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Reuters reports that U.S. home prices fell a record 8.9% in 2007. The final day home prices fell anywhere approach as much as in 1991 when they lost 2.8% of their value. That was when the current president’s father was in office. And he presided by a $200 billion government bailout of the savings and loan industry.

This is an impressive accomplishment for junior. But it does not seem to be the end — although it may mark the beginning of the end. That’s considering, as you may have read by now, two million homeowners are expected to foreclose on their homes by the end of 2009. The reason is that variable rate mortgages are resetting to rates higher than many borrowers can

It’s too early to tell how much the current president’s housing market problems will cost the economy. Although, so far, he is doing a good job of keeping the government from formally bailing out the housing market. That is unless you take into explanation the skyrocketing stagflation resulting from the Fed’s interest rate cuts and the credit crunch.

Maybe the U.S. needs a break from Bushes in capability.

Peter Cohan is President of Peter S. Cohan & Associates. He additionally teaches management at Babson College and edits The Cohan Letter.

Original post by Peter Cohan

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