April 16, 2007

One day soon all the get rich quick housing fools will understand


We've run this classic cartoon a few times over the past year and a half. Figured it was time again, after David at BubbleMeter reminded me the other day.

So many have made fun of HP'ers (and continue to do so), saying "it's different this time" and "the fundamentals don't matter". The trolls go on and on about how prices haven't crashed yet (per the NAR and US Government), how renters and frugal people are stupid, how even though supply is sky high it's just a return to normal, and how they ain't makin' more land.

I hope they stop for a moment, take a look at this, and maybe, just maybe, in their tiny little brains, simply understand. Oh, the folly of human nature. We've been here before, and we'll be here again.

We've just never been here before at this level. It truly is different this time, I'll give the trolls that one. This was the biggest bubble in the history of humanity. Now that's impressive.

And now, the biggest crash awaits.

19 comments:

Anonymous said...

I have been around long enough now to "see" these bubbles before they peak and make some money on the way up and down.

Where will the next bubble be? I think the frequency of these bubbles is increasing.

serindippity's replacement worker said...

Foolish capitalist Americans.

We have you by the, as you say, short and curly barbarian hairs.

Your greedy bourgoisie bosses of the upper class have conspired with us in the strategic industrial destruction of your nation.

All those things that are the "way to grow rich" in picture---America can't do them any more. We take it.

We know all those treasury bonds we own are worthless anyway, but we don't care. We have technology and factories on the ground. All designed and paid for by, guess who, you the American working stiff.

We have integrated Vladimir Lenin, Adam Smith, and Sun Tzu. Most of you stupid Americans don't even realize it yet. And those of you who do---we already arranged it so that it doesn't matter any more.

It's Chinese finger toy. Try to pull out on your own, you hurt even more.

But you don't have finger in toy. Lower appendage. We pull.

Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win. -- Sun Tzu

Our capitalism is our strategic warfare, and you have lost already.

Winning not possible when your own generals are on our side.

Just wait until we force opium on you. Middle kingdom has long memory.

THE PARADE OF HOMES said...

* * * * * *

Vote to pop 07!!!

SODA (snap, crackle and "?")

G.W. Bubble

(only a UFO landing will save us now!!!) Hang-on mates!

* * * * * * *

Veronica Lodge said...

Oh, the folly of human nature. We've been here before, and we'll be here again. We've just never been here before at this level. It truly is different this time, I'll give the trolls that one. This was the biggest bubble in the history of humanity. Now that's impressive... And now, the biggest crash awaits.

Yes, but this time we can play the blame game, with new twists. How about a "WE WERE THE VICTIMS OF DISCRIMINATION" defense? Here's the NAACP angle on this strategy:

"How did a strawberry picker earning $15,000 a year qualify for a loan of $720,000? The answer, the experts say, lies in a lending industry that got too innovative for its own good. Last week, a coalition of civil rights groups, including the National Council of La Raza, the Center for Responsible Lending and the NAACP, called for a national six-month moratorium on foreclosures -- after observing that the subprime crisis disproportionately affected minorities."

"According to the National Council of La Raza, 40 percent of Latino families and more than half of African Americans who receive home loans get higher-cost mortgages, predominately subprime loans. In a study released last month, an analysis of 2005 federal mortgage lending data of large subprime originators in six metropolitan areas, African American borrowers were 3.8 times and Latino borrowers were 3.6 times more likely to receive a higher-cost home purchase loan than white borrowers."

Of course, these same people would have cried DISCRIMINATION! if they had been denied huge liar loans in the first place.

A six-month moratorium on foreclosures? This will make it so much easier to predict when the BIG crash will occur.

More information on this innovative new bailout plan can be found HERE.

Anonymous said...

This cartoon reminds me of Ben Franklin's autobiography which outlined 2 ways to build wealth: speculation or hard work. He analyzed both giving the pros & cons of both and voicing a preference for wealth building via hard work & not speculation because of the emotional rolling that goes with speculation based wealth building.

Anonymous said...

SINCE OUT MONEY IS DEBT BASED WE WILL HAVE A BUBLE BUST CYCLE UNTILL WE GET REAL MONEY BACK BY SOME THING THANT CANT BE "GAMED"

WE NEED A CONSTTUTION REVOLUTION
RON PAUL BUT I DO NOT SEE THIS as the answer no many people have a vested interest in the present system lawyers CPA's ect to do away with the IRS and the federal reserve and go back to a con stitutional republic our forfathers gave us a republic we have failed to keep it by voting in people that we thought would give us a free ride and false promises

Mark in San Diego said...

As the dollar keeps going down, probably the next bubble will be investing in foreign currency. . .this may be a good bet for a while, but as in all bubbles - buy early and get out early. Whatever the bubble - remember old Warren - "the reason I am so rich is because I sold too soon."

Seneca said...

At the end of the day, to me, it comes down to the fundamental question of: has something changed, permanently, to stop reversion to mean? Has something changed in the underlying, impossible to avoid, fundamentals required to sustain economic growth and price stability? Has humanity undergone some kind of deep transformation that makes us totally different from any that have gone before? The answer to these must surely be no.

Any student of history would be hard pressed to believe that we have somehow stumbled into a world where 'ever upwards, all the time' will be the new way of being.

Anonymous said...

SILVER

The Sheeple Watcher said...

The thing that really amazes me is how stupid we are as a Nation. Sad really. I guess Celebrity Worship is more important than any real education.

It doesn't get any simpler than Supply and Demand economics. Too much Supply and Prices will Fall, yet somehow this point is lost on the morons who think "it's different this time". This is The Cycle and Nicolai Kontratieff was spot on in his research and analysis ... so much that it cost him his life.

I guess the Properties in Phoenix and elsewhere will soon have Squatters living in them. Who the Hell is going to stop them? Find a nice vacant home, preferably with vacant homes on either side, break a window and move in for the foreseeable future for free. Why not? It's only going to get worse.

Bush and Greenspan thought they were smarter than everyone else and it turns out they just made the problem worse. History repeats itself once again.

Buying more Gold (GG & AUY), Uranium (USU & URZ), Titanium (TIE), Cotton, Wheat, and of course Oil. Put Options on HOV, KBH, CFC, NDE, STI, FNM.

http://www.kwaves.com/kond_overview.htm

http://www.thelongwaveanalyst.ca/presentation.html

SPECTRE of Deflation said...

"It's hard to get a man to understand something when his job depends on him not understanding it"

The "it" in this case is a housing/lending bubble that reminds me of a black hole with the event horizon pulling us all exponentially faster into the abyss.

Anonymous said...

Did a little 'net research and found this original publication info:

The way to grow poor. The way to grow rich. Lithograph by Currier & Ives, 1875. Reproduction number: LC-USZ62-662

Chet

B. Franklin said...

I like that old Currier & Ives print, as it reminds us that financial manias and bubbles are not new, but quite old. Despite the fancy new names (CDO, GSE, option ARMs, etc), there truly is nothing new under the Sun. All are nothing more than schemes to separate the fools from their money.

FWIW, notice how there's MANY more people on the 'folly' side of that print: that's no accident. There's many more fools out there who are seduced by promises of 'easy money' than people who possess common sense, not realizing that the most important investment they'll make is not their house, but in their career (that is, if they're a professional).

Financial markets are driven by mass (i.e. large group) mania, and common sense just isn't that common. Some things NEVER change.

Remember that Sir Isaac Newton himself was swept up in the infamous South Seas Investment mania, after first enjoying some initial success in the early stages. Newton jumped back in the scheme more heavily, and ended up losing much more money than he initially earned when the Ponzi scheme burst. As he said, "I can calculate the movement of heavenly bodies, but I cannot calculate the madness of men". Replace the word "greed" with "madness", and I'd agree....

Fast forward to the modern era. The whole point of the development of the science and study of the discipline of economics was to provide better understanding of how economic transactions. The fundamentals are quite sound, but the only problem: economics has become too egg-headed to be of much use to the average person, and even the concept of a bubble is deemed too "high-brow" for the average punter.

Benjamin Franklin said it well, over 200 years ago: "you cannot borrow your way out of debt".

Despite all the fancy loan devices which promise to change market fundamentals as a new paradigm ("it's different now"), the bottom line is a buyer STILL needs to be able to afford what they buy.

Saturday Night Live spoofed the need for such a simple premise in this video with Steve Martin:

http://tinyurl.com/3ye7ro

Worth a look, as it's pretty funny...

Ben Franklin said...

Where will the next bubble be? I think the frequency of these bubbles is increasing.

The reality is we're running out of assets for the common man to use for bubbles and hopes of instant wealth creation: first the stock market, now real estate.

I suspect a NEW set of laws will emerge to encourage State-run lotteries will emerge, wherein the gubberment takes the 'middle man' asset (e.g. the house) out of the equation so we can call a spade a spade. The State should allow tax breaks for "investing" in lottery tickets, and set aside a small % of the person's purchase in an IRA for a retirement plan, suspend capital gains taxes for the winners in the lottery "investor" game.

Hell, why not? Why let the specuvestors screw up the housing market for what is a basic essential, a place to live? If not, what asset will be next?

I can see it now: there will be market runs on the local supermarket, with Casey Serins of the world snapping up stores of food to artificially raise prices, creating a "can't lose" investment? God help us if someone figures out how to suck oxygen out of the air, and then tries to sell it back to us....

David said...

Thanks for the mention.

David
Bubble Meter Blog

Libertariansparadise said...

"I can see it now: there will be market runs on the local supermarket, with Casey Serins of the world snapping up stores of food to artificially raise prices, creating a "can't lose" investment? God help us if someone figures out how to suck oxygen out of the air, and then tries to sell it back to us...."

Lets not give the Master Class any ideas.

Anonymous said...

LIKE THEY HAVE NOT ALREADY CLAIMED IT!!!

Minimum Wage said...

The working poor work hard but they definitely don't get rich. Where did that idea ever come from?

Minimum Wage said...

Sure you can borrow your way out of debt. Buy an income-producing asset which generates an ROI greater than the interest rate on your debt, and with sufficient time you will get out of debt.