“Declines in home values of 2 per cent are costing US households some $370bn [€290bn, £257bn] per month, which helps explain why people are miserable.” (Ian Sheperdson, chief US economist at High Frequency Economics, an independent researcher)

The FT reports today that US home prices are still plumetting at a record rate.  This suggest that access to mortgage refinancing through the Administration’s $75 billion ‘Homeowner Affordability and Stability Plan’ will do little to bolster consumer consumption.  Why?  Because access to refinancing does not challenge the fundamental decline in value of homes. It simply adjusts the loans to the current, depressed, prices.  The plan, therefore, does nothing to help homeowners to recover disappearing bubble equity…