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No Christmas Truce in the Political Wars

12:00 AM, Dec 24, 2011 • By IRWIN M. STELZER
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This year also saw the housing market struggle to realize its long search for the bottom from which there is nowhere to go but up. Construction of new single-family homes rose by 2.3 percent in November, and of apartments by 32 percent, the latter in response to increased demand for rental units. Still, the 430,000 homes and 185,000 apartments and townhouses built were about half the number that would be started in a healthy economy. Since each home built creates three jobs according to the National Association of Home Builders, a more normal level of activity would have produced close to two million new, sorely needed jobs. (Next week we will take a look at all of the data, including inventories, sales, and new mortgage applications to tease out the probable performance of this key sector in the new year.)

Finally, no tabulation of economic developments in 2011 would be complete without mentioning that it was a year in which politics trumped economics. American banks are better capitalized and better able to lend than ever before, corporate treasuries are overflowing with cash, and consumers are showing hints of unzipping their wallets. But the economy falters as the political class introduces a high degree of uncertainty and demonstrates an appalling commitment to ideology über alles, with compromise a dirty word. Deficits continue to run at unsustainable levels, debt hits a level worthy of a banana republic (with apologies to those banana-growing countries around the world that may be well managed), Republicans continue to pretend that inequality is not increasing, and Obama that he can right things by taxing “millionaires and billionaires.” Were it not for the fact that election year 2012 is likely to see even more damaging political wrangling, we would happily look forward to ringing in the new.

Let me take this opportunity to wish all of you a wonderful holiday season. 

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