Congress extends home-buyer credit and awards billions to home builders foolishly delaying the inevitable.

I cannot begin to describe how disappointed I am with today's passing of HR 3548 despite local papers cheering this as a triumphant victory of prudent and benevolent lawmakers.  At a whopping 43 billion dollars this bill is aimed to extend jobless benefits (only 2.4 billion for that) and provide billions more for people to buy houses while handing over 33 billion dollars to home-builders!  Home-builders got filthy rich during the boom and now they are being funded by OUR money?  Instead of allowing the housing bubble to deflate at a normal rate Congress has approved an extension for the $8,000 dollar first time credit, relaxed income limits and is now providing a tax credit ($6,500) for those already living in the home for five years.  How does providing 6,500 dollars to people who owned a home for five years help the housing market?  This is just pointless distribution - another idiotic Keynesian handout.

The Treasury Department estimates that more than 1.4 million Americans have taken advantage of the homebuyer credit at a cost so far of about $10 billion.

We do not want people buying homes if they cannot afford to do so with their own savings!  This is precisely how we got into this mess in the first place, houses have become too expensive and unaffordable for many Americans and relying on cheap credit and mortgage tricks was hardly the solution.  The reason it is called a housing bubble is because house prices rose above the natural market price and in order for prices to stabilize prices have to come down to their correct market value.  Congress throwing money at the problem causes two distinct problems. 

First, it prevents the oversupply of houses to be properly sold off.  If we have too many houses or if houses are too expensive for people to buy then demand has to drop off such that price can become attractive enough.

Second, by borrowing money we do not have we simply adds extra burden to our already crippling deficits and will invariably prompt the central bank to print additional dollars, inflating further, debasing our currency and diminishing our purchasing power.

American needs to de-leverage and contract after a massive and unprecedented boom of credit.  Contractions hurt, but interventions hurt even more!  This is precisely the reason why the Great Depression continued until 1939 instead of ending in 1932-1933.  Propping up the market and saddling the public with debt, by issuing more debt is madness, stupidity and lunacy.

Note:  Giving 2.4 billion for people out of work, but unable to find new jobs is perfectly acceptable - however slapping on over 40 billion dollars in house subsidies at the same time is flat out deceitful.