Some good news.

Irwin Kellner of MarketWatch (part of the Wall Street Journal Digital Network) here, reports that the drop in gasoline prices at the pump has put some $200Billion into our pockets.  Not my pockets, otherwise I'd be buying one of those cool new Mac laptops...  But anyway, this money, that we didn't spend getting from place to place, plus the stimulus check from the government, has raised our collective buying power by 4% over the past four months.  This is good news, especially headed into the holiday buying season. (I hate to say that, since this season should really celebrate family and friends, not to mention it's religious events, but retailers are a big part of GDP and the fourth quarter is critical to their profitability, even their survival.)

Now it's only $75 to fill the 34-gallon tank of my Chevrolet Silverado, instead of $150. Not that those dollars are being spent somewhere else, like the mall or online or at Santa's workshop. It's going into savings.  And therein lies the problem: all of that money Congress approved under, TARP, here, is going to the banks and not coming out the other side in loans to small businesses to buy new equipment, open new markets, and build inventories in anticipation of selling more stuff.  It's going to into their capital accounts, where it doesn't do anyone, except them, any good. None of it, yet, is affecting the mortgages of homes in imminent danger of foreclosure.   The government should be using that money to buy bad debt and empty houses, like Mr. Paulson originally proposed. 

Remove the threat of the debt (that rhymes nicely, doesn't it?), and now the banks know what to reserve for, rather than a big unknown.  They have a known level of risk that they can accurately reflect by holding an appropriate level of reserves.  Create positive absorption (that's a genuine technical real estate finance term) in the residential housing market and you catch the falling prices.  The South Florida Business Journal, here, reports that sales of condos and single-family homes are up significantly.  Yes, prices are down, but folks are saying: "I've always wanted to have a home in _____, and at this price, I'm going to buy."  There is cash out there, and there is demand, and at some price, that becomes transactions.  Falling supply in the face of constant demand becomes a price floor.

Back to my original point: have patience.  All of that money is going to have an effect, but it takes time to work it's way through the economy.

There you have it.