The problem is, the absolute exorbitant prices that have been paid for what is really not all that great real estate. Someone in California got, for a patch of land and a mobile home, something like 1.7 million dollars a few years ago, and that had purchased it, I think a year before, for $900,000.
It’s a real estate market that is nuts, and inflation that has gone into overdrive. And then people have been taking out even more loans against the property they have, trying to capitalize on equity. It’s all based on money that is not really there, and it is going to come crashing down, and it’s going to be disastrous in some areas, but more than that, the fact that alot of national mortgage companies are leveraged into this insane markets.
It’s a recipe for disaster, and it reflects in general the problem of the 1990’s onward economy. With the exception of a few small recession, we have been on economic full blast since the mid 80s. Because of government controls on the economy, we have eliminated deflation as the corrective measure that it used to be. Well, till now, but it’s only going to be a real estate deflation, which is going to bankrupt alot of people, while other prices keep rising.
The only thing that kept the 70’s from being deflationary were the various government controls we instituted after the New Deal to stop deflation. Problem is, the New Deal was meant to be temporary, it’s now permanent and it is setting up what could possibly be a worse economic collapse then that period. No politician has the courage to tell the average American worker that if they lack a college degree, their income in real value, has probably reached it’s eternal peak, we’re in a world market now. Non-college educated Americans will have to get used to lower wages.
But this is all going to have to happen with us taking a severe economic hit that I don’t think this generation is ready for. One thing the deflation and correction of the thirties did, salaries that no one would take in the 20’s, people were greatful for in the 40s. The correction hurt, but, in the end it made our economy stronger and helped equip us to defeat the Nazis. I think the next decade will prove what the entitlement generation is made of.
I think the next decade will prove what the entitlement generation is made of.
I assume you are talking about the boomer's. My wife and I are of the early 30's late 20's age group, and I know what I think is going to happen. SS is going to be unsupportable, and higher taxes will be leveraged to pay for it. Boomer's will sit there and demand the workers be taxed more. How does that sit with me? I'm pissed.
As it is now you have to have two incomes to afford a house. Home school or private schooling is not an option. The mean income is not enough to afford the mean house.
All this while retiring boomer sit in the casino and demand I give them more of my pay check. It's not our fault they were lied to by Big Government. I'm sure I'm going to get flamed now. I don't care. The thought of having to pay for the boomer's free government ride, while saving for my own retirement, while trying to hold a family together.... I don't know...
I think its going to come down to the Gen X'ers to save the nation. We are the ones that will have to break the entitlement cycle. Boomer's are not willing to do it, and frankly, they don't have the time.
I have 4 children who are Gen X'ers
My children can barely save themselves, I don't see how they can save a nation.
Believe me, I taught them well, they are simply soft and used to life being very easy.
I hope you are right