the outgoing President, trying to both steal their cake and eat it too.

Luther