"I have been saying for about two years we’re looking at a 1929 kind of event. I think that we are really in trouble in this country. And what you have seen in the last four months is just the beginning of it."
-Patrick Byrne, Chairman and CEO of Overstock.com, December 2007
December 12, 2007
HousingPANIC Quote of the Day
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The Impending Destruction of the U.S. Economy, Part 1
By Morgan Housel December 11, 2007
We U.S. citizens enjoy a magnificent and prosperous economy the rest of the world can only envy. Employment is humming along, inflation is tame, and the lines inside Starbucks (Nasdaq: SBUX) everywhere remain annoyingly long. Despite a number of hiccups this year, the stock market is still just a rock's throw from another all-time high.
But we're coming up on a bend in the yellow brick road, and going 'round it could cause the party lights to go dark quickly. That could change everything about the way we and future Americans live. Sound scary? It is.
A nation built on debt?
Let's go back to the 1990s. It wasn't a bad time to be an American. Ace of Base was topping the charts, the economy was parading freely, and the stock market could make a Chihuahua look smart. With newfound wealth came newfound toys and spending habits, and a drive to leverage up to your eyeballs to fund the cars, boats, and multiple TVs for your second or third home. Since 1990, non-mortgage household debt has gone up more than threefold, outstripping economic growth and inflation.
But, heck, the amount of debt we had was not a problem! The economy kept buzzing at a pace that allowed consumers to fund their debt-laden habits. And with reasonable interest rates throughout the '90s, layering on consumption outside your earnings means wasn't that big a deal. The indulgences in spending kept going, and going ...
Since 2001, the U.S. has had the benefit of laughably low interest rates. Investors, still shell-shocked from the stock market turmoil, began salivating over another asset class they could exploit with those low rates -- real estate.
Savvy businessmen finessed ways to market exotic mortgage products to consumers most of us wouldn't lend a cup of sugar. Thus the birth of the subprime-mortgage calamity that propelled companies such as Countrywide (NYSE: CFC) into the stratosphere and allowed homebuilders such as Beazer (NYSE: BZH) and D.R. Horton (NYSE: DHI) to crank out as many subdivisions as they could dream of.
I'll save you the ending of this real estate saga -- we know how much of a mess we're in now. And it's probably worse than any of us could have dreamed, with massive write-downs from respected financial institutions, such as Citigroup (NYSE: C) and Merrill Lynch (NYSE: MER).
What now? Many of us would like to believe Uncle Bernanke will bail us out by slashing interest rates and bringing back the good old days. Right?
Kind of -- and that's where the massive economic debacle begins, my friends. Those same spend-happy consumers raised in the go-go 1990s -- they're still alive and kicking, and you better believe they still love to spend.
Yeah whatever.
I DON'T CARE WHAT THEY SAY ABOUT DEBT BEING BAD!
I DESERVE a new BMW so I bought one.
After a hard day at the office I DESERVE to be able to watch my 60" plasma TV.
I don't care if we have to charge it on a credit card at 22% interest, by God my daughter is going to have her ballet lessons.
So if all you HPers want to live like Po-Folk be my guest!
Two words:
DEBTORS PRISON
The END.
Sick and Dying America
Speaking of BMWs have you seen the latest sales numbers for BMW? Up. And the same for BM, Lexus, Acura.
Yep we are in a recesison since in a recession sales of luxury cars always go up.
You all enjoy your 1982 Honda Civic instead.
Keith here's a CNBC Video Link for a Byrne interview from last week. Watch Maria's reaction when he drops the 1929 Bomb..
http://www.cnbc.com
/id/15840232?video=605445206
Oh Don't forget to reassemble the link..
BMW sales are up in in Asia and the Middle East and down in the USA. nice try, realtroll
DOPES!!!
Why quote a clown that runs a Walmart style "consumer debt machine" like Overstock.com?
Of course he is worried. The majority of consumer purchases are made with credit/debt.
Damn, this country is getting to be more and more stinky every day like a rotten dog carcass.
Make you really think not once, but twice or thrice about "Proud to be an Americano". Maybe you should change that famous, self-centered slogan to "Poor to be an Americano"...
Shame on this nation and most of its people.
I don't care if we have to charge it on a credit card at 22% interest, by God my daughter is going to have her ballet lessons.
At least the ballet lessons are an investment of sorts. An investment into your daughters culture, education and health whereas the plasma and BMW are just depreciating assets.
Keith here's a CNBC Video Link for a Byrne interview from last week. Watch Maria's reaction when he drops the 1929 Bomb..
http://www.cnbc.com
/id/15840232?video=605445206
Hehehe.. That's funny.
It's always amusing to watch the media talking heads go into damage control mode when they hear bad news and try to argue with their limited understanding of economics - "but, but look at all the big buildings ... and the technology ... the markets are up ... look at my diamond studded platinum Rolex that I bought with my Amex ..."
Speaking of BMWs have you seen the latest sales numbers for BMW? Up. And the same for BM, Lexus, Acura.
Yep we are in a recesison since in a recession sales of luxury cars always go up.
Totally false. Car sales in general are in the toilet. And you guys have to understand once for all that giving away a zillion cars at cost and with 0% interest just to fake sales is not the same as being profitable. It's a trick that GM knows very well, but eventually catches up with your balance sheet.
If the economy is so great, why is it that banks are failing, homes are not selling, and Starbucks sales are down?
Hey Keith, new wave of trolls out of Washington, eh?
Speaking of BMWs have you seen the latest sales numbers for BMW? Up. And the same for BM, Lexus, Acura.
Yep we are in a recesison since in a recession sales of luxury cars always go up.
Don't forget iPhones! iPhones and Lexuses are the ultimate indicators of a healthy economy, and they're both soaring!
Buy in Phoenix NOW or be priced out forever! This minor blip isn't going to continue for long, soon, studio condos in Scottsdale will be exceeding $1 million!!!
"Speaking of BMWs have you seen the latest sales numbers for BMW? Up. And the same for BM, Lexus, Acura."
Careful I think I saw the repo man driving around the hood.
Hey anon, its a 1989 honda civic. Just blitzed through it road worthy test. Works fine for my 12km round trip to work, runs on less than 5 gallons a week.
Costs me 3k total per year running cost (inc gas).
How is the value of your house, BMW, boat, HELOC, CC working out?
"Speaking of BMWs have you seen the latest sales numbers for BMW? Up. And the same for BM, Lexus, Acura."
It's because most of these cars are made in the United States, unlike GM, Ford, and Chrysler. Since the dollar has declined in value, it's far cheaper to make cars in the States than in Canada or overseas. Exports are getting more expensive with the dollar in decline, and this is going to seriously hurt the "domestic" auto producers, since they manufacture in Canada which is now the most expensive place in the World to make vehicles.
We will once again, have to become a manufacturing economy. The United States has no choice, with a worthless currency, but to start making products for export. Our natural and mineral resources will be up for grabs too.
Oh!! goodies just the beginning ..I just love surprises.
Look one can tell things are going in the tank when even working 2 jobs things are still fuCing tight.
I work a full time job 40 hours and make over $60,000 a year...strait..my second job I make a little over $22,000 a year...plus the wife works 3 days a week, add another $12,000.
$94,000 + - plus what ever i do on the side on a weekend if it comes up...No debt besides my mortgage, and a car payment cheap right?...wrong!!.....Where the Fuck is all my money going...???
this supports a family of 4...troubled times ahead...for sure.
I already told my children enjoy this Christmas,cause next year...their just might not be one...a gift giving one that is..be thankful the lights and the heat are on and you have food.
Keith, Byrne is another closet Hper!!! Can't you give his site a free plug on the sidebar for a couple of days for coming out? That clip is classic, "big buildings" lol!
Ditto. That moronic talking head was funny...
Anonymous said...
Keith, Byrne is another closet Hper!!! Can't you give his site a free plug on the sidebar for a couple of days for coming out? That clip is classic, "big buildings" lol!
December 13, 2007 1:45 AM
Keith,
What about reverse motgages?
I wonder if there is going to be problems with these loans in the future. Many older people are going to expect to take out a loan to pay for their expenses. Appraised Values will also be an issue.
ICEMAN
Anonymous said...
BMW sales are up in in Asia and the Middle East and down in the USA. nice try, realtroll
December 12, 2007 3:29 PM
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Try again moron. BMW sales are up everywhere including the USA. Same for Lexus and Acura and MB.
He would make a great vp for Dr. Ron Paul.
Burn Babay Burn
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