What difference will +$1,200 make up against -$100,000

With home price in parts of the country dropping by $100,000 per year or more, is $1,200 in rebates from the government going to make any difference?

The now-quickly-vanishing home equity was nearly as easy to spend as the checks that are now hitting bank accounts and mailboxes. Remember when purveyors of home equity loans would offer credit cards that would tap your equity directly?

Do they still do that?

If government stimulus plans are to be effective, that's what the government should do - just issue credit cards that would tap the U.S. treasury directly and then everyone can worry about paying the money back later.

They ought to keep that in mind since it doesn't look like the first batch of checks is going to have the desired effect as explained in this report in the New York Times.

The Rebates Might Not Go to the Mall
By PHYLLIS KORKKI

Go ahead and spend — it’s your patriotic duty. That’s one way to look at the government rebates that are just starting to arrive in taxpayers’ bank accounts and mailboxes.
...
The rebates are meant to help revive our parched and stunted economy with millions of liquid infusions. But many consumers do not plan to rush to the store with the money.

According to a recent survey by the NPD Group, a research firm, 42 percent of taxpayers said they planned to pay bills with the check, and 21 percent said they would add it to savings. Only 12 percent said they would spend it on discretionary items.

It is still possible, though, that once the bills are paid, and the savings are padded, the urge to splurge will assert itself at last.

They really should consider the credit card idea for the next round - either that or just decree that home prices are going to be reset to their peak levels in 2005 or 2006 (whichever is higher) from which they will not be allowed to fall.

ooo

This week's cartoon from The Economist: