Falling Inland home prices still too high for many would-be buyers

Since this slowdown came from a financial bust, the outlook is particularly uncertain. Nobody knows what financial calamities lurk under the surface or by how much credit will shrink. But one thing is clear. By adopting very different stances to the threat, policymakers are not helping to assuage the uncertainty.

In America politicians and central bankers are focusing on policy stimulus. The Federal Reserve has cut short-term interest rates by 1.25 percentage points in recent weeks, to 3%. Financial markets expect another half-point cut at (or before) the Fed's next meeting on March 18th. This week George Bush signed into law a package of tax rebates and temporary investment incentives worth $152 billion, or just over 1% of GDP.

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