Slip Slidin' Away...

It's really bizarre to watch the American Dream fade to dust. I'd gotten used to saying fade, because working in real estate for the past 12 years has prepared me well for our current meltdown. Realistically, we're dealing with more of an imploding collapse, similar to how the twin towers fell.



This past Thursday's Daily Show mocked the media for explaining our economy as if their audience was exclusively made up of semi-retarded 9 year-old children. John Stewart is brilliant, but that man pays attention to news like very few people in the country. Are normal people really curious to discover what happened, or do people simply want to ignore it?

Yesterday's NY Times Freakonomics blog lays out a wonderful, if dry, explanation of some of the key elements of how the housing bubble grew like so much Bubble Yum and is now exploding into a big and sticky, if salvageable, mess. Author Ian Ayres is surprised to find out that 4 out of 10 first-time buyers used no-money down loans in 2005 and 2006, but banks were giving away money to anyone with a credit score.

Each day I heard numerous real estate agents preach the gospel of the never-ending housing price surge. No one seemed to understand the fundamentals of housing mathematics - if housing goes up 10% each year, while wage increases for non-management employees hover around 3% per year when adjusted for inflation, quickly no one outside of management will be able to afford their property.

What happens when you combine high inflation rates, rising (with small recent exceptions) costs of goods, services, transportation, a credit-fueled economy, insane speculation, monumental national and personal debt, and a housing bubble just after the peak of prices?

You get a perfect storm. The reason why no one can adequately explain what's happening right now? It has no historical precedent. There are parallels to be drawn, certainly - there are lessons to be learned from the Great Depression and other situations of interconnected economic market crises. All the experts are vying for attention, either dumbing down their stories to reach a wider audience or using complex data to portray themselves as smarter than the competition.

The real situation: the rich are getting richer, and the poor are getting poorer. When
Warren Buffet buys up a major stake in Goldman Sachs, it's time to connect some dots. The man is known to be a genius at purchasing companies, and he looks more closely at the people involved than any other factor. Mr. Treasury Secretary Paulson has sold all of his shares of Goldman Sachs, so I'm sure he'll never make a profit off of his unprecedented new powers... right. And Warren Buffet's purchase in the wake of the bailout was entirely coincidental.

I think that South Park has it right - China is looking to take over.

They're doing a great job so far.