Then explain to me why I am able to buy a house during this time?

F15Mech on April 2, 2008 at 11:32 PM

Alot of people can buy a house at this time because they still have jobs. Remember that negative feedback loop I spoke about. Look at today’s jobless claims. Way up. the layoffs are starting. the last several years has not been a job seeker’s delight. the last two months have seen an accelration in job cuts. If the home prices continue to fall it will get worse. Are you sure your job is secure?

From the comments it appears that most people can’t imagine that their sitution will change. They think their job is secure, that life will go on the same as it has regardless of all other factors occurring in the economy.
They can not/will not see that they are a part of the economy and that their futures will rise and fall in tandem to everyone else. Yes I could go buy a house today. I won’t because that 50k off offer will seem like a bad deal in another year if home prices continue to fall. In fact I have no dog in this fight. I choose to stay out of the real estate runup just as I choose not to try to catch a bottom. If I did not understand economics I too would be shouting to let them eat cake. However, I do understand the ramifications that this country faces, I have studied the boom and busts cycles of capitalism, I understand the power that socialism gains during busts cycles, the power grab that FDR was able to make during the 1930’s that changed this country into a quasi socialist state. I do not wish to give socialism more of a chance to gain a foothold in this country. We have a smaller oppurtunity today than we did last year to make the downturn short and less painful. A very long and painful downturn will usher in a major socialist government, strikes will occur on a regular basis, unions will gain power, governmental programs will be proposed and accepted, new deal politics will be the law of the land. a chicken in every pot. the taxpayer instead of paying billions will pay trillions. Freedoms will be lost. I guess it comes down to if you think this coming downturn is small or large. We are facing forces not seen since 1929 IMO. the recent Fed actions (actions they have not used since the 1930’s) point to this. the rise in gold and other hard assets point to this, the fall of the stock market’s , the drying up of the credit markets point to this. the storm clouds are gathering and yet not many see the danger. We can act and avoid the worse of the storm or we can continue on blinding laughing at others misfortune, stupid mistakes, and greed thinking it will not effect us.

unseen on April 3, 2008 at 9:40 AM

In fact 165 16% of the

unseen on April 3, 2008 at 10:06 AM

Think_b4_speaking on April 3, 2008 at 10:17 AM

1) bear Streans was saved from bankrupcty by the FED, it was a shotgun marriage. Call it what you want. the fact of the matter is an 85 year old firm one of the biggest financial firms in the World was wiped out. but you know what that happens all the time right? No really it doesn’t. It was a HISTORIC event. Bear Streans was the lead company on the home loan problem. the carney in the coal mine so to speak. the Fed went further, they opened the discount window to investment banks so none of the others would fail. Again a historic event.

2) the stimulus package only came about AFTER the FED chairmen went to capital hill and met privately with the Congressional leaders. again it being an election year and a large majoirity of the voters being against a bailout, the proper thing would have been to fight it. they didn’t. Not only didn’t they fight it, you had both sides come together and sit around the campfire. No debate, very few amendments, etc. Record time…another historic event. that’s three historic events in a very small time. Add into the mix the historic interest rate decrease in record time from 5.25% to 2.25%. How many more historic events do you need to happen to understand that we face an unprecendented financial/economic crisis in this country. Maybe the historic rise of oil/gold? the historic fall of the dollar? the historic rise of grains and food stuffs? Not getting it yet? How about the historic rate of home price decline? No? still not seeing the picture? still seeing hystria around every bush? the only thing that has been keeping this economy up is low unemployment and consumer spending. Now we have consumer confidence numbers coming out not seen since the early 70’s, we have a rise in unemployment, we have consumer debt at a HISTORIC high. we have company after company reporting a sharp violient drop off in consumer spending.
What part of this picture do you not see? this isn’t about bailing out a few homeowners. this isn’t about votes or election year media coverage. It’s about our economy, our credit, our finacial systems.

unseen on April 3, 2008 at 10:44 AM

Think_b4_speaking on April 3, 2008 at 10:55 AM

oil is up 10 times
gold is up 300%
dollar down about 10%
corn as doubled.

All of the move is not dollar related.

The historic home price decline only exists in a few areas, where the bubble needed to burst

Nationwide 17 out of 18 cities tracked had price declines last month. while I agree the bubble needs to deflate, home are different than stocks, or bonds, or oil etc. homes wealth is the underlying bedrock of our economy.

unseen on April 3, 2008 at 11:37 AM

right2bright on April 3, 2008 at 1:22 PM

First finish the thought: Economic cycles are simply a product of the human emotions of fear and greed. yes the underlying economic conditions cause the cycles but it is the human emotion of fear that make a small contraction into a large depression and the emotion of greed turns a boom into a bubble

You see, our industrial revolution wasn’t inspired by greed, but the desire to create, to build.

Yeah Morgan, Standard oil, Biltmore no greed there. Nope. They were after the betterment of civilization. ever hear of the gilded age? the entire industrial revolution was based on greed.

The housing boom of the 1950’s didn’t come from greed, the the necessity to provide jobs to a growing urban economy

and what drove the people to move to the cities? the greed for a better life. they could have stayed on the farm. But they wanted better.

None of these are inspired by greed or fear, they are natural cycles of an economy.

and what drives these natural cycles? that’s right fear and greed. Are human wants greed? depends what the want is and who is in relation to that want. A human want of a CEO might seem incredibly greedy to a worker on the line. whereas that washing machine might seem gredy to the African child that has no food. It is a matter of degree.

If you do not understand that fear and greed are the drives of all economic cycles it is you who must go back to school. The stock market is a microcosim of that fear and greed on display on a daily basis. what is the present credit crunch but a big fear revival of the money lenders. what has caused the housing bubble but the greed for a bigger house or the fear of not keeping up with the neighbors? Why do you invest but not for the fear of being without or the greed of doing better? what is the difference between a recession and a depresion but a magnitude difference in fear and hopelesness? why do you think we call it a DEPRESSION? that is a human condition not an economic one. What is the difference between boom times and a bubble but the unrestrained emotion of greed?

that scotsman you quote was in the vangaurd of a nation that wanted to rule the world. that was not greedy? what is absolute power but run away greed of power? sure you have other reasons for making things, building a better life but the emotions of fear and greed amplify those cycles makes them bigger, longer and higher

unseen on April 3, 2008 at 4:23 PM