Diane Swonk Waxes Poetically about Falling House Prices

She writes:

[The housing downturn] not only represents a hit to the American economy, but it represents a hit to the American psyche. It is a straw that breaks the back of working class households who feel they have already given more than their fair share in an economy that penalizes manual labor relative to educational attainment.

A more prosaic way to put it is that home equity is often the only wealth that people in the lower half of the income distribution have. According to the 2004 SCF, 40 percent of those in the bottom quintile of the income distribution have some home equity; only 12 percent own stock.