As Robert Samuelson of Newsweek points out,
"The "real economy" of spending, production and jobs -- though weakening -- is hardly in a state of collapse."
The currently scary possibilities and uncertainties are in the "shadow economy" of credit, securities, and markets. Since most of our financial media coverage is obsessed with Wall Street, not Main Street, we're hearing a lot more about these new financial instruments which nobody really understands, and less about the bread and butter. Hence this talk about the Great Depression, which is an economic equivalent of Godwin's law--dragging Nazis into a political conversation. An extremist analogy that grinds intelligent thinking to a halt.
But I think there's another level of factors we should be paying attention to, that does have to do with the "real economy," that is pretty scary. I'm talking about the two-decade, unsustainable trend of stagnant household earnings and increasing household debt. Consumer spending can't recover unless wages go up and people are able to pay down debt. But wages tend to go down in economic climates like this one. And borrowing more to get out of this mess
is just plain unsustainable.
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One shouldn't rely on outside forces to increase one's wages. If there is no hope for a pay increase, it is important to remember that quite often, that the best source of income is a low overhead. -- Lose the cellphones, extra cable, fancy nights out, conserve on utilities and fuel, etc. People make life out to be more complicated than it really is.
Hold the hysteria and up the meds Anya
Anya, I would love to see you use your position to encourage people to speak up about the impending housing bailout. As a voice for youth, I can't imagine that you don't care that your generation is going to be the first that will be priced out of homeownership, IF prices aren't allowed to come back to reality from their inflated bubble levels. Politicians think that "everyone" benefits from bailing out those who bought or borrowed above their means. One third of the general population, and of course, a much greater percentage of younger folks, are renters. They do NOT benefit from artificially inflated prices. Nor to those who hope to 'move up' to a nicer neighborhood, larger home, etc. Why should the vast majority sacrifice to save a very small portion of the population, who were for the most part, just plain greedy and/or stupid? They acted irresponsibly, gambled, and lost the bet. PLEASE rally the troups to contact Barney Franks and Sen. Dodd, as well as their own elected officials to demand NO BAILOUT! We need to let home prices return to more sensible levels. Our cities are being bought up by foreign investors, and inland America is being bought up by busloads of California investors. Speaking as a Californian, I don't think it is right to limit the opportunities of all Americans to buy a home. Our tax laws WAY over-incentivize real estate investment. Why favor real estate over stocks? For every home that is bought by an investor, that is a potential homeowner who has to buy a lesser house, or see more of their income paying for a higher priced home, thanks to the competition from investors bidding up the prices. There are bus loads full of them coming to an area near you soon. Living in an area with absentee landlords isn't what America should be about. We haven't learned a thing from the current mortgage 'crisis' - now politicians want to use government guarantees for mortgages with almost NOTHING down, marginal credit, to prop inflated bubble prices, using our tax dollars! This "FHA Modernization" that is soon to become law, unless we speak up, is going to prolong this mess, and lead to further defaults as these loans go bad in the future. In addition, people are STILL taking out interest only, low downpayment, adjustable rate mortgages. We need to stop letting the real estate industrial complex dictate legislation! Please Anya, use your voice to get others to speak out against this insanity!
Yes scary stuff. As more people find themselves deeper in debt the vicious circle closes in.
So imagine this scenario, that nobody pays their mortgage, are the banks going to repossess all their home?
And if so to whom will they re-sell to recoup their loses?
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