Jaws Drop as Home Prices Plummet and BusinessWeek's Chief Economist Outlines the Argument that will Dominate Congress

Eye popping, yet not surprising. That's what you are likely to think about about the new report showing home prices falling 17.7% from last year in a number of major cities. The Wall Street Journal's Donna Kardos has a terrific write on the report, and the Journal has an excellent second web page breaking down each metro area. If you want to focus on Los Angeles then you should check out the zen master of LA real estate - aka - the LA Times' Peter Viles who runs the paper's real estate blog: LA Land.

You should take a moment with the report, and as we say, eye popping but not surprising. Not surprising because the economy hasn't stabilized yet. How do we get to stability? Well, that's why today's must read is BusinessWeek's chief economist Michael Mandel who argues that the economy's problem isn't a confidence crisis but rather a breakdown in the economic system itself.

Here's why you care: Mr. Mandel's argument essentially says this - We are in a global economy where a number of countries depend on American consumers to do just that consume, but how can Americans continue to do that if their personal debt is rising while their wages are falling? Yes, we are doing a slight disservice in over simplifying his argument. But, that's why we are highlighting this for you. His arguments will be important as Capitol Hill will return post election and will undoubtedly tackle a stimulus package (i.e. - a cash injection for the tax payer, as we've previously noted deserves to be on your radar screen).

Mr. Mandel's argument is both thought provoking, and well laid out. Whether we agree or disagree with him is beside the point, we think you'll walk away from it better able to understand the policy arguments over the next month between Capitol Hill and Wall Street. You'll be glad you read it.