Posted on 08/16/2008 12:51:32 PM PDT by vietvet67
You can have my granite countertop when you pry it from my cold, dead hands...
I love my granite. It’s a natural product (Verde Butterfly, which is perfecty with my cherry Craftsman cabinets), is durable, doesn’t scorch and won’t need replacing unless I thwack it with a hammer, something I’m not about to do.
$5 for a cup of coffee is another story.
I’m not an environmentalist — some of the stuff I do is just because I’m stingy and frugal, not to mention leery of a lot of chemical products used. I sterilize my laundry with baking soda and use a clothesline (propane is $2.69 a gallon, heaven help me). I have a small garden I’d like to expand next year now that I know how NOT to grow watermelons, and I try to buy local because I think it’s fresher, NOT because of energy costs.
We sensible consumers are getting tired of Chicken Little stories from all sides.
I know, 20 minute wait.
The positive feedback loop is ridiculous.
Just because Washington, WallStreet and Detroit urge people to spend, spend, spend, doesn’t mean that the consumer still has the responsibility to manage their debt. I don’t blame the powers that be.
If the consumer couldn’t figure out basic math, interest percentages, mortgage payments and their bring-home pay, it is their problem.
I’ll stay in my modest home, with my old television, paid for vehicles, investment money, and zero debt. My only responsibility is to care for my family. And I figured that out long before the interest rates started to drop.
Bush did not create this problem.
There’s no such thing as a “false prosperity.”
And the “consumer” doesn’t “drive” the economy.
When real goods and services are produced, that’s prosperity.
And that’s what we’ve had since the early 1980s.
What we DO have that’s a problem is FIAT MONEY. We need to get off that poison. Has anyone ever done so without a hyperinflation first?
There is a great truth that will be highly unpopular in these parts. Problem is, the irresponsibility of bankers and consumers alike has given a lot of ammunition to Obama and the socialists.
Quite the difference between your daughter and the college roommate. Congrats to your daughter on the handling of her finances.
Regarding roommate: “But she thinks it is worth a million dollars. Only if she can sell it to a blind person!”
Sounds like she might be the blind person. :-)
Just out of curiousity, how do 401k/403b, etc., accounts figure into the rate of savings by US taxpayers? I think most workers have a fairly high amount of savings in those types of ‘savings’ account.
You make a good point. However, we live in a system that makes it difficult not to go into debt, and in fact encourages people to do so. You can’t get a living-wage job unles you take out large student loans for a degree, you have to get a large loan to buy a car that you can use to go to work and drive the children to and from school, and virtually no one can afford to buy a house with cash. Most debt is not for luxury expenses, but the three listed above. Many, in fact, can’t imagine living any other way.
The stupendous power of the free market is an overarching principle to these little blips that signify nothing at all except to prove the success of the fundamental concepts of capitalism itself.
Calls by the politicos to meddle with the system for transient gains are outright stupid.
“When real goods and services are produced, that’s prosperity.”
That’s very true. In recent years, it seems that very little real goods are produced in the United States anymore.
I meant to say... it doesn’t mean that the consumer still doesn’t have the responsibility to manage their debt.
Sorry for the error.
And, considering the mouse infestation, someone who's olfactorily impaired.
It isn't counted as savings and most workers don't have a fairly high amount.
AWESOME ARTICLE. Absolutely awesome article.
This is an absolute must read by anyone who is unaware of the true scope of the financial crisis, its causes, and its very likely outcome on the US economy and the world.
Did I mention, AWESOME ARTICLE! Nice find. I’ve read most of this before in bits and pieces, but taken in one bite, it really drives home the point that personal, corporate, banking and government debt is simply MASSIVE and must be wrong out before steady growth can occur again. This MASSIVE debt will not be wrung out without severe economic pain among many over a period of years, not months.
We are talking about a long, deep recession. Many will not be able to comprehend this until after the fact. No matter.
Scary stuff but very accurate.
Oh, by the way... AWESOME ARTICLE. Nice find.
“What we DO have that’s a problem is FIAT MONEY.”
Sure agree with that.
It will probably take a bout of hyperinflation to prompt the changes necessary.
Jim Sinclair talks about a Federal Reserve Gold Certificate Ratio which I confess to not fully understanding.
See his post on Thursday: http://www.jsmineset.com/
“You can have my granite countertop when you pry it from my cold, dead hands...”
Was glad to see Consumer Reports debunked the recent news.
So many compelling points made in the article...
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Home prices have been spiraling downward for two years to the point where 29% of all households that purchased in the last five years owe more than their house is worth according to Zillow, the home valuation company. For those who bought in 2006, 45% have negative equity.
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The debt induced spending that occurred from 2001 until 2007 accounted for virtually all the GDP growth over this time. Without the mortgage equity withdrawal, the U.S. would have had less than 1% average GDP growth for the entire period.
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The massive overbuilding based on false demand has led to 3.5 million excess homes in the U.S. based upon historical trends. The most shocking fact is that there are 1.5 million vacant homes. This oversupply can only be corrected by massive price decreases.
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But no, owner equity as a percentage of house value has reached an all-time low of 45%. People have sucked the equity out of their homes and spent it faster than the prices were rising.
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The average American household has credit card debt of $9,840 versus $2,966 in 1990, at an average interest rate of 19%. Credit card delinquencies have increased to 4.51% in the 1st quarter.
Consumers used their credit and debit cards to buy $51 billion of fast food in 2006 according to Carddata. According to the Federal Reserve, 40% of American families spend more than they earn.
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“This is an epic event; we’re talking about the end of a 20-year secular credit expansion that went absolutely parabolic from 2001-2007.”
“Before the US economy can truly begin to expand again, the savings rate must rise to pre-bubble levels of 8pc, that the US housing stocks must fall to below eight months’ supply, and that the household interest coverage ratio must fall from 14pc to 10.5pc.”
The elimination of $2 trillion of household debt will lead to the closing of thousands of retail stores, strip malls, restaurants, and bank branches. There should be a lot of vacant buildings available in the next few years, and a few suspicious fires.
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The Federal Reserve reported that banks have tightened standards for all loans in record numbers. After giving loans to anyone with a pulse for the last five years, this information is refreshing. But based on the well qualified assessments of Bridgewater Associates and NYU economist Nouriel Roubini, there is still $1.0 to $1.5 trillion in losses to go.
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Government unemployment figures have begun to skyrocket, while the true unadjusted unemployment figures point to a major recession. If the number of people who have given up looking for a job were included, the official 5.7% unemployment rate would jump to 14%.
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In conclusion, the gathering storm has arrived. It will be long, painful and destructive. Those who prepared for the storm by not taking on excessive debt and living above their means, will ride it out unscathed. Those who built their house on sand by leveraging up and living the “good” life, will see their house swept out to sea. The storm will pass and we will rebuild.
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There has been and will be resistance to the inevitable deep recession that is coming.
Companies need to fail, housing needs to find its bottom based on supply, demand and price. Those who gambled must be allowed to lose and suffer the consequences.
Government intervention in this natural process could lead to a decade long depression. Let’s hope that reasonable heads prevail.
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You raise a very good point. Add to that the tsunami of inheritance cash coming from older parents to the boomers (I see this as a CPA) and I’m not sure I’m ready to agree with all of the conclusions, either. Even the median house sales price is deceptive... If three homes are for sale last year, $ 100, $ 200, $ 300, the median is $ 200. If a new group sells this yr. but it is only lower priced homes, $ 100, $ 150, $ 200, because the $ 300 decides not to sell (because he/she is told it is only worth $ 290), then the new median price is...$ 150. A so-called 25% drop in median price, but actually the drop is miniscule. But, numbers & liars.
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