>Economic growth would be substantially slower, as there would be fewer purchases of goods and services from Home
>Depot, furniture/carpet stores, appliance stores, roofing contractors, lawn services, and so on. Every time a home is
>built and sold, workers in (probably) thousands of different occupations participate positively in the
>purchase.
This is an assumption. If economic activity were not directed toward building houses and buying shop-vacs at Home Depot, then it would be directed toward other efforts. Without the government guarantee of credit quality, credit would be established for these other activities at the market price of credit. The economy would be different, but it would still function, likely even more efficiently and faster-growing than the current one.
If the FHA/VA programs were simply halted tomorrow, it would undoubtedly result in slower economic growth - for a while. The economy would absorb the change and would reorganize. In the end, the housing market would go on, and the economy would go on. There might be fewer REALTORs (TM) after the pain is over. |
