Believe it or not, your blogger is actually a very upbeat, positive, optimistic person. Seriously. No, seriously.
I see the bursting of the housing bubble as a net positive not only for the US but the world. Call it an awakening, or a cleansing. We were on the wrong track as a society - over consuming, doing get-rich-quick schemes, not investing in our future or saving, passing the buck to the next generation, and establishing Wal-Mart as China's distribution channel to the US, thus losing our manufacturing base.
We needed a wake-up call. The bursting of the bubble and collapse of our debt-fueled economy may be just that.
Many will get burned, but never again (well, at least for 100 years) will housing be seen as a get rich quick scheme. Houses will be places people live in, and they'll keep up with inflation at best. But the key is, people, regular working people, will be able to afford houses.
The bubble bursting will also lead to driving costs and inefficiencies out of the system. Good bye realtors - hello internet. And perceptions of housing as a get rich quick scheme will change, back to the reality that they're a place you live in. Period.
And lastly, the bursting of the bubble will so piss off Americans that they'll turn on and never trust again everyone associated with it - Congress, Bush, Republicans, Democrats, the Fed, Realtors, Builders, Speculators, Appraisers, the NAR and their friends who told them renting was stupid.
Call it a revolution. And just look to Bush's historically low 36% approval rating today, with 70% of Americans saying we're on the wrong track. The emperor is not wearing clothes, the country needs a change, and here it comes.
The uprising has started. This is good news. People are awakening. Now what will they do?
March 16, 2006
Bubble bursting is not all doom and gloom - it's an awakening.
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37 comments:
Keith said,
"And lastly, the bursting of the bubble will so piss off Americans that they'll turn on and never trust again everyone associated with it - Congress, Bush, Republicans, Democrats, the Fed. . ."
Bye, bye socialism. Hello capitalism.
LETTER TO MURTHA - OT
by: avsgasser2002 (M/Galts Gulch, CO) 03/15/06 06:53 pm
Msg: 188374 of 188374
Letter to Congressman Murtha from Dave Rockwell
Dear Congressman Murtha,
Although it is difficult to keep up with politics from over here, your comments on immediate withdrawal have been noted by all of us. I cannot tell you the overall sense of discouragement, sense of betrayal and the feeling that few appreciate our efforts your comments have created. 1BCT has been frequently deployed in support of the War on Terrorism and we believe it is the correct fight and we believe we are winning. We have seen a significant improvement on the ground since we began combat operations in Baghdad three months ago.
I started in the US Army in 1968 and retired in 1992, with most of my time in Special Forces or Airborne Infantry units. I came out of retirement to come to Iraq with the 1BCT and I enjoy service with these outstanding officers and men. They are better than we were and they carry the terrific burden of frequent deployments and a high operational-tempo. There are few complains as they feel the mission is extremely important to the nation's security, their families and to most Iraqis. They are dedicated to winning and I believe they are winning. It is obvious to this 'old paratrooper' that your comments have hurt their morale and will eventually impact negatively on their efforts here.
"It is not enough to fight. It is the spirit which we bring to the fight that decides the issue. It is morale that wins the victory."
"Morale is a state of mind. It is steadfastness, and courage, and hope. It is confidence and zeal and loyalty. It is élan, esprit de corps, determination."
"It is staying power, the spirit which endures in the end…the will to win."
"With it all things are possible; without it everything else, planning, preparation, and production, count for naught."
General George C. Marshall
I sincerely believe General Marshall as deeply as I believe your statements have undermined the morale of these young soldiers. I have watched intently as your political party has attempted to use this war for political advantage and find it to be repugnant in the extreme. That your name is now inextricably linked to Senators Kennedy, Biden and Durbin-politicians who we believe do not support us-must be of great concern to your constituents.
How can you ask us to leave? Must we forget all the sacrifices, the deaths, lost limbs, lost marriages and the daily struggle to win? What do I say to my 22 year old nephew, a Staff Sergeant with the 1/75th Rangers seriously wounded in Mosul last month or his brother, a Sergeant in Germany just back from Afghanistan or my niece in ROTC, or my brother-in-law, a Lieutenant Colonel getting ready for his second deployment? Would you have me tell them that all we have done thus far is for naught? It means nothing? How about, "Don't worry; it happened to us coming out of Vietnam." Don't you remember?
Well said.
As some authors in the field of sustainability believe, the main evil is complexity. Increasingly thick layers of administration, government, overpaid execs, politicians, you name it. The functioning of our society is incomprehensible to the vast majority of the people who live in it. Bad sign.
If this financial blood bath is going to wash away some of the parasites who don't actually do anything but sip the cream off the top, so be it.
Societies have been going through this cycle since the first ones started up 6000 years ago. It's nobody's fault, it really just happens naturally.
Anon repost: I meant to say "well said" to the main post, not the unrelated pro-war thing that slipped in while I was typing.
War on terrorism? WTF? Sending outnumbered guys to unwelcome zones on imperial adventures against guerrillas is bad for morale man. That's pretty obvious.
Its a given that you can't trust the dead weight at the top,be it federal,state,or local.
They live to serve the special interests groups that are either loudest, or have the most PAC money come re-election time.
Now, I am not saying that all politicos are dishonest,lying,cheating,crooks and parasites.Just 99.9999999%. You pick out the good ones.
They promise the world to get elected,but once in office they "blend into the fold" right or left,never to be heard from again except at election time.
My dear departed daddy used to say that "You elect your crook hoping that he gets more for you (while lining his own pockets) than the other guy's crook can gets for his people (while lining HIS own pockets)" He never once said that in anger or malice, but as a simple given truth!
What I am getting at is: What Do We Have Left? Its the only system we have and its rotten to the core. I think that most people don't vote because they truly DO believe that it makes no differance, and the evidence has been stacking up for a long time that this is so.
The idea of a 'strong man' coming in to power is scary but it looks more and more like it could possibly happen as the masses become angry at a government (at all levels)
that has its own agenda,dosen't ask for their opinion or approval,and just sends the people the bill to pay.One minor problem: The people have no more money. They(the government) have already taken it all. What happens next?
Leaning towards Doom here!
What the hell are you guys talkin about? stay on the frickin subject for crying out loud!
As to the post about "it's an awakening" I believe it will NEVER happen again!!! After the fallout of all this the government will never let anybody flip houses again. If you sell a house without it being your primary residence for ten years, you'll be taxed so bad that it wont be profitable ever again!! This up and coming crash will hurt everybody and will give our future generation something to live for.
If anybody truly believes the future generations are going to sit back and work at wal-mart as fuel is $5 a gallon, housing is over $1 million, Insurance is 3, 4, 5, times what it is now, food prices are through the roof, your crazy!!! The future generations will kill us all to get the things we consume, deplete and extinct.
>>>Bye, bye socialism. Hello capitalism.
Corporate ownership of our government and financial system is what got us to this point.
Looks like they ain't going to come to the housing market's rescue like they did for stocks...
WASHINGTON (MarketWatch) -- The Federal Reserve has no intention of preserving all of the recent gains in home price values, said Federal Reserve board governor Donald Kohn on Thursday.
"If real estate prices begin to erode, homeowners should not expect to see all the gains of recent years preserved by monetary policy actions,' Kohn said in a speech prepared for delivery to a European Central Bank forum in Frankfurt, Germany.
In his remarks, Kohn attacked the popular 'Greenspan put' theory that Fed policy would always protect investors from sharp asset market drops while doing nothing to restrain these markets when prices rise.
"This argument strikes me as a misreading of history," Kohn said.
"Conventional policy as practiced by the Federal Reserve has not insulated investors from downside risk," he said.
"Whatever might have once been thought about the existence of a 'Greenspan put,' stock market, investors could not have endured the experience of the last five years in the United States and concluded that they were hedged on the downside by asymmetric monetary policy," Kohn said.
"The same consideration apply to homeowners: All else being equal, interest rates are higher now than they would be were real estate valuations less lofty; and if real estate prices begin to erode. Homeowners should not expect to see all the gains of recent years preserved by monetary policy actions," Kohn said.
But Kohn said he doubted that central banks should "lean against the wind" of an incipient stock market bubble by adopting a somewhat tighter policy stance than otherwise would be the case.
He said there were three tough conditions that would have to be met before the costs of the extra tightening would be worthwhile.
First, the central bank would have to be able to identify the bubble in a timely faction. Secondly, there would have to be a fairly high chance that the tighter policy would check the speculative activity and finally, the expected improvement in the economy would have to be sizable.
"For my part, I am dubious that any central banker knows enough about the economy to overcome these hurdles," Kohn said. "
Heres a thought, All of these farms that we are (so called) building on, the farmer buys his land 100 years ago and has ten kids, and then their kids have five kids each, and then their grandkids have three kids each. did the farmer divide up his property at all? to support any of his family? HELL NO! But when he sells to a developer he gets millions, which drives up the cost of housing because the land is so over priced. All the land in this country has been bought up by the previous generations. Just because this old farmer with one foot in the grave, born in 1906, aquired thousands of acres back in prehistoric times for nothin, (the state probably gave him the land)Doesnt mean he can hold out for millions now! and if the entire country believes we can all hold out for millions and millions, because we were born first and we'll just sell it to the next generation for more and more. We are fools! the next generations will just kill us and take it! The cost of living can only get so expensive before everyone stops trying, and starts taking the easy way. (crime)
http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B6116173A%2DA04F%2D4EDD%2D8D0B%2D835D37201544%7D&siteid=mktw
Fed won't act to preserve high home prices: Kohn
'Greenspan put' theory doesn't stand scrutiny
By Greg Robb, MarketWatch
Last Update: 10:36 AM ET Mar 16, 2006
WASHINGTON (MarketWatch) -- The Federal Reserve has no intention of preserving all of the recent gains in home price values, said Federal Reserve board governor Donald Kohn on Thursday.
"If real estate prices begin to erode, homeowners should not expect to see all the gains of recent years preserved by monetary policy actions,' Kohn said in a speech prepared for delivery to a European Central Bank forum in Frankfurt, Germany.
In his remarks, Kohn attacked the popular 'Greenspan put' theory that Fed policy would always protect investors from sharp asset market drops while doing nothing to restrain these markets when prices rise.
"This argument strikes me as a misreading of history," Kohn said.
"Conventional policy as practiced by the Federal Reserve has not insulated investors from downside risk," he said.
"Whatever might have once been thought about the existence of a 'Greenspan put,' stock market, investors could not have endured the experience of the last five years in the United States and concluded that they were hedged on the downside by asymmetric monetary policy," Kohn said.
"The same consideration apply to homeowners: All else being equal, interest rates are higher now than they would be were real estate valuations less lofty; and if real estate prices begin to erode. Homeowners should not expect to see all the gains of recent years preserved by monetary policy actions," Kohn said.
But Kohn said he doubted that central banks should "lean against the wind" of an incipient stock market bubble by adopting a somewhat tighter policy stance than otherwise would be the case.
He said there were three tough conditions that would have to be met before the costs of the extra tightening would be worthwhile.
First, the central bank would have to be able to identify the bubble in a timely faction. Secondly, there would have to be a fairly high chance that the tighter policy would check the speculative activity and finally, the expected improvement in the economy would have to be sizable.
"For my part, I am dubious that any central banker knows enough about the economy to overcome these hurdles," Kohn said.
Greg Robb is a senior reporter for MarketWatch in Washington.
The next generation will not have to wait long. The baby boomers will be retiring over the next twenty years, and dying over the next 40. With fewer people left to replace them, there will be a decreasing need for housing and prices will not even match inflation.
I welcome the upcoming collapse. The war in Iraq is relevant because it will bring the end of the empire sooner and it kills and maims idiots who support the gov't.
The standard of living for most folks in the U.S (97%) will continue to fall until it is closer to that of the rest of the world. The last 30 years has been about using debt to camoflouge this decline and keep the people consuming as the manufacturing base was disassembled and shipped to Asia. Our fiat fractional-reserve banking system demands constant growth, otherwise it will die. But therein lies the big problem. Growth requires greater and greater quantities of energy and we have no good replacement for the fossil fuels that we rely on to power our economy.
Anonymous said:
"I welcome the upcoming collapse. The war in Iraq is relevant because it will bring the end of the empire sooner and it kills and maims idiots who support the gov't."
Are you insane? Those "idiots" are astoundingly brave, selfless kids who go and do what they're told, regardless of the risk to themselves. Do you realize what you've just said to everyone reading these posts: that you support the killing of our soldiers and the destruction of the United States? There is a word for this, and I guess you should be glad that the government doesn't have your IP address.
Whatever you wish upon this country you wish upon yourself, assuming you live here. The Irish have a nice little saying: "Evil returns to the doer." We know it as Karma. You may be about to discover your own word for it.
I think that as the std. of living declines and the spines of people get softer they will run into the open arms of some type of socialism/facisism...Perhaps were already there? You can sort of just see it happening...as multinationals begin to pick up the pace of separating Americans from pensions and health insurance typical people will not be able to provide for themselves and their loved ones adequately...then suddenly someone os something appears and offers to take care of those things for them and presto! The offer will be too good for most to pass up.
People are awakening. Now what will they do?
If the past is any guide, the answer is "NOTHING".
Bush invades a country on false pretenses, kills tens of thousands of people, blows hundreds of billions of dollars, illegally wiretaps Americans without a warrant, holds uncounted American citizens under arrest without trial indefinitely and incommunicado, opens the gates to Fort Knox to his corporate buddies, almost completely takes over the new media...
And the public says, "Zzz..."
And the Democratic Party says, "...mrh..ff..umm... must.. win.. war.. on.. terror... mmrsz..."
It makes me sick.
Doom and gloom, doom and gloom.
Why does everyone think we are headed on an armageddon path for our country and economy?
I'm worried about the economy, I believe housing prices should drop 15-30% throughout the country, but I do not expect this will create massive financial ruin.
Hey, I think I've seen that movie, it's called 'D is for Denial' or something;)
But Keith we've got a long way to go before we get to that point where we revolutionize our government and throw all the bastards out.
Americans have a strong sense of entitlement and that's gonna just accelerate us into official bankruptcy as politicians try to placate them.
For a long time we'll be listening to this:
You gotta cut the other guy's job, not mine. Your congressman is the problem, not mine. Don't take away my mortgage deduction or my other tax breaks. Cut spending in the bureau of X, not Y because I support Y and not X. Give me cheap meds even though I eat crap and do nothing to take care of myself. Give me food stamps so I can buy crap to eat.
And so on and so on. Any time anybody in Washington has gotten up and talked about any kind of real reform it has gotten so politicized and watered down that it becomes useless.
The automobile was designed with 4 wheels and for basic transportation in mind! We still need transportation but the 4 wheel simple investment somehow became somewhat more expensive. One or two extra's added since Henry Ford's days.
Perhaps a Housing Crash is needed to remind us that the big, fancy. magnificient, expensive SHACKS REALLY EXIST for No Other Purpose than our to house our MASSIVE EGO's when the IDEA was to hold up a BASIC ROOF to COVER the REST of our large stupid HEADS!
Dow up another 70 points today (11,278).....5 year high.
S&P up again too......5 year high.
Interest rates will hold steady.
Since I don't live in AZ or CA, my house is NOT on the overvalued list.
I remember some fool on this site saying the Dow was going to be at 8800 by 12/31/06.
Idiot.
And lastly, the bursting of the bubble will so piss off Americans that they'll turn on and never trust again everyone associated with it
How naive.
And lastly, the bursting of the bubble will so piss off Americans that they'll turn on and never trust again everyone associated with it
How naive.
I agree. Pain lasts a lot longer than memory in this country. The same poeple who lost their asses in the stock market they overheated are repeating the same mistake in the housing market.
anon:
you dont think that a 15-30% drop in home values will have a major effect on the economy? I am in California and I am here to tell you that a 15-30% drop will devistate this place.
Good. The California economy is not really the same as the USA economy. When there were rolling blackouts in Cal the rest of the country was rolling on the floor.
I was born and raised out there and priced out the day I left engineering school in 1979. It only got much much worse.
We won't pay for your fires, mudslides, floods, droughts, earthquakes, etc... Move where there are jobs, affordable housing and land, and less crime. leave the stinkhole to the rats.
You are obviosly ver anti-California. California is a huge chunk of the U.S. economy and if it catches a cold so will the rest of the country.
New national anthem?
My bills are all due and the babies need shoes,
But I'm Busted
Cotton's gone down to a quarter a pound
And I'm Busted
I got a cow that's gone dry
And a hen that won't lay
A big stack of bills
Getting bigger each day
The county's gonna haul my belongings away,
But I'm Busted
So I called on my brother to ask for a loan
'Cause I was Busted
I hate to beg like a dog for a bone,
But I'm Busted
My brother said, "there's not a thing I can do,
My wife and my kids
Are all down with the flu
And I was just thinkin' about callin' on you,
'Cause I'M Busted."
Lord, I ain't no thief, but a man can go wrong,
When he's Busted
The food that we canned last summer is gone,
But I'm Busted
Now the fields are all bare
And the cotton won't grow
Me and my family's gotta pack up and go
But I'll make a living, just where, I don't know
'Cause I'm Busted
JR Cash
A Tale of Two Farmers
Farmer Chang only grows oranges. Farmer Jones only grows apples. Each grows only the fruit that he produces most efficiently, trading the surplus for the fruit grown by the other. Both farmers benefit from comparative advantage and free trade. The sole reason that Farmer Chang “exports” oranges is to “import” apples, and vise-versa.
Suppose that one year a frost wipes out farmer Jones’ apple crop. Not having any fruit to trade, but hungry nevertheless, he proposes to trade apple IOUs for farmer Chang’s oranges. Since Farmer Chang cannot eat all of the oranges he grew anyway, and since farmer Jones’ IOUs will pay 10% interest (in extra apples of course) he agrees.
Farmer Chang only accepts farmer Jones’ offer because of the apples that Farmer Jones’ IOUs promise to pay. By themselves, the IOUs have no intrinsic value. Farmer Chang cannot eat them. It is only the promise to pay apples that gives them value.
Now suppose that the following year farmer Jones’ crop is again destroyed, this time by a flood. He and Farmer Chang once again make the same deal, with Farmer Jones getting more of Farmer Chang’s oranges, and Farmer Chang accepting more of Farmer Jones’ IOUs.
Further suppose that similar natural disasters continue to besiege Farmer Jones for several more years, with Farmer Chang continuing to accept Farmer Jones’ interest-bearing apple IOUs in exchange for his oranges. Eventually it dawns on Farmer Jones that he is eating pretty well, without actually farming. He therefore decides to turn his apple orchard into a golf course, and simply play golf all day while enjoying Farmer Chang’s oranges. In other words, Farmer Jones now operates a “service economy.”
Farmer Chang on the other hand is so busy growing all those oranges that he never gets a chance to play Farmer Jones’ course. In fact, he has been accepting farmer Jones’s IOUs for so long that he no longer remembers his original reason for doing so. He forgot about his original desire to actually eat the real apples Farmer Jones had promised to deliver. Instead, he now counts his wealth based solely on his accumulation of apple IOUs. In fact, Farmer Jones had such a good reputation within the farming community that Farmer Chang was actually able to trade some of Farmer Jones’ IOUs for goods and services provided by other farmers and local merchants. Apparently no one bothered to notice that Farmer Jones’ apple orchard had become a golf course, and that his IOUs were therefore worthless, as he no longer possessed the ability to redeem them with actual apples.
Some might argue that the entire community now depends on Farmer Jones and his worthless IOUs and that everyone will accept them indifferently rather than acknowledging the reality of their folly. Of course, were these revelations to occur, any unfortunate holders of Farmer Jones’ IOUs would officially be forced to realize their losses. However, their true financial situations would improve, as any further accumulation of worthless IOUs would end. As for Farmer Chang, he would literally once again enjoy all of the fruits of his labor.
The real loser of course would be Farmer Jones, for without a viable apple orchard or the ability to buy oranges on credit, he would starve. It would take years to transform his golf course back into an orchard, regain his lost knowledge of farming, and replace his obsolete or dilapidated farming equipment (provided he hadn't already traded it in for golf carts and titanium clubs). In the end, his only alternative might be to sell his golf course to farmer Chang and take a job picking fruit in his orange grove.
Peter Schiff
A California economy bust would not be isolated to California. California has the 7th largest GDP in the world if it were its own nation. (Bigger than France's) I understand its easy to get caught up in the doom and gloom, but what I don't understand is the glee that some of you posters seem to take talking about it. Yeah Californians are there own breed. Yeah its fun to think of California slipping into the Pacific ocean. But do we really wish it would happen? I sure don't.
We had a small blip in the economy due to the recent huricanes. Lucky for us, New Orleans is not the be all and end all of our national economy. If the house of cards known as California collapses, it will be more than a blip. It will affect everyone on this board in some way.
Anon in Austin,TX
The common man sold his soul long ago. Congress and the powers that be have carefully and cleverly insinuated everyones community with their own special interest needs. One man's pork is another's bare necessity.
The common man has also been carefully and cleverly seduced by his many playthings, and like trained rats keep hitting the buzzer to get the reward.
No, I'm afraid the average man is here to support the system which the wealthy and powerful so cleverly manage.
Do not forget. This is not a democracy, and your representatives are the ultimate rubes in the game of Peter Principal.
I can't figure out whether some of these rants are coming from fans of Noam Chomsky or Pat Buchanan.
One thing is for certain though, we can all agree that the costs of such things as housing, insurance, and energy has gotten way out of control. Something has got to give, and I honestly don't have the slighest clue what that is. My point from above is that people across the political belief spectrum can all agree on some of these points and therefore there may be a chance for some fundamental and comprehensive reform.
100 years?
Do you think Americans have a memory that long?
Do Californians remember the LAST housing bubble that imploded in 1989?
Do they remember the one before that which caved in 1980?
Do Americans remember the Savings and Loan bailout that cost the US taxpayers more in inflation-adjusted dollars than World War II?
No. They don't. You think Americans are going to remember something for three generations! Ha!
the guvment this, the guvment that. c'mom, people. this is the USA. the guvment is not an alien force; it will respond to political pressure as always.
some of the comments on this thread really cause me to wonder whether HP has been taken over by yobbos.
Yeah, it'll espond all right.
It'll respond to special interests, corporations, and the elite.
J6P will only be offered some bread & circuses.
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RickJ
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