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We Will All Pay for the Dummies

By Rick Ackerman Posted on March 30, 2010, 2:23 am EDT Last Updated April 8, 2010, 8:03 pm EDT

(Editor’s note: We wrote here yesterday that mortgage forgiveness would crater the housing market to much greater depths, with homes ultimately falling 70% from their peak values.  The following response, from “Donniemac,” was one of the more interesting posts in the Rick’s Picks forum. He sees signs of a recovery, but also the death of the America Dream for many chastened borrowers.)

Loan balances are either paid by the bank or the lendee. Therefore, the someone who is going to “pay” for the housing bust is the banking industry. And, eventually, the taxpayer probably will be called upon to prop up the banks — maybe through very liberal tax write offs of bad debt or through another round of bailouts, who knows? What the collective “we” need to have happen is to have the current economic growth be real. I know that doom-and-gloom attitudes seem to be the norm, but from my view, a return to a functioning economy is slowly becoming a fact. But there will be a large number of citizens who will have their lifestyles drastically altered — in particular, early boomers who are, say, 55 or older and who did not create any savings to speak of. I know, as my wife and I have a family full of them. And some of them are running scared. But I am off-topic. As the economy starts to gain some momentum, the pain of deflating the housing bubble can be eased, hopefully enough to not put economic activity back into a tailspin.

The big unknown, IMHO, is how are the masses going to react to not being able to satisfy their consumer itch at the flick of a piece of plastic? For sure, the extension of unsecured credit, or credit lines secured by home equity, is going to be greatly curtailed. This is being seen by raising of credit scores to get mortgages, or good car financing, or something other than an 18% rate on a credit card. What I think is going to happen is more of a stagflation period similar to the 1970s as we unwind the debt bubble and return to a more 1950s/1960s-like period of credit usage. People will be employed (and will hopefully learn how to save), real estate and real money (when I first learned of gold, this is what it was called) will appreciate in fiat money terms. And that will allow the bubble to deflate. At some time in the next ten years or so, fiscal conservatism will become the norm. Those of us who have practiced that in our private lives will celebrate a return to sanity and the next bubble will be born.

Nanny Society

You are correct about those of us who will not see balances reduced (as we did not allow ourselves to get into trouble) being angry about paying for the sins of my irresponsible family members. But the reality is we all pay for the dummies. I used to be opposed to laws that protect people from themselves and create a nanny society. But I have slowly come to the realization that those laws also protect me from the irresponsible. So, as I pay for some idiot who cracks his head open when he falls off his motorcycle, I become a supporter of that person losing a bit of his freedom through mandatory helmet laws. And thus it goes. For we all pay, one way or another, for the less mature and responsible among us. So back to the anger of seeing my brother get “bailed out,” I will get over it, as that is better than the alternative, which is to have him come live with or off me.

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  • Oliver April 4, 2010, 1:12 am

    I agree. This is exactly the philosophy behind the attempt to harmonize socialism/communism and capitalism/free markets.
    There are no free markets. That is an illusion. If you let markets go completely free they clash the latest with the judicial system (and they foster the Cheneyan form of modern state protected piracy, or rigging the game).
    Now, is the judicial system where economical questions ought to be answered? I think not.
    So it is more like Barney Frank said. It is not about regulation or no regulation, it is about good, efficient, accident-defensive, but opportunity-aggressive regulation.
    Opportunity-aggressive regulation for the good of mankind and the markets can be an artform, we haven´t even started to learn, I think. There´s room to excel.
    A helmet for a motorcycle is an opportunity-aggressive regulation. It obviously saves talent and money. But it does not curtail the center advantages of motorcycle riding, many of which being emotional, driving the market. All that for 70$. Making the motorcycle and helmet maker wealthy.
    Lean regulation. Dynamic regulation. Learned regulation written by the Buffets, Bransons, Gates, and the Mittals. Not by the lawyers. Not that Obama thinks he has reason to smile.
    Economics is like hunting. Without the deer dead on the table, even good instructions remain academic, so the instructions must come from a real deer hunter.
    Therefore regulation itself must become part of the global free market of ideas, without any Krugmans or Bernankes standing in the way.
    This “self-regulation” of the quality of regulatory ideas has now become possible through the open global communication standard.
    Mentally and psychologically – and genetically, in memoriam – Rumsfeld´s “old Europe” is ahead of that learning game through severe aristocracic spiritual and monetary default, Adolf Hitler and Stalin and reconvalescence from that test into modern democracies through excellent knowledge and the will to live on.
    I think everybody in this world has grown a lot stronger in the past decades than some gloomists think.
    It is an act of pragmatic balance, not of ideology.
    The principle of solidarity in modern democratic systems is not wrong and calling it socialism at every tweak is hysterical.
    In Europe, we might bicker about our health care system from morning to evening, but come try take it from us, rich or poor, you stand no chance, I dare claim.
    But the Lady remains a hot senior analyst in warning us: “the problem with socialism is that one day you run out of other people´s money.” Avoid the extremes.
    In the US, the problems with this idea can arise through simple geography. The neighbor can be far that I am asked to show solidarity with.
    And it requires the fool-proof registration of the citizen at various points in life.
    Because, sometimes it seems I wish to shout at “The” Republican (of today): man, if you talk like that you must come to the ER and say no to the 13 yr. old girl without healthcare. Otherwise your talk remains purely academic. You cannot say no to the girl. You ought not. You won´t. You know it.
    So there has to be a solution that avoids the most expensive station of any hospital, the ER.
    —
    We must learn to balance out socialism and capitalism and we will see that the new whole maybe more than it´s parts.
    A crisis is the chance. Rome failed for other reasons than just monetary ones. It failed in it´s spirit.
    If this crisis ignites the Thomas Jeffersons and Benjamin Franklins in the US citizens, there might be other scenarios for the new normal.

    I think the US is in a state of puberty. It will only ripe and become all the better. It is like a kid trying drugs. Uuups, debt IS dangerous, no matter what it was spent for. Aha. Ouch. And lead again as one among his peers: through creativity and excellence.

    The really good stuff I still read here – on the US pages.

    Happy Easter. Shalom and salamaleikum and om.

    P.S.: Can anyone help? How can one invest (derivatives/leverages) from Europe into RA´s picks? Does anyone have a tip? I hope this is not a stupid question.

  • Lizbeth April 2, 2010, 12:13 am

    Hello there, Happy April Fool’s Day!!!

    The saleswoman watched as a teen-ager twirled in front of the mirror.
    “I adore this dress!” bubbled the girl. “It’s absolutely perfect! I’ll take it!”
    Then the young shopper paused thoughtfully, “But in case my mother likes it, can I bring it back?”

    Happy April Fool’s Day!

  • Chris T. March 30, 2010, 10:52 pm

    Rich, you wrote:

    “…dysfunctional bureaucracies that missed … a Nigerian who bought a one way ticket for cash without luggage or passport AFTER his father turned him in to the US embassy.”

    It wasn’t incompetence on the part of the agencies here, hey did not miss him.
    Whatever the reason, they were aware of him, and shepherded him through to the plane in Amsterdam
    (perhaps he was part of a sting with them angling for his superiors, perhaps an intentional false flag [heaven forbid, to say so, they would never do that], whatever).
    As the Detroit lawyer, who sat right by him, has been trying to publicize, there were agents guiding the man through the checkpoints when the lack of proper documents impeded that. So someone was aware of this person.

    This does not invalidate your point, as incometence would be a less bad manifestation than willful conduct of this broeken governing structure of ours but just to point that out.

  • cp March 30, 2010, 8:50 pm

    What is the source of jobs that Dominic bases the bulk of his optimistic views on? We continue to lose jobs, and most of those jobs aren’t coming back. Any that replace them will be of a reduced wage, thanks to the effects of globalization. I read somewhere that estimates are as high as 25% of existing jobs will be outsourced in the next 20 years. And what will replace them?

    The other nite I saw a nature show about aquatic life in the ocean. One segment showed dramatic footage of a huge school of bait fish being reduced in size into a “baitball”. Large predator fish from below, medium sized predator fish from the side and even diving birds from above had this huge school of fish entirely encircled and collapsed into a solid mass of protein. It was a feeding frenzy that was unbelievably violent as well as short. Very few survived. I realized that this is the image I now hold for what was once the mighty middle class of america. Assign your own impressions as to who represents the large and medium predators as well as the diving birds.

    At one time the middle class of america held not only tremendous collective wealth, but also earning potential.
    A succulent target indeed. As jobs were shipped overseas, and the finance industry became dominant, most american workers now find little in their future to be optimistic about. Even the service economy now has stiff competition from a flood of immigrants that will work for less, destroying the remnants of any real wage bargaining power.

    In a consumer type economy, where disposable income to a large extent determines how well the economy does, how does Dominic believe it will improve, when overall incomes can really only go down?

    cp

  • Jeff Lane March 30, 2010, 8:30 pm

    [ As the economy starts to gain some momentum ] The only economic indicators pointing up are gov induced. The real economy is, at best, slowing it’s ascent. Not anything I’d call upward momentum.

  • Jeff Lane March 30, 2010, 8:01 pm

    [ As the economy starts to gain some momentum ] There is no doubt in my mind you are in for a rude awakening. How about a friendly wager ($100) says your momentum will be pointing down before 2011

  • JohnJay March 30, 2010, 7:57 pm

    There is more to collapsing house prices than the end of NINJA loans. Here is a link to an article about house prices in Hemet, CA. http://www.latimes.com/business/la-fi-hemet30-2010mar30,0,7301923.story
    A 5,000 SF house that sold for 440k in 2006 is now worth maybe 170k if you would want it at any price, thanks to the scum that took over the neighborhood.
    Collapsing house prices may not move the inventory except at the 70% haircut Rick talks about.
    There is more to deflation than money.

  • TahoeBilly March 30, 2010, 7:27 pm

    My basic message to anyone who will listen is to hope for “decentralization”, versus a dead broke Government’s further “centralization”, which in my mind equates only to a furthering of fascism. When I tell my lefty friends in SF that the EU could (and should) breakup, as well as US States should outright ignore the scare tactics of the Fed’s dominating of their States rights, I can only pray they see that this is our only hope for some preservation of freedom.
    Decentralize!

  • Benjamin March 30, 2010, 5:53 pm

    “I used to be opposed to laws that protect people from themselves and create a nanny society. But I have slowly come to the realization that those laws also protect me from the irresponsible.”

    Oh, so we need the nanny state to protect us from all the idiots, even though that is the very purpose of the nanny state? Give the man a Nobel for his outstanding reasoning and adaptiveness!

    • donniemac March 30, 2010, 9:11 pm

      I used to believe that many/most regulations led to a nanny state. I no longer believe that. When the actions of a few (Wall Street bankers) can create conditions where the, for lack of a better word, naive can find themselves the victims of the greedy, their own naivete, and economic conditions way beyond their control, then we need regulations to protect us from both groups. There used to be a time where you had to have 10-20% down to buy a house and the seller could not participate in paying the buyer’s closing costs. That is an example of regulations/rules necessary to protect your deposits from getting sucked into property that quickly lost its value.
      FDIC protects depositors. But when FDIC did not exist, depositors lost their savings because they were not doing an adequate job of tracking how risky their bank was with it’s loan policy. I doubt you will find many who want to put an end to that part of the nanny society. So it comes down to finding that line where society protects without stifling freedom and risk. I am as opposed to those who want to have a regulation for every human folly as I am to those who want to do away with all/most regulations. But what I hear on sites like this is an opinion that regulation is bad. I listened to this for years and slowly came to realize that is not so. No one denies that the rule of driving on the right side of the road in the US and the left side in the UK is good. And that is needed to protect us. So it is not a stretch to think that requiring 10% down to buy a house is a needed requirement. Or even more egalitarian, don’t require the down payment, just require that the buyer can prove that he or she can make the mortgage payments within average life experiences (car payments, college tuition, loan rate resets, etc.). Those are a couple of examples of rules, had they been in effect, would of helped prevent the current situation. But frankly, it really does not affect me as I did not allow myself to get into that kind of situation. And I do have enough room for the more spendthrift members of my family. And I retired from industry, so I did not feed at the public trough. Unfortunately, SSI payments have become important to me. And all because we had the idea that a free market could regulate itself and, instead of being asked to buckle down and help the war effort, we were told to go out and spend.
      Sorry, but IMHO, we need to have some protection. We are not islands unto ourselves.
      And thanks for the Nobel prize comment, at my age I am glad for anything that even remotely looks like a compliment. 🙂

    • Benjamin March 31, 2010, 12:12 am

      Donniemac,

      Put shortly, yes, there should be protections and accountability for fraud and the like. However, nothing is worth considering until first there is a return to the ultimate regulator, that which is neither the rule of man or nor anyone’s obligation: Gold. Anything before that is adding more shell-shifters to the shell game. But I think I see where you’re coming from now, though I would disagree that FDIC protects anything when all is said and done. If anything, FDIC is part of the problem.

  • Rich March 30, 2010, 5:44 pm

    Bully.
    Beware this old Chinese curse:
    May you live in interesting times.
    We have broken banks and corps staying in business, continuing to pay bonuses, defraud customers, depositors, shareholders and taxpayers.
    We have the POTUS saying we are out of money, then hyping 0Care because of Our great wealth.
    (Tell that to downsized American workers whose standard of living declined since the 50s.)
    We have a Census predicated on getting our fair share of funding (from the magic goose Nanny State taking over the economy).
    We have Congress, Federal Reserve, Monopoly Media and Treasury telling US we were on a fatal cliff dive two Falls ago, now telling US we are A-ok in recovery because THEY took countless trillions out of the economy, and US volcanoes of deficit and debt ratios higher than Greece don’t matter.
    We have Courts shredding the Constitution, while putting more people in Prison than any other country on the planet.
    We have crooked lobbied Politicians claiming to reform Medicare and Social Security after spending it all on their pork bloated budgets, when what they really mean is Cut Benefits and raise payroll taxes.
    We suffer Union diktat bureaucrats of Big Government Departments of Education, Energy, Health, Homeland Security, Safety and Welfare that produce illiteracy, higher costs, illness, insecurity, problems and poverty.
    We have Free trade Agreement Policies, that instead of enriching US, broke US by importing deficits and subsidizing illegals.
    Now government aims to cure Climate and the Weather while eavesdropping on every private communication, calling it Patriot Act.
    Are there no limits to Big G destruction of health, wealth, liberty and life?
    We have government agencies staging preemptive strikes on American citizens to justify bloated dysfunctional bureaucracies that missed TWA Flight 800, WTC, Murrah, 9-11 and a Nigerian who bought a one way ticket for cash without luggage or passport AFTER his father turned him in to the US embassy.
    We have Clash of the Titans Big Brother Wars of the Week, maiming and killing American volunteer soldiers while destroying the budget, when it appears Al Qaeda, Iran Contras, Saddam and other terrorists were armed and funded by the US.
    And we have a Tea Party movement with the President even acknowledging and dismissing his birth and socialism are of concern to Americans.
    Interesting times indeed.
    About the only thing we can count on is the trend of market prices.
    Since the Fall of 2007, the trend has been down town…

    • Steve March 30, 2010, 7:21 pm

      “We have Courts shredding the Constitution, while putting more people in Prison than any other country on the planet”

      We have a Constitution, and we have legislatively created entities under Article I, sec. 8, cls. 17, and Article IV, sec. 3, cls. 2.

      14th amendment citizenship is territorial, and it is subject to Article I, sec. 8, cls. 3 *Commerce Clause* controls under corporate law, and excise taxes internal. This new inferior citizenship is a “benefit” of legislative Act. Under the Ashwander v. Tenn. Vly. Auth. Doctrine “Beneficiary cannot raise constitutional question against benefactor while in receipt of benefit.”

      Read your constitution in regard to “Contract”, and then read 10 Stat. 146 in which congress legislates the privilege to engage in rebellion against the Constitution, and to practice private democracy/ mobocracy/national socialist democratic party games within a federal territory.

      Citizens of a territory have no constitutional rights,[None of the powers of sovereignty exist in the people of a territory; the legislative assembly owes its existence to and derives all its authority from the act of congress creating it, Murin v. Converse 2 C.I.N. 113] and; the Const. A.D. 1787 sits there abandoned by persons [now corporate enfranchisees] who engage in the fraud of federal reserve notes as territorial tender/tally of slave debt.

      We get what we derserve. One can choose to use the Coinage Act of 1792, or one can choose to use the Banking Act of 1913 territorially. No one said being Free was easy, or that one would not have to pay the ultimate price to stay free one day. Do you want to know how Nash’s Non Co-operative Game theory works, or is just better to trade the Futures Markets in mobocracy ?

      The corruption is older than all of you write. It goes back to A.D. 1865 and the Northern Senate Rebellion against Article II, sec. 2 presidental pardon of the several States. Every ill can be traced to what is known as The Reconstruction Acts of 1867, and the loss of Estates, Privilege, and Immunity to the Commander in Chief in military occupation. I know; The Veterans of Foreign Wars are just wrong about the military flag with its silks, cords, and fringe that rests in your Statehouse.

      The Constitution and Republic is still there waiting for Men to serve. Instead we have what we have. A democracy in territorial power where the people have lazed away Freedom, for the silver spoon of fiat wealth, and the ability to make ‘use’ of other peoples lives by trading the futures of every child unborn.

      Please do not complain the Constitution is being abused, when in fact the Supreme Court is telling you the truth. The problem is YOU DON’T WANT THE STINKING TRUTH !

      READ THIS “TERRITORIAL AUTHORITY” because We are too Cowardly to do anything about it legitmately. A few radical idiots in a militia will fail to operate legitimately, and we all fear what is right by Organizing under the unanimous Declaration of the thirteen united States of America July 4th 1776 and bringing forth a legitimate Power in Authority.

      Do you want the history for Oregon in which the Legitmate Republican Territory was replaced by the congress funding a territorial democracy, the Oregon System, the U’Ren Progressive communist movement ?

      I really doubt the people want to know the TRUTH because it would require every man and woman United States Code 1 to come forth and put down the democratic tyranny of Obama, and 535 whores. The whores are not going to give up territorial power as they now abuse it. Guess what that leaves !

  • Chuck Griffiths March 30, 2010, 5:07 pm

    Were this the 70s we could go back to the 50s and 60s. Unfortunately, it is not and never will be. The crux of the problem is not consumer debt. It is government debt. As I write (as we speak ?) consumers are paying down their credit card debt. Those that can are paying their mortgages. Those that can’t are having their mortgages foreclosed. Government , on the other hand, is piling debt upon debt by multiples of billions. Without either defaulting on the debt, or going to super (hopefully, not hyper) inflation, we cannot pay down our government debt. Defeating inflation in the Carter era took us nearly a decade. To defeat inflation on the scale we will be facing will take multiple decades. Your great grandchildren will still be paying down the debt that we, and the government ,we elected,burdened them with.Shame on us and shame on our government.

    It is too late to save ourselves. But; maybe if we all do the right thing we can save America’s future generations.

  • Vanessa March 30, 2010, 4:30 pm

    Taxpayers are, in fact, left holding the bag on this one. Internal Revenue Code Section 382 limits the amount of an acquiree’s pre-acquisition net operating losses an acquiring company can utilize to offset post-acquisition combined income. The limitation is a function of, among other things, the purchase price of the company acquired. Well, if the purchase price is minimal, the theory goes that the post-acquisition utilization of NOLs is also minimal (any # times zero equals zero). The law was intended to limit companies making acquisitions for purely tax-motivated, non-business reasons.

    Well, at the time of the bailout, Paulson & Co. promised the bailout banks that IRC Section 382 would be amended so as to allow full utilization of any acquired NOLs, e.g. WaMu. Of course, the change ONLY applies to the banks. So, all those acquiring banks who obtained bargain purchases and direct government dollars also recently reported record profits and will not be paying anything to the Feds for those earnings; just check the recent financial reports to confirm.

    It is shocking to me that this was allowed, but even more shocking that it was little reported and less understood. I haven’t done the math to calculate the lost tax revenue, but maybe ignorance is bliss.

  • Chris T. March 30, 2010, 4:30 pm

    I could not be as sanguine as the writer of this commentary.

    We always read about all this being caused by the general profligacy of an entire generation. To some extent of course that is true.

    However, what is the back-drop to all of that?
    A few generations of this country grew up in a generally sound economic environment, where the norm had become that the next generation would do as well, really better than their forebears.
    It is this situation that finally went under about 40 years ago, as demonstrated by the real median wage “growth” ever since.

    In order to cope with this development, meaning to find a way to keep that normal going, Americans adopted coping mechanisms. First was the double-earner family, when that failed to suffice, credit, credit, credit. Those that benefit(ted) from this, were happy to oblige. Both changes had their costs, and not only financial. The loss of a stay-at-home parent (usually always mom) had many non-economic costs as well. (To those women who chose to work instead of mother, this was not a loss, but many did not choose, but had no choice not to work).

    Now of course, even the credit coping mechanism has failed, so that at some point the bitter realization of having to do with less than mom and dad will have to sink in. This should have happened long ago of course, but paradigm shifts of this nature are slow in coming.

    As college education has become a major part of many families’ consumption, student loans were another way of coping with the roughly 20x cost increase over 40+ years. That is now failing too, with crushing debt killing futures of grads, and just today, the about to be signed full-socialization of the student loan program.

    Bottom line here: Those merely trying to keep the paradigm of the life they knew from childhood going, not living excess over that, are to blame, sure, but the real blame goes to the devaluing monetary system, which has forced this general sliding back.

    As to the nanny state commentary:
    “I used to be opposed to laws that protect people from themselves … But I have slowly come to the realization that those laws also protect me from the irresponsible. So, as I pay for some idiot…”

    Unfortunately, this attitude shows a flaw, as you are making some underlying basic assumptions.

    Primarily that is, that you have come to accept the government taking from you for others as correct and normal, and then, that government can impose eve more on your freedom to right the wrong it has created in the first place.

    You would NOT have to suffer a stricture on your freedom, if others weren’t being bailed out for their stupidity.
    Old English/Scots law has a general principle, which is, you are NOT your brother;s keeper. This differs quite drastically from other Roman influenced systems, where NOT being a keeper can be a criminal act of omission (as opposed to our criminal acts of comission).

    There may moral/religious/blood-tie reasons why you will feel compelled to be another’s keeper for their stupidity, but those are YOUR PERSONAL ties/beliefs, that I do not share. I have others, which YOU do not share.
    By accepting the nanny state, you ultimately condone/endorse that what any one of us may choose to do for others (without being forced to other than by our own will) should be paid for by all instead.
    Thus you want ME to pay for your personal moral suasion.

    Anyone empowered in this “democracy” of ours should bear the costs for their actions by themselves, or at worst, rely on aid FREELY given by others only, if that exists. In a society with values and morals, such free aid WILL and DOES exist.
    It is only COMPULSORY aid, which should not exist, and which should be resisted by all who value freedom.

    And that is why the founders had it right in creating a REPUBLIC, not a democracy as seen today, they KNEW that some are more capable than others. Unfortunately today, we only want the benefits (full enfranchisment) but not the consequences…

  • redwilldanaher March 30, 2010, 4:17 pm

    Been reading Rick’s comments for some time now and almost always read the nightly email but normally do not take the time to comment. I had to this time around. How in any way does “donnie” think that any of this is “organic”? How is he not distinguishing between artificial inducement (for which the bill has yet to begin to be repaid) and legitimate, natural cyclical growth. Sorry Donny. I strongly disagree with you. That’s not to say that the econ stats can’t be faked, corporate accounting can’t continue to hide the truth, and that the exceedingly manipulated markets can’t march higher. All of us that have been around the markets during the era of serial bubble fomentation know that these markets can march irrationally higher for a good long time. My personal “bottom line” goes something like this. You can’t thoroughly mismanage your affairs on all fronts for nearly 40 years and expect it all to turn out sunny in the end. Every day the USA et. al. are on the precipice and the reality is far worse than most of us can imagine since the truth is kept from us. If you want to allow yourself to be lulled into a false sense of security by the MSM and the unholy alliance of Wall St. and DC by all means enjoy. Life is but a dream.

  • DonF March 30, 2010, 4:03 pm

    Thank you, donniemac, for contributing so selflessly to us dummies.

    Some of us, especially us provincial, brainwashed by the bought and paid for media, middle Americans, don’t quite understand the concept of the slogan It Takes A Village.(No reference to Clinton or book) Anyone who leaves the backwoods of America and travels far enough to need a passport and a few thousand dollars will soon find out the truth of that slogan. It’s not JUST for dummies

    Most of us would be better off with Rick’s recommended reading list (WTF! where is that list?) and avoiding the mainstream drivel, such as the Miami Herald. I simply shake my head and roll my eyes at the choices some people make!
    Well, it is sort of a free country. If you don’t believe me, just ask the Hutaree people. Oh crap! You’re not even allowed to overthrow the government any more? By God, back in 1776 you were! I dare them British to try it again! I can see it now, the War of 2012!

  • Steve March 30, 2010, 3:01 pm

    Below I have attached a quote I received via emai. I think this speaks to the greatest BUBBLE of them all. Need I say greed, and the greedy who wish to have all of your cake ? I have studied money because someone said ‘money is the root of all evil’, or was it ‘the love of money is the root of all evil’ ? Maybe this time will be different and the history of the cycle of money will not repeat its self. We have entered the end game of all history on money, and the end game has come and gone before, just not on a global scale. France lost in 1804 when the futures scheme ended in disaster after the ‘Purchase’. Is it beyond question that we master nothing if we fail to master the past ?

    Great quote. Too bad we don’t know who wrote it….

    The danger to America is not Barack Obama but a citizenry capable of entrusting a man like him with the presidency. It will be easier to limit and undo the follies of an Obama presidency than to restore the necessary common sense and good judgment to an electorate willing to have such a man for their president. The problem is much deeper and far more serious than Mr. Obama, who is a mere symptom of what ails us. Blaming the prince of the fools should not blind anyone to the vast confederacy of fools that made him their prince. The republic can survive a Barack Obama. It is less likely to survive a multitude of fools such as those who made him their president.” — Author Unknown

  • John Wilson March 30, 2010, 10:24 am

    So, let me get this straight.
    Banks change their lending policies to take on all applications (those who will prove nothing about income or credit history), the government backs this with FHA insurance, the FBI warns Congress that this is going to cause a massive melt down of historic proportions but does nothing, and the “dummies” are to blame?
    What this revolves around is the greed of the rich, and the lack of regulatory bodies enforcing any rules and regulations that were set up to prevent this.
    The “dummies” were just going after the candy that was laid on the table. All preventable if our “nanny” government had enforced the rules in place.

    Madoff’s Ponzi scheme was known to the government, Lehman Brother’s lies about their CDO’s and CMO’s were known to the government, as were Bear Stearns’ lies. But, it is the dummies who buy $200,000 homes that are to blame?? It just does not make sense. Place the blame on the regulators and the banks who went crazy. That is where the blame lies.

  • Gregg [UK] March 30, 2010, 5:04 am

    Looks like the big bear market rally has done what they do best once again – suckered Donniemac into thinking that the US economy is improving for the long term. The $trillions that the US taxpayer has thrown at the problem has done what you would expect it to as we enter the big deflationary depression – perked it up a bit but this is no more than the temporary burst of life a dying man would get when given a “shot” of oxygen. Sorry, I look around me here in Colorado and there are still businesses going bust at a rate of knots – some of which have been established 30+ years.

    There is no harm being optimistic but come on Donnie……be straight with us your real name wouldn’t be Bernanke would it?

    • photoradarscam March 30, 2010, 4:10 pm

      I agree with your sentiments, but it is better now than it was a year ago, there are quite a few signs of this. But I hesitate to call it a real recovery. Rather it’s probably more accurate to say that it’s flattened out, which is a lot better than having things getting worse and may appear to be recovery to some.

  • donniemac March 30, 2010, 4:37 am

    Interesting article in the Miami paper! I did not read it before I wrote these comments.
    http://www.miamiherald.com/2010/03/27/1551536/work-isnt-done-for-aging-baby.html
    The article touches all the bases, the boomer bust, losing half your value of your house, the economy improving shown by employment increasing, and family moving in.

  • Other Paul March 30, 2010, 4:13 am

    What part of indefinite, $1T+ federal deficit tells you that the “taxpayers” are footing the bill for the “less mature and responsible upon us?” Treasury bond and bill buyers are lending Uncle Sugar the money, and those owners are the ones who are going to be left holding the bag via dollar depreciation and / or gov’t default.

    If the gov’t decides to start paying down that debt via increased taxes, what is that going to do to that slow return to a “functioning economy?”

    Ultimately we will get back to those 1950s-1960s times: $.17/gal gasoline, 5c packs of gum and baseball cards, $.10/gal milk, $1,200/yr salaries, $10,000 houses, $10 doctor appointments, etc.

    Donniemac, your optimism is refreshing. Let’s hope that you are right.


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