You will see a new government agency created next year that will go out and buy up all the houses. Trillions worth of unwanted houses. They'll put 'em on the books of the ol' USA, maybe even rent them out for a bit, and eventually they'll resell 'em for whatever they can get.
Call it a Super-RTC. And when the government is selling distressed houses and the banks aren't lending, THAT'S when you want to have buckets of cash ready to buy.
This article takes it even farther, and says that in order to avoid a Depression and deflation, the government will also have to buy stocks and commodities. I disagree, the government will not buy stocks, as Bernanke will do a fine job pumping that new bubble. But they will buy houses, mark my words, they will buy the houses.
So sit back, grab some popcorn, and get ready to hunker down for years. We're just getting started. As the government is now admitting, the worst is yet to come.
Depression risk might force U.S. to buy assets
NEW YORK (Reuters) - Fear that a hobbled banking sector may set off another Great Depression could force the U.S. government and Federal Reserve to take the unprecedented step of buying a broad range of assets, including stocks, according to one of the most bearish market analysts.
"Avoiding a depression is, unfortunately, going to have to involve either a large, quasi-permanent increase in the budget deficit -- preferably tax cuts -- or restoring overvaluation of equity prices," Connolly said on Monday.