“If you happened to sell out at the height of the bubble, then it was real.”
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Yes, for the person selling it was real but what many people don’t understand is that even if you were lucky enough to sell at the top that may have increased YOUR real wealth but the total wealth of the nation did NOT increase. Your gain is offset by the loss of the buyer. I once stated on FR that the constantly increasing appraised value of housing that was happening at that time DID NOT represent an increase in total wealth in the real world. I was called several different kinds of a fool by certain FREEPERS for that statement but I still stick by it. Likewise the drop in housing prices did not represent a real loss in total wealth of the nation. The house is the real wealth and the house is still there. As long as a house is being sold AND PAID FOR any loss to the seller is offset by a gain to the buyer and vice versa. It is only when houses and commercial buildings sit empty and fall into disrepair that there is a REAL decline in total wealth, that is going on now. As I drive around my area I see more and more empty buildings and empty houses. A house can only sit empty and untouched for so long and it starts to fall down. A few leaks begin and in this humid climate the rot begins rapidly. The total real wealth in my community is dropping and dropping rapidly, of this I have no doubt.
In short, barring outside inputs from other nations such as when oil wealthy little nations are able to simply let oil companies from other nations come in and produce oil and pay royalties is there any increase in REAL wealth from any source other than the hard work of the citizens. This is so simple that many people cannot comprehend it. We have large numbers of Americans who imagine that somehow increasing numbers are real wealth. The same people seem to think that a job is a job is a job. They think that a government job that pays $100,000. a year is equal in value to two jobs for plumbers making $50,000. a year each. It ain’t so, never has been, never will be. The plumbers preserve and or produce real wealth, the government worker in all too many cases is tasked with preventing the production or preservation of real wealth.
All quite correct.
I was quite amused by the workers who got shafted by the collapse of Enron 10 years ago. They apparently felt they should have been informed of the poor condition of the company so they could sell their stock off to some poor schmuck who wasn’t informed.
IOW, they were upset they weren’t able to shift their losses to anther totally innocent person. In the process committing insider trading and fraud.
LOL
Many interrelated factors are also creating inefficient capital allocation and unproductive spending. A lot of houses are underwater, creating illiquid market conditions at one end of the market while foreclosures are selling for cash prices at the other end. People and businesses with otherwise good track records for repaying debt can’t get credit because their balance sheets have been negatively impacted. Someone paying on an underwater mortgage could be putting that money to better use but can’t sell the house. The bubble did a lot of damage beyond what can be objectively measured in asset prices.
Many interrelated factors are also creating inefficient capital allocation and unproductive spending. A lot of houses are underwater, creating illiquid market conditions at one end of the market while foreclosures are selling for cash prices at the other end. People and businesses with otherwise good track records for repaying debt can’t get credit because their balance sheets have been negatively impacted. Someone paying on an underwater mortgage could be putting that money to better use but can’t sell the house. The bubble did a lot of damage beyond what can be objectively measured in asset prices.
As someone who has been called mutliple different kinds of names by certain FREEPERS, I can relate to that. It is even worse, because the illusion of wealth was created by borrowing money to pay for "your" apparent increase in wealth, meaning that someone is now getting a rent that he was not otherwise going to get, so he is going to stop working for a living and enjoy an easy life living off the interest that must be paid by the guy who borrowed to make you wealthy. So not only have "you" quite working to enjoy your newfound "wealth," but someone else has as well.
The economists identify three conditions for a free market - 1. no monopoly or monopsony 2. No externalities and 3. no information asymmetries.
In this case the government has a monopoly and monoopsony, and certainly is creating an externality on the market by bidding with taxpayer or printed money to create useless jobs in the place of useful ones.