US Housing Vortex And Fiscal Expansion

Pending sales of existing U.S. houses rebounded 6.3% in December, and markets were partying ...

I read the post "Senators Go Wild!, Approve House Flipping Subsidy, Media Don't Notice" by Dean Baker:

...Tonight Congress approved the Isakson amendment which gives $15,000 (or 10 percent of the purchase price, whichever is lower) to every person who buys a home in 2009.

Somehow, Isakson has this thing costing just $19 billion. Let's break the Washington rules and try a little arithmetic. Even with weakness in the housing market, it is still virtually certain that we will sell close to 5 million homes in 2009. The overwhelming majority would qualify for the full credit. So, we get 5 million times $15,000. That sounds a lot like $75 billion.

And this is before we get to any gaming. It's hard to see why tens of millions of people wouldn't figure out a way to buy a house from a friend or relative and get their $15k. If we can get one-third of the country's homes to change hands (lots of jobs for realtors) that would be good for $375 billion.

Any questions?

Is there anyone wondering why the long term interest rates for U.S. Government bonds are rising, despite the Krugman's fears of deflation? And put this in the context of "submerging markets" by Willem Buiter...