I'll leave you this week with two quotes from the person most responsible for the housing bubble, and eventual crash - Mr. Alan Greenspan

"Don't allow money-supply growth to spiral out of hand.”

- Alan Greenspan, 1977

But what they perceive as newly abundant liquidity can readily disappear. Any onset of increased investor caution elevates risk premiums and, as a consequence, lowers asset values and promotes the liquidation of the debt that supported higher asset prices. This is the reason that history has not dealt kindly with the aftermath of protracted periods of low risk premiums

- Alan Greenspan, 2005

New movie and book on credit-addicted Americans - Maxed Out by James Scurlock

Some smart people are starting to write books and make movies about everything we've been talking about here at HP.

The American economy isn't fine folks. People aren't doing well. All that wealth you see is just a mirage. And out of control consumerism is not a good thing.

It was all bankrolled by debt, massive, out of control debt. And now the bill is coming due.

Here's a book (and movie) on this out of control debt and addiction to credit cards - I encourage all of you to go see it, or read the book.

Deep in Debt, Deeper in Denial

"Maxed Out," a documentary that opens nationwide next week, examines the dark side of America's love affair with debt.

"Maxed Out" is directed by filmmaker James Scurlock, a Wharton business school dropout and entrepreneur. Scurlock also wrote a book based on the film, which is due out next week from Scribner, a division of Simon & Schuster.

Scurlock says he started out hoping to do a lighthearted riff on consumer irresponsibility, but was shocked by what he found: College students and housewives committing suicide over their credit card debt, and the nation's biggest banks involved in predatory lending schemes.

"I wanted to know why people are living so close to the edge," says Scurlock. "A lot of people just haven't been able to keep pace with expenses like health care, education, and housing.

"It's not in anyone's interest to have a financial industry that behaves like a used-car dealership," says Scurlock. "I think it's conservative to expect that credit will be regulated in this country. People need to have to have strong financial industry that's trusted -- and to the extent that that erodes, that's very bad for the country and the economy."

Why, I asked Scurlock, don't people understand this? Why do so many consumers buy things on credit and then pay double for them over time? Why do they sacrifice what they want most in life for what they want this very second?

It's pretty simple, Scurlock says: "I think there's a lot of denial. Most people can't do the math. There is very little, if any, focus on the balance sheet side of the equation."

Berkshire Hathaway sitting on $38 billion in cash, waiting to buy distressed real estate, Buffett sees writing on the wall

Ah, gotta love Warren Buffett. Always the smartest guy in the room in my book. And the fact that he gave away almost his entire fortune last year to charity makes this guy, even though he's one of the richest people in history, a saint in my book.

Remember last year, when he and Charlie said there was a massive real estate bubble that would go bust? Yup.

Remember when he said he was hording cash so he could buy assets at distressed prices after the crash? Nice play.

Remember how he took his dollars and had it in foreign currency during the dollar downfall? Oh, man, nice work. He's also buying foreign companies and moving out of the US when he can.

And here's his comments yesterday on the unsustainable US debt and "soft landings", and how this will unfold.

You can learn a lot from Buffett. Imagine him and The Corrupt David Lereah in the same room.

"Americans will live better 10 or 20 years from now," Buffett wrote. "But our citizens will also be forced every year to ship a significant portion of their current production abroad merely to service the cost of our huge debtor position.

"At some point in the future U.S. workers and voters will find this annual 'tribute' so onerous that there will be a severe political backlash," he continued. "How that will play out in markets is impossible to predict -- but to expect a 'soft landing' seems like wishful thinking."

The $10 billion meltdown at HSBC (so far) and how the US housing crash may eventually destroy the world financial system

To think, we're just getting started. Oh, my, how interesting this ride will be.

The loans aren't going to be paid back. The bag holders are just now smelling the coffee. And a world financial system built on the back of a Great Bubble run amok will now collapse.

It hath been foretold.

HSBC fires US executives as it works to get Household in order

"Embarrassing", "catastrophic" and "disastrous" as not words one usually associates with HSBC. But they were being thrown around with wild abandon yesterday as the market woke up to the first profits warning in the 167-year history of Britain's biggest and most prestigious banking group.

The first came from the mouth of an HSBC spokesman; the latter two were used by analysts to describe a truly horrific trading statement in which the company was forced to admit it had got its figures on non-performing loans - bad debts - badly wrong.

While the market had expected provisions of about $8.8bn (£4.5bn) to cover these, the bank was forced to admit it will need to set aside nearer $10.6bn. The reason? The US sub-prime lender, Household.

Everyone knew there was a problem with the business, which offers mortgages and other loans to people whose poor credit histories mean they are shunned by mainstream lenders.

The company was forced to admit in December that it was grappling with difficulties at the operation, bought for $15bn in 2003. Some clients were defaulting on second mortgages within just six months of taking them out.

What it didn't take into account was a fundamental problem with the US housing market. There has been an unprecedented construction boom in the US over the past 15 years. So much so that the Goldman Sachs economist, Jan Hatzius, estimates there are about 1.5 million excess homes in the US.

Combined with that is the impact of 17 successive interest rate rises in two and a half years, taking them up from 1 per cent to 5.25 per cent. Aside from a few "bubble" areas (central Manhattan, for example) these two factors have caused house prices to fall.