Housing Boom Goes Bust II

I theorized on 28 Dec 2006 that the reason new home sales went up in November was because builders were dumping inventory by reducing prices. Today we find hard evidence of that fact. Paul Kasriel explains that builders are aggressively cutting prices, and you can read through this article to find the hard numbers. A very good overview of the entire economic situation is laid out by Mike Shedlock in Significant Shifts in Psychology. In esssence he asks the question, "what if the Fed wants to loan money, but no one wants to take on more debt?" "We are in a world of hurt," is the quick answer.
Finally, we have seen this macroeconomic situation before in many manias of the past. Shannara Johnson describes the result of Fiat Money Inflation in France. It has profound similarities with what the Fed has already done here. I assume the journey will not be exactly the same, but I can't help imagining that the end result will be much different. Notice that it was immediately in the aftermath of these events in France that the world saw the rise of Napoleon. Ms. Johnson's final sentence is pretty illuminating, "And don’t make the mistake to think those French politicians were morons, warns Andrew Dickson White. “[The] men who had charge of French finance during the Reign of Terror and who made these experiments, which seem to us so monstrous. . . were universally recognized as among the most skillful and honest financiers in Europe. . . [which shows] how powerless are the most skillful masters of finance to stem the tide of fiat money calamity when once it is fairly under headway; and how useless are all enactments which they can devise against the underlying laws of nature.