Below is one of hundreds of things I have read recently on what the "experts" have to say. As you read this remember that since 2004 I have been sharing with some of my best clients that the pieces were in place and that we would move into a global depression of such significance that history would show it to make "The Great Depression" look like a drop in the bucket relative to that which we are now in. Make no mistakes; this is not about the US housing market! It is about the incredible greed and arrogance of some, coupled with the absolute ignorance and apathy of many. This is not a US issue alone. Yes we here in the states are starting to feel it first; the rest of the western hemisphere will soon follow as will Europe, then eventually Asia. When all is said and done, about 20-25 years from now, a major housecleaning will have taken place in the world's financial markets and economies. What an amazing time to be alive! Throughout history the times of the greatest and most rapid changes, when the masses needed the most help to simply survive, those who have been the most prepared, informed and concerned have had the greatest opportunities to make huge differences and to truly help large numbers of people. When you are committed to helping others, and there exist tons of people to help . . . what happens to you personally?
Says famed Harvard economist Martin Feldstein of the ongoing rapid decline of home prices: "It's simply not clear – at least to me – what will stop this self-reinforcing process." Not a word was said about who created these problems. I imagine all the well-heeled economists now meeting with the Fed governors in Jackson Hole this week are doing an economic version of "Who's On First?" The government and its economists conspired to build a false prosperity through huge increases to mortgage lending over the last decade. Just look at the outrageous growth of the balance sheets of Fannie and Freddie. Now the facade has worn thin. And the debts must be repaid. What should happen? Pity the uneducated or delusional people who trusted their mortgage broker. Hang the political leaders and the bankers who encouraged reckless borrowing. What will happen? The government and its economists will do everything they can to postpone the inevitable, which will make the problems worse.
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The government and its economists are looking for truckloads of Band-Aids now, when the patient would truly be best served by a full, complete, and rapid amputation. Will that happen? No, there are no votes in taking that action, the powers that be will let infection and disease set in and until the stench is so strong that we simply can't take it any longer we will try to hang on, thereby exacerbating the problem significantly.
What would happen if none of our tax dollars went into this or into any other situation where the government was trying to bail out people from the consequences of their own stupidity? Buy a house you can't afford - tough figure it out. Make a loan to someone who couldn't pay - tough figure it out. Build your home or city below sea level, or on a known fault line - tough figure it out. Invest in things you don't understand - tough figure it out. Choose to neglect your physical well being - tough figure it out. Have 5 kids you can't afford to feed - tough figure it out (or we'll take the kids and give them to someone who can afford to feed them since you are obviously an idiot and we are tired of idiots raising children to perpetuate the idiot lifestyle.) I could go on forever, but not now.
