Remember the old law-and-order political sally: A conservative is a liberal who got mugged. Maybe there will be a new version. At least one conservative business analyst is warning his political compatriots that their middle class base may melt away when homeowners begin to experience the coming housing crash. Andrew LaPerriere sounds the alarm in the most recent Weekly Standard, telling conservatives to get some answers ready for the people who are going to lose their homes.
Has the housing crash started? And will it bring down the whole economy? LaPerriere travels ground we covered here last summer — skyrocketing home prices that make purchases unaffordable for a growing number of families, the staggering differential between rental prices and purchase prices that signal over-heated speculation, and what happens when $2 trillion of adjustable-rate and interest-only mortgages (one quarter of all mortgages in the US) are reset in the next two years. But he adds a political analysis that is amazingly candid. Calling his fellow conservatives “strangely silent” on the problem and consequently vulnerable to the political fallout when conservatives across the country discover that no one in Washington was watching out for them.
While LaPerriere, the managing partner of a Washington brokerage firm, seems to want to distance himself from the “liberal economists, columnists and bloggers” who have been talking about this problem for several months, he agrees with every single point that that this unsavory group has been making. In fact, he even plays with the numbers and adds some new data about the price-income ratio that look worse than anything Paul Krugman has come up with.
LaPerriere dismisses those who claim the housing market is stable. Comparing them to the dot.com cheerleaders, he describes their explanations for how housing will sustain its current price levels as “ever more creative.”
LaPerriere offers no solutions. Instead, he sends up the plea that someone figure out a way not to blame this mess, as liberals will claim, on “Bush’s tax cuts and other policies that have created a hollow and unsustainable economy.” His best answer is that it was loose monetary policy (read: inadequate mortgage regulation) in 2002-2004 that fueled this problem, as if that should let everyone in power in Washington off the hook.
He clearly doesn’t want to say it, but the way he aligns the numbers makes it clear that LaPerriere has heard the rumble of the earthquake. And he fears that the coming collapse will realign both housing prices and political affiliations.
