It seems like for the last decade or so, too many graduates from elite colleges have been lured to Wall Street instead of becoming doctors, lawyers, teachers, scientists, etc. We can blame the culture: 1998-2008 were all about bling and material wealth. Granite counters and leased Mercedes. Since, frugality is making a slow comeback. Not [...]

Until someone with some clout stands up and admits that our real problem is too much debt, and until we introduce policy to eliminate debt instead of simply refinancing it, it’s hard to imagine the global economy or our local housing market getting better any time soon.

Our economy is perilously perched on a crumbling foundation, over a gaping sink-hole of unserviceable debt. We’ve looked the other way for three years now, but maybe time is finally catching up with us.

Especially since the 1990′s, home prices have largely been driven, directly or indirectly, by the actions of The Fed. The Greenspan Fed enabled the Credit and Housing Bubbles, and the Bernanke Fed is doing everything it can to keep them inflated, extending and pretending, hoping the fundamental core economy will eventually catch up.

I think the crucial point will be reached in late 2013. If the bond market sees a serious move to control the deficit, I think they let us “skate.” Then we Muddle Through. But if not, I think we begin to see some real push-back on rates then.