Why did almost everyone think it was different this time?
December 27, 2006
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A time capsule of the greatest financial mania in the history of mankind, told in real-time by regular folks and patriots. May future generations better understand the madness of crowds, and how power and money corrupt.
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51 comments:
Because... Suzanne reserched it!
Yes, I think it will be different: probably worse.
They didn't think it was going to be different. It was just easier to say "it's different this time" than "buy this sinking ship" or "oh no, I'm going broke."
Because P.T. Barnum was right: There IS a sucker born every minute.
In addition to that truism, we have to add a few more factors:
1. Our corrupt monetary system (The "Inverted Pyramid of Death" as I call it), which consists of fiat currency, fractional reserve lending and central banking.
2. Now for the REAL "kicker" we add to the above the brilliant, but alas corrupting, influence of "Securitization", which allows the decoupling of risk of making the loans to the FBs from being responsible for the payment of the loan.
3. Now, #2 above is bad enough on it's own, but to even more magnify the dangers that securitization poses, we add the addtional nuclear material of the "GSEs" (Gov't Sponsored Enterprises) which has allowed the moral hazard problem to creep into the picture, as the U.S. Congress either overtly (in the case of Ginnie) or covertly (in the case of Fannie/Freddie/FHLB), since the gov't expressly or implicitly guarantees these instruments.
4. Next, we have had a twenty-five year history of unwinding virtually every regulation of the banking, mortgage and securities industries, allowing the REIC to "run wild in the streets", and pile in every
ill-qualified Tom, Dick, and Harry into every kind of exotic, dangerous, bogus loan.
So, with all those forces gathering together (and many more, which I have discussed previously including tax incentives to human greed), you have the making of the perfect storm, which will result in one of the greatest spectacles you will witness in your lifetimes.
What's this bubble everyone is talking about?
because hope is a dangerous thing
Because the general public misunderstood the nature of the game. They thought - stocks, that's one thing. Housing is always a good investment.
Because real estate NEVER goes down in price. You have to get in before you're priced out of the market FOREVER. They're not making any new land, you know. Especially not in Phoenix.
Because after the tech bubble burst a preference for tangible property over intangible was entrenched in terms of it being more of a certainty.
However, we forgot its not the tangibility or intangibility of the asset its the valuation and leveraging of the asset that counts. Both tech stocks and housing became over valued and over leveraged, the result will be the same regardless of the asset, just ask any 1920's & depression era investor.
The 1929 crash was due to over valuation of stocks & over leveraging by investors with high margins in their accounts. Fortunes evaporated and when the margin call came investors could not pay, so all their assets were taken. The economy went into a tailspin/death spiral a.k.a. the great depression. And that was when only a small fraction of the population were invest in stocks. So do not expect the housing recession to be contained to the housing sector.
Not sure what will be the result this time, but we will have a long drawn out contraction in housing for the long term and at least a slowdown if not a recession in the near term for an unpredictable duration.
BECAUSE THIS TIME IT'S ALL BASED ON THE DERIVATIVES MARKETS!!!!!!!!!!!
"because hope is a dangerous thing"
As my Dad used to say:
"You can HOPE in one hand, and shit in the other, and see which one fills up first."
I hope these STUPID women, who gouged their "pee whipped" husbands into buying an OVERPRICED home, SINK into the depths of the debt abyss...
Good post, butch!
Because Wal-Mart keeps lowering prices
every day and the underclass can juggle a house payment now.
The bubble is all Sam Walton's fault
because he allowed the white trash to wander off the trailer parks.
Human nature. It is that same human nature that makes a teenager drive a car 110 mph, believing that he is invincible.
“Wrap my car around a telephone pole? Nah…it can’t happen to me!”
Yes it will be terrible.
Now here is why, Real estate never goes down. Get it, "Real" Estate never goes down.
However flippers and speculators buying with 0 down, never intending to live in it, and over streteced FB's buying houses they cant afford with neg am, IO option, no doc loans are based on Nothing "real". Hence this is all fake estate and Fake estate will crash and burn ...
The Real estate is solid (AKA houses that people own and have for years). The fake estate (AKA the new Mcmansions built to flip, the condos that used to be apartments, the houses that were bought with liar loans to make a quick buck are not going to be worth the paper the FB's signed on them. And yes its near impossible to tell the former from the latter so both are frocked ...
Cool.
Cow_tipping.
The 1929 stock crash was preceeded by the smart and wealthy few (banks and wealthy investors) who traded amongst themselves stocks for larger and larger prices and when those trades got published showing ever increasing "values" the sheeple got suckered into thinking these stocks were actually worth more. Once they sold it to the sheeple, the truth came out and it all crashed. Sorta like the flippers selling to each other for ever increasing prices and then hoping to sucker in a greater fool. Of course the RE market is neither as tight nor was it as well controlled as the 29 stock market so it has no real "team effort" going for it.
BTW a florida land crash happened before the 29 stock crash, sorta like now, so I guess we will see a stock crash in the next 1-2 years signalling the great depression II.
Cool.
Cow_tipping.
Wishfull thinking!
Can't happen to me!
Every one except Bubble Bloggers, that is.
Very insightful fmw! :)
The Fed is trying to keep inflation down. And just so you know, "inflation down" means essentially "keep wages from rising".
However, anyone who bought with an option ARM that allows payments less than the amount necessary to pay down the loan is by definition, going to be unable to pay their mortgage payments when their teaser rate period is over.
In other words, everyone who bought with an option ARM was banking on getting a raise to pay their mortgage! But the Fed is working actively against that happening. Most unfortunate.
Any woman who pussy whipped their husband into buying an inflated house isn't going to hang around for the consequences.
As with all losing teams, the players start blaming each other. One fight and the wife has an excuse to leave. To leave the husband with the mortgage since it's easier for a wife to get a divorce, declare bankruptcy, get some juicy alimony and child support while seeking out a new sucker to suckle from.
Hey GrandInquisitor, who are these economists that predicted the housing slowdown? Most of the economists I hear about are simply seeing the onset of the bursting bubble and calling it a slowdown. They got it wrong, they are getting it wrong and they will continue to get it wrong!
It is Reaganomics 101, the rich get richer.
G'day mates!
Ozzie Tim here.
Now here's some good oil:
before the 1929 crash un the US shares bourse, the margin requirement was a mere 10% (you put up 10%, the broker loaned you 90%). There was instant liquidity (you holler 'sell' and it sells), if that instant liquidity creates a wave of more selling, well, more selling happens.
It was, by and large, the over margined speculators who drove the markets upa and as their portfolios swelled, bought more and more (all that margin equity, right?) well, if you started with $1,000, leveraged it up to $10,000, rode it up to $20,000 (giving you $9,000 in margin equity), put on another $90,000 in margin debt (your original $1,000 now controls $111,000) and if the market goes against you 1%, you investment is wiped out - run for the doors!
In housing, there isn't the instant liquidity, the only liquidity is the forclosure sale. Hopefully the bank only gets major heartburn from the forcloseure and not death (that is for the speculator). So maybe the cratering of the housing bubble won't be as fast or painful as the bubble in shares of the 1920's.
Damn, that's good oil.
Figjam!
Hooroo. Ozzie Tim
They keep saying it's different this time because it is easier to say that than to say they fell for the oldest trick in the book. Borrow your way to prosperity, it's different this time. For some it was, most will get burned, including taxpayers, pension funds, and FBs. Bwahaha! This country is going down the toidy. Bwahaha! Hey, where's my hundred million dollar bonus?
To the anonymous with the comment re
stupid women, please consider that
might be the woman's point of view:
prettynest, etc. But what of the man's
point of view: an opportunity to look
rich, and eventually BE rich, without work, and of course no real risk. Ego.
And if a man can't speak up to his wife doesn't that on some level imply their relationship isn't human to human, but role to role which often leads to less than satisfactory results. And doesn't
it imply neither one has very
discerning math skills, are lazy
about researching the most important
purchase of their life, and are
"culturally brainwashed" into
expecting the unrealistic on all
levels. PKK
Only nerds bragged about their stock-market stuff in the dot com boom. Mom and Dad weren't telling their kids to buy pets.com. It was mostly male nerds and a few professional women who participated, and in the back of their mind they knew it was going to blow up. During the stock market boom there were all sorts of articles about how ridiculously overvalued stocks were.
Not so with housing.
Mom and Dad and sis and wifey ALL said to buy real estate because it's not at all like stocks, and you need some place to live, right?
"real estate investor" gets way more tail than "daytrader".
watch a funny video tinyurl.com/yfw62g
GrandInquisitor said...
I'm looking for a Japan style melt-down. Right now we're in a soft landing. Lereah and his buddies are already patting each other on the back.
Wednesday, December 27, 2006 6:21:22 PM
Right on the second count (the stupid 10% or even 15% we have seen in the over blown markets is a joke, I wont even get out of bed for less than 30+. Right on the nose Mr Inquisitor ...
However I dont believe we'll ever have a Japan style crash in the US. They save 15%+ we save -3%. Simple. We will fall and fall sharply. No 15 year slo mo crash. BTW we are also not ashamed of our defaults and we dont quite believe we have to pay back our debts. Its some sorta pride issue ... not paying your bills ... damn that's "bad ass".
Cool.
Cow_tipping.
squidly66, that's a classic. Here's another one from the UK.
DOW goes to new record levels - for the life of me I am in total disbelief.
If a man is pussy-whipped into buying a house and get stuck holding the mortgage - who exactly is the stupid one?
"If a man is pussy-whipped into buying a house and get stuck holding the mortgage - who exactly is the stupid one?"
Ok, if we were like Holland and seeing professionals was deemed 'ok', then what are the chances of a vast majority of men being pussywhipped to begin with?
Our home is under my wifes name due to my Fd up credit (stated income/ A credit loan).
I make over 100k a year. She makes 22k. She needs me as much as I need her to own a home.
We both acknowledge that and got no beef whatsover.
Nice little setup I got.
Wow you boyz have some serious women issues. You do realize you are all walking stereotypes of the fat, bald nerd who hates women.
You excuse your lack of success with women by convincing yourselves you're better off without them. Sure thing. Who needs a woman when all they do is spend your money, especially on a house? Stupid bitches. Much better to be alone and renting.
Oh well, I'm stupidly paying a mortgage. I live in a suburban palace with my wife. Does she work? Nope. She can't. Too busy during the day at the gym, getting her hair done, her nails done and whatever else she has to do to look good for me when I come home at night ready to fuck her brains out. And on the weekends I hang out with the other stupid guys in the neighborhood playing golf, BBQing, out on the lake while the wives spend even more of our hard earned money.
You're right. I'd be much better off in your situation, alone in an apartment.
Everyone but the stupid and lazy made money in the 80s. Everyone but the stupid and lazy made money in the 90s. Everyone but the stupid and lazy made money in the 00s.
However it is the stupid and lazy who blame Reagan, Clinton or Bush for their failures.
"It is Reaganomics 101, the rich get richer"
TO the last anon:
So did you use the HELOC or REFI money to keep up that 'lavish' lifestyle? hahahahahahaha.. what a joke.
BTW your wife sounds like a no skills, high maitnenance, lazy ass, useless piece of shit.
I make over 100k and my wife STILL works because she wants to fell good.
Good luck with your cunt tonight when you hit it.
My sister's husband was once a tall (6'1"), handsome (looked a bit like Pat Dempsey during his youth), and a successful sales manager.
Well today... he's a guilt stricken, balding, chubby guy who's continually beaten down by my sister and their insipid teenage daughter (my sister's mini-me clone). And due to his Catholic upbringing, he doesn't believe in divorce but does a lot of time watching the tube and drinking Jack Daniels when he's not toiling away at the office. And this is suppose to be inspiring?!
In reference to the comments about women:
"its better to be lonely than to be sorry."
Women are great. Especially mine.
She'd say what she wants, procuring it, paying for it and retaining it is my responsibility.
She wants a house ... I have a choice to rent or buy, I have a choice to get an I/O no doc, neg am loan, or to get a straight loan, she doesn't even care.
She'd say what type of house in what area. The rest is mine.
She also lets me fix her car and stuff around the house before buying new sheite.
I get to make stuff too, like an observation deck out of an old retired coffee broken table type stuff.
She is smart as a whip too, she'd identify over 1000 stars, nebulas, galaxies, most types of motorcycles and what their common problems are and ... the list is endless. Oddly, I never even had to go looking for her and find her or put in a lot of effort wooing her.
The good ones are always capable of seeing what is real and what isn't and they always want their men to succeed (not just give the impression of success) ... women are great and no reason they'd want to to over stretch yourself, if they are thinking of the long term.
Cool.
Cow_tipping.
..."while the wives spend even more of our hard earned money."
Yeah, YOUR wife bought me a new sweater, and rolex watch..Thanks sweetie... Oh yeah, and she put it on YOUR credit card.
OK boyz you've convinced me. Today I am going to get a divorce, sell my house and go live alone in a 1 bedroom apartment.
Let the good time roll
When I see all these disgustingly obese, shallow, superficial, unappreciative self-centered American women with their cell phone glued to their ear, I want to get down on my hands and knees to thank God for giving me the wisdom to have married a foreign woman who values the simple things in life (like family, spending the day off going to the park - as opposed to accumulating an endless supply of material goods) and appreciates an ordinary guy who treats her well.
so you got yourself a nice mail order bride who will do anything for you until the citizenship papers are signed. And you live in a 1 bedroom apartment.
I'm jealous.
"you until the citizenship papers are signed"
Interesting to note, I believe the stats are less than 20% divorce for intl couple (one US citizen, the other intl) vs 50% for the American median.
So if anything, if one does one's homework correctly, the chances for success are pretty high, ~80%.
Nice assumption Anon 4:49...but wrong.
Happily married 11 years, she’s been a citizen for 5 years, we have a couple of houses which we purchased pre-bubble…life is good!
It sure must suck to be married to a fatty with a ‘buy-me’ complex, Anon.
:I believe the stats are less than 20% divorce for intl couple (one US citizen, the other intl)
I don't mean to rain on your parade but I think that particular study was skewed around the Filipina/USA (and maybe Korean as well) relations which have been rather common since the second world war. In the Philippine's culture, divorce is stigmatized so you'll see a lot of ladies try to make it work vs bolting after the papers are signed.
I think if you factor in the newer eastern European/Russian phenomena and perhaps parts of the middle east, etc, it'll probably edge closer to a happy middle ground between a 20% and 50% divorce rate.
Realize, the more caucasian the lady is, the more likely she'll be influenced by the Ally McBeal's in town who'll turn her into a men hating dyke in no time whereas the stereotyping of Asian women as submissive via their so-called non-racist white female friends have embodied east Asians to stand by their men than siding with those (white American women) who want to break them up.
"Happily married 11 years, she’s been a citizen for 5 years"
I've been married for seven and my wife doesn't even want US citizenship because her nation doesn't allow dual status.
What's interesting is that she wants me to move back to her home country with her, instead of staying here with "phonies and wannabes" in all directions, down the road if my company can get me a transfer.
----Realize, the more caucasian the lady is, the more likely she'll be influenced by the Ally McBeals in town who'll turn her into a men hating dyke-----
Sweet! Now that's a smackdown!
And it's true; there's a Amero-Brazilian couple and the lady, being fair skinned with light brown hair (w/blond highlights), thought she was America's next supermodel and she was heavily under the spell of Hillary Clinton and Ally McBeal, thinking that the world was hers since she was prettier than all the bitches in 'Sex in the City'. Nietzsche ain't seen nothing yet!
Anon 5:29:06 wrote: “I think if you factor in the newer eastern European/Russian phenomena and perhaps parts of the middle east, etc, it'll probably edge closer to a happy middle ground between a 20% and 50% divorce rate.”
---------------------
Just chiming in - On the December general thread I wrote a warning post the other day regarding Russian mail-order bride scams.
After having learned Russian language in college and spending a bit of time in Russia, I‘ve become acquainted with a number of Russian-American and Ukrainian-American couples here. Out of ~25 couples in this group, only 1 has split up - a 4% divorce rate, which is pretty low.
Re: the demographics, most of both the guys and the women have previously been married and divorced, so their marriage success rate should be compared with that of remarried couples.
Also, since the American & European cultures are much closer to one another than the American & Asian cultures, it seems like marriages between the former would be happier. One should not underestimate the unfathomable gap that exists between the latter.
Again, for any guys out there even considering taking this route, BEWARE of the scammers and if one of these women so much as asks you for a dime, then drop her like a brick because she (possibly actually a he) is just scamming you. Another red flag is if she comes across as having fallen in love with you almost right away.
Now, back to housing!
-Mammoth
:it seems like marriages between the former would be happier
Dude, it's about power.
I mean really, what's the difference between a Slavic woman from Russia vs an American of Slavic descent? You see, within a short period of time, meaning less than a generation, she's an American woman with the same attitude.
The key is whether or not the Russian lady, in question, grew up in an area where her relations with men were positive and uplifting so that she can transfer that good feeling to the American fellow. If not, then when she arrives in America, she'll discover that the Ally McBeals are stupid and that she can best them at their game and make her man a servant to her cause in establishing Catherine the Great's USA division.
"It sure must suck to be married to a fatty with a ‘buy-me’ complex, Anon."
Another SSSSMACK DOWN.
Hey Anon with the worhtless 'buy me' cunt for a wife.
You got it all wrong. SOme of us here are not apratment dwellers.
I myself own my primary home in California and a rental. I make over 100k, bought pre-bubble and live way below our means.
My wife is a role model for wives. She raises my 2 small children under 4 while I am at work. Is going to school to finish her degree, and holds a part time job. After all this I come home to a hot meal, a clean home and some good lovin'.
Wen I tell her she doesnt have to work and that we are ok with my salary she tells me she is looking LONG TERM and doesnt want to be a 'stay at home mom' forever. She told me one day she wants to take some pressure off of me of being the 'only provider' in our home. She wants to help me and our family advance and I love her dearly for that. Forget the fact my home worth 4 times what I paid, I struck gold with this lady.
Meanwhile, we have your wife who sits at home geting her nails done and bleaching her asshole while you are out spending refinance and HELOC money on the golf course.
good luck with that douchebag.
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