Daniel Gross takes readers' questions about the economy, housing market, and credit crisis.

Daniel Gross: Hi all—Dan Gross here, Moneybox columnist at Slate and the Money Culture columnist at Newsweek. Sorry for the delays in getting started—we're having some weather issues here in the northeast. I'm looking forward to answering as many questions as I can in the next hour about the housing market, the credit crunch, the Federal Reserve, etc.

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Marion, N.C.: Does anybody actually expect the National Association of Realtors to come out with an analysis of the actual condition of the housing market? NAR recently got rid of an "all is well" economist, but have they changed? NAR's job is to help real estate brokers sell houses—period. Anyone who wishes to think differently is naive.

Daniel Gross: Hi Marion—I think your cynicism is well-founded. The column we're discussing was about how the media—the financial media—always pays a great deal of attention to the National Association of Realtors' forecasts. After all, NAR is the relied-upon source for things like home sales. The point of my article is that NAR's economists have been willfully upbeat, even as the housing market plummeted. And, of course, as you point out, the NAR's job "is to help real estate brokers sell houses—period."

That's true. But from an economics perspective, NAR serves one relatively neutral function—they produce the data on home sales from their members. Nobody really quibbles with the data they produce as being overly promotional—rather it's the spin and the forecasting that is problematic.

I just think the media—CNBC, the wire services, etc.—have to be a little smarter in covering NAR. Use the data they provide—the real hard numbers—and report it, since those numbers do tell us something about the market, but be more weary of quoting the inevitable spin and take the forecasts with several grains of salt.

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Two Times Your Income—Period: The vast majority of homeowners in this country are living beyond their means. The exact amount my husband and I make in a year is what we owe right now on our home. It is great. The problem is that people are making, say, $140,000 a year and they think they are flush. They are not. They should not have $60,000 in car debt, but they do. They should not have a mortgage for $400,000, but they do. It won't end until people realize that more car and house debt—no matter how much you make—only imprisons you.

Daniel Gross: Two Times Your Income—you are correct that a lot of people are living beyond their means. And, ironically, one of the messages we get from our culture and our media is that doing so is somehow part of our patriotic duty. If we don't buy cars, go to Disney World, and shop till we drop in December, our neighbors may soon be out of work.

And I think you're spot on about debt. People have come to confuse liquidity—i.e. the amount of money you have on hand—with the amount of credit that's available. They're two different things. And people tend to get into trouble when they think the latter is the former.

That's great that you and your husband have a combined income of what you owe on your mortgage. Unfortunately, in certain parts of the country, especially on the coasts, that's a pretty tough benchmark to meet—especially if you're a first-time buyer.

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Princeton, N.J.: I am a mathmatician. Here is my take on the Social Security projections, although most of the comments apply to any economic projection: The demographics: Doom-sayers say: "In 1945, for every Social Security beneficiary, we had 42 workers paying in. By 2002, we had just 3.3 workers per beneficiary. By 2030, we'll have only 2.2 workers per beneficiary." So what? I presume they somehow want us to conclude that Social Security is going to pot just by looking at this one statistic (workers per beneficiary), suggesting it dominates all other inputs. Because they do not tell us the state of Social Security at any point, we actually can conclude nothing from this argument, and if we put in its current state, this argument shows exactly the opposite of what they want us to conclude!

Today Social Security is in the best state it ever has been—the yearly surplus last year was the largest in its history. The Social Security Trust Fund is $1.5 trillion, which is also its maximum. I don't have the figures for 2006, but they are similar. So what we have is that from 1945 to 2002, the number of workers per beneficiary decreased by 92 percent, but the health of Social Security is vastly better. Clearly there are other factors that dominate this one demographic statistic. Furthermore, if Social Security could improve its condition with a 92 percent decrease in this statistic, why should we worry about the 33 percent decrease they predict for the period 2002 to 2030?

The projections: Dr. Steven Goss, the chief actuary of the Social Security Administration is careful to point out that what he makes are projections, not predictions. They are based on assumptions, i.e. he says that if this happens then this will happen. These assumptions cannot be computed, he says, because they are event-driven. You would have to be a fortune-teller to even make an estimate. Because of this, he actually makes three projections. The one most people quote is the "middle" projection. If you look at the record, you will see that his "high" projection consistently and significantly has been more accurate than the middle one. The high projection says that the Social Security Trust Fund will not go to zero during the next 75 years, that Social Security will be able to pay all promised benefits, and that there will be a surplus in the trillions at the end of the period.

An assumption: The middle projection of the Social Security Administration (the one you quote) assumes that the average growth in the GDP will be 1.78 percent in the next 75 years. If you just change this one assumption—keeping all the horrible demographics that you believe in—to 2.7 percent and do the exact same computation, then you find that the Social Security Trust Funds never will go to zero, all promised benefits will be paid and there will be a huge surplus at the end of the period. The average growth in the GDP in the past 75 years was 3.1 percent. I am not saying what the growth in the GDP will be (that would not be mathematics, but fortune-telling), I am just saying that the exact same mathematics that gives you the bad forecast with the very low assumption gives you a good forecast with a more reasonable one.