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The · Psychohistorian


The free market at work

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Amidst the continuing bad economic news dominating the headlines, there was some good news this week: home sales were up about 5% in February, contrary to predictions, and durable goods sales were also up more than expected. The reason is simple: prices are down, in the case of homes by about 15-20% from a year ago. As with any product, when there is a pricing bubble, people usually figure it out eventually and stop buying; when the bubble bursts, people start buying again.

Now if the government would just quit interfering, we might see the rest of the economy recover, too.

Links:
http://www.cbc.ca/money/story/2009/03/25/us-homes-new-orders.html
http://online.wsj.com/article/SB123781706899814483.html?mod=googlenews_wsj
http://www.foxbusiness.com/story/markets/economy/existing-home-sales--february/
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