Trying to Throw His Arms Around the Housing Crisis

"I'm afraid the $800 billion Obama "stimulus spending plan" will be as big a waste of money as the Iraq war "

If they fill one pothole on a street in Kansas with that $800 billion, it will still be much much much better spent money than what was spent on the Iraq war.

Posted by: northsloperenter at January 8, 2009 10:13 AM

I'm pretty sure the only way the housing crisis get solved is when the person who borrowed money that they could not afford to repay default and the creditor sells the house to someone who can afford it.

Now, since everyone who was highly motivated to buy a home in the last 5 years pretty much did so, there isn't a big group of gullible people waiting to buy real estate.

Which means the people left to sell real estate to are speculators (no way I can call them investors in this market), people who were too young to buy in the last 5 years, and people who stayed on the sidelines because we thought prices were insane.

Those of us in the latter group are now worried that the whole general economy is going to hell for the next 3 years, so prices that would have seemed sane to us last year now look too expensive.

A month or two ago, I was thinking I would really like to buy a place in 2009. Now I'm getting a little scared about making any kind of commitment when I don't feel secure about my job, the city and state's ability to fund public services, and the possibility that all that is happened so far is only the beginning.

I was happier when I thought 2009 would be a good time to buy.

Posted by: northsloperenter at January 8, 2009 10:22 AM

"The only way out of this mess is to produce something that people really need and buy."

This is the truth.

Unfortunately, we have spent many many many years outsourcing more and more of the productive work and having more people work in sales and finance.

The internet actually accelerated this as a lot of "white collar" jobs started getting outsourced as well (call centers, IT support, medical and legal records processing, etc. -- even some lawyers jobs are being outsourced to India).

The result was that goods and services kept getting cheaper and cheaper in inflation adjusted dollar terms but America was actually producing fewer and fewer objects of value.

Yet we still had enough dollars to buy those cheaper goods.

How?

Borrowing borrowing borrowing borrowing borrowing.

And a strong dollar.

Both have to change.

China is going to get burned by this too. Instead of taking all the money they made selling stuff to us to improve life in China or to enrich the citizens of China, they lent the profits back to us (by buying Treasuries) so that our government could afford to keep fighting 2 wars without raising taxes so that the American consumer would have enough money to keep buying stuff from China.

Now we are going to buy less of their stuff and the profits they stored away in US Treasuries are going to get devalued right along with the dollar.

And people in American are going to learn that not everyone is going to get a Hummer, a flat screen TV, a $300 phone, and a home of their own.

Posted by: northsloperenter at January 8, 2009 3:01 PM