patrick.net

...and while we're at it, the evil overlords ARE paying us less. Welcome to stagflation!

CA_Spider says

Two things must happen to liberate you:

1. an end to the Federal Reserve system
2. universal health coverage (no cost for that if you pay taxes instead of premiums)

Ahhh.. Yes..
We will be “LIBERATED” with Ghetto Healthcare from the Federal Government! Amen on the Stupid ****ing Post of the Day!

Why settle for other services from Federal Government then....like Fire Department and police...I am sure police services should be better for those who have more money....I mean how can the law and order be socialist..Shouldn't rich be able to summon police faster.... ?

To bring down housing prices and let you get a good return on your saved money might liberate you from a lifetime of doing what your boss says. That cannot be allowed.
But even if it happened, without health care reform you are always just one illness away from bankruptcy. So they can take everything you ever saved, and your house. Even if you have insurance (50% of policies are rescinded if you make large demands on them).
So you’re a slave then too.
Two things must happen to liberate you:
1. an end to the Federal Reserve system

2. universal health coverage (no cost for that if you pay taxes instead of premiums)

Am I missing something here? After reform, wouldn't that then bankrupt the government (i.e. all taxpayers) when enough people have a serious illness? Sounds contradictory to the documented distaste most of us on this site have towards taxpayers footing the bill for the millions of housing "illnesses".

It wouldn't bankrupt the government.

Medicare already pays for the most expensive end of life care for everyone that makes it beyond 64
years of age. This is something like two thirds of what this country spends on health care. If we had
"medicare for all" to pay for major medical and hospital stays etc, along with private supplementary
insurance or HSAs (health Savings Accounts) provided by employers, maybe also high copays to
keep people from wasting doctors time, it wouldn't cost that much more in taxes.

It would be a far better deal than what we get with the insurance companies.

But those same insurance companies and those who wish to see Obama and the democrats fail refuse
to comprehend what would otherwise be obvious.

Maybe as a clue consider that we are the only country that does it this way, and yet all of our health statistics are far from number one. Probably not even if you just considered only the rich.

Wake up right wingnuts !

Not sure what happened on my formatting there.

Some Guy says

knewbetter says

So,,,,,,,,,, its low interest rates that are keeping us slaves? What happened to the other way around? If money was worth something again the evil overlords will just pay you less.

Face it people: Buying a house is taking a risk. Some of you are just too chicken.

Did Patrick say ANYTHING about interest rates in that post? Are you too stupid to read and comprehend?

I didn't know I was reading from a script. Why don't you tell us all what to say so you don't get lost in the conversation. Or maybe you're just upset because I'm cheering in the wrong section?

You're posts suck.

marcus says

provided by employers

"provided by employers" = your wage going lower

Some Guy says

If you’re worried about the financial state of the government, I’d suggest we stop giving trillions of dollars to banksters and then get the fuck out of Iraq

I couldn't agree with you more. While we are at it, lets get the hell out of Afghanistan as well.

I find it interesting that while nearly zero of us trust our government with financial matters (i.e. them bailing out banks), a large segment of people here want to trust the government with their health care. The current situation in health care needs to change - much like the situation in housing should have changed back in 2003-2005 when things were out of control, but Barney Frank and his cronies said, "There is no bubble." It is a mind-numbing tit for tat, back and forth between these two parties and their ideals.

BTW, badraig == Patrick. I use badraig sometimes for testing.

Another user deleted: CA_Spider is gone, with all his posts and comments for this insult:

"Amen on the Stupid ****ing Post of the Day!"

So again, to be clear, the rule is no insults. You can express any opinion you like, as long as you do it politely.

marcus says

Anyway, I just can’t get behind the conspiracy idea that the bankers or whomever needs to keep us enslaved to get more work out of us

To be honest, I agree. I don't think there is any explicit conspiracy. But I do think there is a kind of naturally-evolved conspiracy which happens without any need for people to whisper to each other, where the rules subtly chage to benefit banks because they have the political power to keep bending the rules to their interest. So to speak.

BTW, badraig == Patrick. I use badraig sometimes for testing.
Another user deleted: CA_Spider is gone, with all his posts and comments for this insult:
“Amen on the Stupid ****ing Post of the Day!”
So again, to be clear, the rule is no insults. You can express any opinion you like, as long as you do it politely.

Thank you Patrick. I wonder how many such raging attacks would occur if this were face to face? Some people are very big and tough - from behind a keyboard. Then again, in the past week I have been almost run off the road twice by dudes in huge trucks w/lift kits and monster mudders, and then flipped off and yelled at for having the audacity of existing on the same road.
There are some angry little people out there.

homeowner_for ever_san jose says

lets take these two hypothetical cases:
assuming a home is 120K and people who live in that home can afford $1000 mortgage.
lets assume we only have interest only loans ( just to explain my point)
case1 : 10% interest
monthly mortgage = 1000 dollars
home owners can payoff 120k when they accumulate money.
case2 : 1% interest
monthly mortgage = 100 dollars

so prices will shoot up 10X over time such that monthly mortgage is again = 1000 dollars

The limiting factor is mortgage affordability so prices shoot up till they are limited by affordability.

final house price (10X) = 1.2 million
the home owners can never pay it off.
bank will get interest of 1000 both in the first case and the second case…doesn’t change for them.

The only people who benefit are the one’s who bought at 120K and sold at 1.2 million to the bag holders !!

real estate agents/NAR/mortgage brokers/county-revenue benefit beause thier fees increase.

You're leaving out higher property taxes and homeowners' insurance premiums. They put limits on how high real estate prices can go. Eventually, you'd get to a point where your taxes and insurance cost another $1,000 a month or more.

masayako says

I agree with homeowner_forever_san jose as well. Government will manipulate housing price in order to credit an illusion of wealth for the American people, when in fact, most homeowners are just long-term renters from the bank (slaves of debts).
“Interest rate will be raised when housing will start to recover. and it will be done in a way which makes sure that housing does not go lower due to inerest rate hike.”

And I agree with the others that you'll see the homebuyer tax credit extended past November. I think the Obama administration will keep that quiet for now, so as to let the pressure of the deadline work its magic, but I think we'll hear about the program being extended, probably sometime this November.

chrisborden says

I will never fathom Americans’ zeal for debt slavery, and the government is doing and will indeed do all it can to facilitate it, even if it means destroying the country. Looks as if that strategy is working just fine. So many dumb people…

I have always lived a conservative life style. I look for discounts and don't need the latest and greatest. My co-workers kid me about my cell phone (NOT an iPhone) and my 8-year-old Honda Civiic (35 MPG) when they are all driving sports cars.

Hey, I'm debt free, have money in the bank, and both my car and house (Texas) are paid for, My military pension kicks in late 2012 and I have an IRA.

Who is laughing now?

Me too. No debt, no credit card interest, I pay cash for a used car when the old one dies. I got a used iPhone (thanks Craigslist!) that's been unlocked so I can use it with my cheapo TMobile account. Money in the bank. Quite a while to go before retirement, but I think it will work out OK.

pkowen says

There are some angry little people out there.

So true. I wish they could see how their anger is being used against them in politics. I bet most of them are in debt, and that's part of the anger, but it's not totally clear.

Excellent post Some Guy.

Some Guy says

cashmonger says

marcus says

provided by employers

“provided by employers” = your wage going lower
Some Guy says

If you’re worried about the financial state of the government, I’d suggest we stop giving trillions of dollars to banksters and then get the fuck out of Iraq

I couldn’t agree with you more. While we are at it, lets get the hell out of Afghanistan as well.
I find it interesting that while nearly zero of us trust our government with financial matters (i.e. them bailing out banks), a large segment of people here want to trust the government with their health care. The current situation in health care needs to change - much like the situation in housing should have changed back in 2003-2005 when things were out of control, but Barney Frank and his cronies said, “There is no bubble.” It is a mind-numbing tit for tat, back and forth between these two parties and their ideals.

Why does everything have to be partisan? Can you not look at a situation and use your own brain to decide if it’s a good idea or not, like I do? You don’t HAVE to go along party lines on everything. I don’t. I part with the democrats when they say it’s necessary to bail out the banksters. Why can’t you look at healthcare, see that it needs to be fixed, and part with the republican line that says, “Let’s just oppose anything Obama is in favor of and keep our system the same even though it’s broken.” Instead you, almost reflexively, mention a democrat. Believe me, I’m no fan of Barney Frank, but were “he and his cronies” the only ones who denied the bubble? Really? There weren’t ANY republicans who denied the bubble?
Unless you are in favor of total anarchy, I think it’s hypocritical to say that you are against ANYTHING the government does.

I heard a snippet of an interview with a journalist who interviewed and wrote something on Paulson (ex-treasury secretary). Guess who Paulson thought were the best politicians to work with? Nancy Pelosi and Barney Frank. This made me pause with regard to all three of these people.

I am neither crazy against any of them, nor a fan. I am with Someguy on this one - I go by the issue and the policy and tire (beyond sick of it) of the knee-jerk partisanship. Let's fix policies and speak to our values and issues. I know, rationalism, it's a foreign concept nowdays. Interestingly, it sounded like Paulson of the Bush admin and Pelosi and Frank of the 'liberal' side were willing to work together in a crisis. Nice if that were true, and nicer if that were true for some critical mass of the populace and our elected officials.

The latter certainly is NOT true, as far as I can tell.

zetabeos1 says

Listen to the Democrats mislead, distort, and otherwise lie about the Iraq War. The party of appeasement and defeat eschews democracy in favor of hypocrisy.

Wasn't the justification for the Iraq War by George W. that we are spreading democracy in the Middle East (after the whole WMD thing fell apart)? And then didn't Palestine democratically elect Hamas as their controlling government? And then didn't George W. say that we wouldn't recognize them because of who they elected? Talk about hypocrisy...

They are all liars and hypocrites in government at this point, and they are the same party. If the bank bailouts didn't teach you that (started by Bush/Paulson and continued by Obama/Geitner), I guess nothing will.

First time I've ever been called a wingnut. Read my other posts (cream of) Some (young) Guy, I am the fuck who is paying $15k a year for health insurance for my family and am sick of it. I want reform - more than you realize. So far I have not been sold as to how the current proposals are going to make things better. I'm hearing some good things, but nothing great just yet. I mentioned the political parties for one reason alone - both contradict themselves in the various positions they take.

Some Guy, with all due respect, you might need to get a life if you are on this forum at 3 a.m. on a Saturday morning (I do realize that the bars close around 2 a.m., so this makes a little sense). Let me spell it out for you - "George W. Bush and his cronies", "Bailout Ben and his cronies"...I don't give a shit which party they are in, there are distinct clusters of fucks in our goverment setting policies that end up hurting us.

I'm waiting with baited breath to hear something that makes sense for health care. I WANT HEALTH CARE REFORM. I am getting fleeced. I think that the discussions need to continue and not get pushed through overnight.

Some Guy says

Um, you didn’t mention “the political parties”,

"It is a mind-numbing tit for tat, back and forth between these two parties and their ideals." This is a copy and paste from the same post that I mentioned Barney Frank. You are reading what you want to read.

Bap33 : you are looking for true ( real) reform which will benefit everybody... you are at the wrong forum ( infact in a wrong country)
Everybody here wants a reform which benefits ONLY them. democrats for the not-have's and republicans for the have's.

Some Guy,

To the casual observer, you come across as angry and sensitive as the "wingnuts" that you and I both despise. What could I possibly say to get you to understand that I AM NEITHER A REPUBLICAN OR A DEMOCRAT?

W (little Bush) was the worst thing to ever happen to this county. PLEASE MAKE SPECIAL NOTE THAT THIS IS A "REPUBLICAN" THAT I AM BASHING.

Barney played a very big role in setting policies that blew (pardon the pun) up the housing bubble. Maybe it is the word crony that you have a problem with - the definition of crony is simply "a close friend especially of long standing". Frank and then Fannie Mae executive Herb Moses were having sex with each other while Frank shaped policies that fed Fannie its business. This kind of stuff has gone on since the beginning of time, so I'm neither gay bashing or taking a moral stance here. And we all know how good Fannie and Freddie have been to the housing situation, but I am Monday morning quarterbacking here. It is human nature to look for someone to blame, but at the end of the day it is futile...so I will try hard to not waste my time anymore.

Lastly, did you really mention Rush? Ha! I flipped through the radio the other day and heard that fat, babbling, druggie talking and immediately changed the station back to NPR.

Good point. I've only showed this thread to one other person - not quite enough to make such a general statement. Enjoy the rest of your weekend. I hope yours is as action packed as mine is about to be...I'm signing off to have some hott sex with the mrs - taking full advantage of having the kids stay at the grandparents house tonight. (Enter porn music.) A good sense of humor conquers all.

Stop, stop stop. We don't want to hear anything more. :)

100% CORRECT
Well Said
Lois

To bring down housing prices and let you get a good return on your saved money might liberate you from a lifetime of doing what your boss says. That cannot be allowed.
But even if it happened, without health care reform you are always just one illness away from bankruptcy. So they can take everything you ever saved, and your house. Even if you have insurance (50% of policies are rescinded if you make large demands on them).
So you’re a slave then too.
Two things must happen to liberate you:
1. an end to the Federal Reserve system
2. universal health coverage (no cost for that if you pay taxes instead of premiums)

Hey Patrick,

does (your) new forum system allow to mark a poster friend/foe (see slashdot.com for example)?

With all the flame wars i'd like to turn off some posts(ers) automatically
(i am sure some others as well)... and later on you could run some interesting stats.

-Okigan

Good idea. I'm also planning on a "rude post" link for each comment, where I can get notified that someone needs their account deleted...

I fear for the future of our economy because of the inevitable need to leverage off of the ‘false inflation’ that is inherent in capitalism toward the end of its life. (I think we can see this in other empires throughout history)
Beyond the immediate issues this round (housing) (last round tech speculation) of bubble making has brought us (known as inflation in the Western Economies) I fear most:

1. The baby boom population absolutely needing to draw on the wealth they have created through inflation
2. The baby boom population not being able to contribute any longer to inflation
3. Younger generations living in poverty as they will be mortgage poor, student loan poor etc.........

Wages will have to increase significantly to meet the demands that these bubbles are creating. This will at some point cause price pressures and will affect the baby boomers. That’s not going to happen as the BB won’t take it. The BB generation is a powerful generation.

Where then has all the money gone that our younger generations will have to pay for all their lives. It has been stolen by the finance industry and the powerful Military complex. Wealth is being concentrated to a few families and groups. They will hold the population in financial handcuffs forever. Until the system breaks down to the point that unemployment is rampant 25% in many areas in the US and food becomes scarce. Then we will see rioting and a rebalancing of power. What that will look like I do not know but I know this; The revolutionary principles that America was founded on are no longer in play. The gov’t is owned by these groups. Forget the constitution. It no longer applies, president Bush proved that through his submission to industry and the creation of the patriot act.

We are at the maturation end of the economic cycle that began with the French Revolution. Creating equilibrium then was through violence as I believe it will be again. How, when and where I do not know.
I think we will very much see a Japanese style economy as they are 10 years ahead of us from a demographic perspective. We will see some deflation while we reach an equilibrium over the next 40 years as the BB die and the second and thrid worlds come to fruition.

The current stimulus in the economy will cause another bubble before this however. I see commodities getting into another bubble before it bursts again.

At 32, I don't live in nor see this future you speak of as inevitable. People have choices to make and making bad ones can put them onto the path of indebtedness no doubt. I myself, while saving for a house (And keeping all fingers and most toes crossed that prices still come down here in the inland empire) am debt free, have credit, own some nice things, and have a very nice life. I live simply and within my means and that is where the path to debt can begin, when we try to live beyond our means.

If I was driving around in a car/truck that was much more expensive then my little toyota, if I had bought a house with granite counters, 4 bedrooms, and a 3 car garage 3 years ago instead of renting my 1 bedroom apartment, if I spent more than I made, I would be on the long road to constant debt.

I take issue with how wall street has been bailed out and is making money however they are not forcing a life of debt on me. That choice is up to the individual, taxes aside.

I believe this time around, raising the interest rates will be catastrophic. The housing crash we've seen so far has been paltry in comparison to:
1. The remaining real estate resets out there
2. The foreclosures that would happen to current home owners whom have low interest rates
3. The COMMERCIAL real-estate market will explode which it may do anyway with low rates.

Folks, deflation is in the system and it's not going anywhere. Raising rates will only make the problem far worse. I mean we are going to find a point of equilibrium that will take into account:
1. The false inflation since WW2 and perhaps before that
2. Price and labor pressures from the developing world

If this equilibrium comes too quickly, we are going to have massive civil unrest. G20 governments won't allow that. They and the money that allows them to be elected could be over run. Not a good thing from their perspective.

Let's not forget that the elite are fighting a revolution right now. The 'technological revolution' that has been silently being waged since 1980. Never before has the average person had as much access to power through the PC as anyone else in history. Individuals can move capital around the world with the push of a button. That is a revolution in itself (see the recent UBS ruling in Switzerland). The UBS ruling was a major change in the fight against the technological revolution.

I think we are facing what the Soviet Union faced in the late 80's (a realization that the game is over) a complete inability to fund the system and thus the resultant break down of the system. The difference will be that capitalism is far more flexible for many reasons and will allow for a more orderly decline and subsequent re-organization of society, specifically the money flow inside of it.

Realize this:
1. The G8 standard of living will not go up and may go down but mostly will be maintained at the current level however it will take savings and a return to realistic gains that individuals can expect. For example 20 year old kids will have to understand they won't own a 400k home. It is not a right. Survival is a right which means food and a roof. Not a 400k roof, well at least until you can buy it outright which is not until you are older.
2. The USD is going to decline. It has to as increase in rates is not an option in this continuing deflationary environment. As I've stated. Managing the deflation will be the most important factor to avoid civil unrest. Interest rates are here to stay and here to stay low along with incentives that will cause debt to increase and the USD to decrease.
3. The standard of living will decline as the amount of goods and services an American can buy will cost more due to increased import costs. (As seen in Canada 1995 to 2007). Expect taxes to increase to service the debt and the coming welfare state albeit a capitalist welfare state. The good news is the US will begin to manufacture again.

In my gut I feel all these are good albeit rocky changes that will take off the leveraged debt we've forced upon our children. HOWEVER, the road will be rocky and full of peril. I am preparing for this by:
1. Paying off my house ASAP so I always have a place to live.
2. Going to cash
3. Decreasing my expectations
4. Disengaging from the culture of consumption. What do you really need to live and put the rest of your cash into savings?
5. Saving for my children's future education. With 3 kids. We are going to need a nest egg
6. Stop worshipping the markets and buying into the hope that they sell on a daily basis. If I am wrong then I am left with my savings that could have been larger. If I am right.....I'm left with savings which will be more than most have.

I applaud you for your discipline. I would ask you to see the big picture. Let’s look Macro vs. Micro. However, what would happen if everyone was that disciplined. What would happen to the economy that depends upon consumption? Wealth would evaporate and civil unrest would result. This is what we are in fact seeing in the economy. It's all about demographics. The bust generation cannot support the boom generation. The echo generation expects to have what they had under their parents of the boom generation. It creates a mess.

Inevitably, all people will have to do exactly what you (and I) are doing. This will cause deflation and a point of equilibrium, a true equilibrium. The gov't will fight this the whole way through but the points of supply and demand will find the equilibrium.

So congrats for doing what you are doing, you are an early adopter and ahead of the curve therefore you will benefit when others suffer.

Ain't gonna happen.

I also believe we are in asset deflation and will continue to be there for the next several years. Deleveraging is painful. Weaning off of debt will take time. The savings rate will go above 10%. Most real estate will decline between 30 and 60% from the peak and may languish for a while near the bottom. Commercial real estate is now the new mover and the decline appears to be rapid. This cycle is different than any I have experienced and manufacturing is a smaller piece of the economy now. The inventory restocking will not help as much as in the past and the jobs in services may not come back in 5 years.

Hello Little Guy Lobby: Can you explain "Aint going to happen". What are you specifically refferring to?

Cheers,

a1sinclair: I agree. I think we are in for a prolonged recovery with a false foundation but aren't all recoveries built with false foundations. In 2000 we were due for an economic contraction (recession) as a normal part of the economic cycle. The gov't didn't allow it and created bubbles to get through it. This is where the housing bubble came from (actually Clinton started that ball rolling under ACORN but the Bush Admin spent the capital). So we still have to make up for that missed contraction which is generally 4% per recession. We have an 8% contraction ahead of us. When you consider the synergistic effect of 4% plus 4% you get more like 12%. I hope not but it is most likely going to happen. I think with the stimulus we will simply stay still or lose 2% for 5-7 years until the excess is mopped up. Then the debt will be our kid’s problems. Aren’t we nice?
Consider this:
In my grandfather's day a stock was considered expensive at 2-3 times earnings. 7x earnings was the max one would see normally unless it was an IBM stock that paid juicy dividends and you planned to hold it for 100 years. We now have 300 times earning stocks. During the stock bubble there was 1000 time earning stock evaluations on companies with no assets.
Pundits will tell you that the S&P at 14 times earnings is a buy point. I disagree. I think a buy point is when we get back to the level before the Fed Reserve system began inducing the poison of inflation causing the illusion of wealth. I think we will see S&P 1-3 times earnings again. Doesn't it only make sense? Do you want to hold a stock for 1000 years before you make your money back...'cmom. I'll hold it for 2-3 years and then I expect to own it outright.

Commercial real-estate is the Achilles heal of the economy. It's going to create havoc on unimaginable levels. I believe this will cause the second declination of the economy and where we will see the W recovery. Where the second point of the W or double bottom occurs will depend upon the intervention the wizards take. Don't underestimate them. They declare war on other countries daily in the interest of the industrialized world and the USA. Remember how we felt when the towers fell, think about how you would feel or how you would be impacted if the economy fell apart completely. Finance is war. Make no mistake about it.

If you want your money to grow stay close to commodities. Specifically fossil fuels and base metals. I work and live in the oil patch. I can see the growth. At the very least you will own part of a company that owns tangible goods the world needs not wants. Or you can listen to the Pundits who told you to buy, CROCS, KRISPY KREME, TAZER INTERNATIONAL. They were the next big thing, a home run. Well maybe for them as they unloaded their stock to us. 2 of the 3 are bankrupt. Didn't last long for being touted as the next IBM.

So here is what I am doing:

If you want to know what the market is going to do follow:
BKX and SMH They are good short term indicators.
IWM for a medium term indicator (speculators get in and out first. Kinda like rats on a ship! LOL
BZH is a representative of the emerging market. If it is doing well the DOW will be healthy
Buy commodities soon. The price level is getting attractive but not until we see the next cycle bottom.Ie: The W
Buy real return bonds if you need some anchoring

Stay away from everything else until Grandpa's PE ratio exists again.

If you really want to become wealthy, learn to build a house and do it. Use your labour vs. paying someone else 2x the cost of the materials plus the speculative pricing. You may actually be able to pick up houses cheaper than their construction content at this point. That's a good option to.

Land is always a winner. God isn’t making any more of it and with global warming he seems to be taking some back :)

We will stagflate for a long time so welcome the new reality. Get out of consumerism and refocus on relationships. Those are more fulfilling and free.

Cheers,

Steve

Hey all - I see the many thoughtful predictions here but it seems that sometimes you leave out one key piece. Many economists and politicians do the same thing - assume that no one changes their behaviors when events take place. You all are doing what you can to deleverage, save, live below your means. You don't think many others won't do the same? If we assume people don't change then yes, some of those doom scenarios can come to pass. Just like raising taxes and predicting revenue from those taxes without assuming the people's behaviors won't be modified in light of the tax increase.

I don't like the continued downward pressure on wages in the U.S. and the very poor retirement savings rates. Surely that will catch up with Americans and ratchet down cost of living faster. I personally know too many who say they don't make enough money to save for retirement and they are in their forties....I have tried to help suggest the power of start small and watch it grow but you cannot be too nosy about people and their money.

thunderlips11 says

I went to see a house that was listed at $400k. Nice, custom built place, lots of land. As I was leaving, the Agent told me the seller would consider leasing or even down to $300k.

I see that situation in my area as well. where asking prices greatly exceed selling prices. I wonder why the realtors engage in that practice. It seems that if the houses were advertised at $300k instead of $400k, buyers would be more plentiful. I suppose the realtors are advertising high prices to convince anyone who is looking at listings to believe prices are higher than they really are.

I'd like to respond to mjfhorsey@comcast.net.

I agree with you in terms of people modifying their behaviour. They will have no choice. They won't like it as they watch the American dream slip away. The American Dream to the consumer society is markedly different than the American Dream that the war generation sought. They were prepared to forgo immediate gratification for a stable climb in standard of living. Not so, especially since the recession of early 90's. Yes we will have to return to the world of delayed gratification......those that lived pre 1990 (i.e.: war, boom and bust generation) will understand. Those that lived post 1990 (The echo generation) will not and for all it will be difficult.

My challenge to all is to ask you will the behavioural changes make the difference. If the problem is in the behaviour alone then yes it will. I mean to say if the basis of the economy is stable and all things being equal and do not change except behaviour then I could buy into the thesis. However, we are talking about fundamental shifts in the basis of the economy that behavioural changes won't fix. It will help but when the ground shifts, changing your gait won't help much.

As I've stated in other posts, the monumental shifts in the economy will change the way we all live significantly. Behavioural changes will occur no doubt but I believe that the aggregate of these changes will not be able to overcome the problems in the economy. The late adopters will be the victims 70% generally. The early adopters (15%) will survive. Be an early adopter. Cut debt, refuse consumerism and save, save, save,..........

With respect to all

HeadSet says

thunderlips11 says

I went to see a house that was listed at $400k. Nice, custom built place, lots of land. As I was leaving, the Agent told me the seller would consider leasing or even down to $300k.

I see that situation in my area as well. where asking prices greatly exceed selling prices. I wonder why the realtors engage in that practice. It seems that if the houses were advertised at $300k instead of $400k, buyers would be more plentiful. I suppose the realtors are advertising high prices to convince anyone who is looking at listings to believe prices are higher than they really are.

The house would have more interested parties if the pricing was closer to what the seller would accept. Not only that, the seller would probably get more money for a properly-priced home.

A few years ago, my husband and I were looking for a home with a 3-car garage. We were willing to pay $300k so we limited our search to homes priced under $350k. A Realtor told me he'd just sold a home which met our criteria for $300k. How could that be? I had been diligently checking the MLS. He never asked the sellers to lower their price from $400k so it never came up in any of my searches. The sellers took an offer 25% under asking price. There may have been multiple offers if the price had been set at $325k because the place blew away the comps.

homeowner_for ever_san jose says

Interest rate will be raised when housing will start to recover. and it will be done in a way which makes sure that housing does not go lower due to inerest rate hike.

3steve says

I’d like to respond to mjfhorsey@comcast.net.
I agree with you in terms of people modifying their behaviour. They will have no choice. They won’t like it as they watch the American dream slip away. The American Dream to the consumer society is markedly different than the American Dream that the war generation sought. They were prepared to forgo immediate gratification for a stable climb in standard of living. Not so, especially since the recession of early 90’s. Yes we will have to return to the world of delayed gratification……those that lived pre 1990 (i.e.: war, boom and bust generation) will understand. Those that lived post 1990 (The echo generation) will not and for all it will be difficult.
My challenge to all is to ask you will the behavioural changes make the difference. If the problem is in the behaviour alone then yes it will. I mean to say if the basis of the economy is stable and all things being equal and do not change except behaviour then I could buy into the thesis. However, we are talking about fundamental shifts in the basis of the economy that behavioural changes won’t fix. It will help but when the ground shifts, changing your gait won’t help much.
As I’ve stated in other posts, the monumental shifts in the economy will change the way we all live significantly. Behavioural changes will occur no doubt but I believe that the aggregate of these changes will not be able to overcome the problems in the economy. The late adopters will be the victims 70% generally. The early adopters (15%) will survive. Be an early adopter. Cut debt, refuse consumerism and save, save, save,……….
With respect to all

It's a good question, will it be enough. I believe things are in a later stage of decline than they appear to be. America has only the primary player on the world economic stage for about 60 years. From the guilded age to the start of the depression the American economy was strong, but far from dominant. It is not preordained that America will continue to be the largest economy in the world. Many long since forgotten societies throughout history were the the Americas of their time.

We have moved into owing unprecedented levels of debt that might not be payable. Yes people are reducing their personal debt, but public debt is increasing faster. There were large amounts of debt in the late 1800's but almost all was spent building infrastructure. There was a higher level of public debt after WW II but a big part of that debt went to building the largest industrial base ever seen in the world to that date. Not to mention that the rest of the industrialized world was left in smoking ruin. America was in a unique position of advantage never seen before in history. Never to be seen again.

Contrast that to our current debt along with the staggering amounts of future unfunded obligations. These debts have done nothing to increase our infrastructure or industrial base. Previous public debt was an investment in the future. Our current debt is stealing from the future. Can a government that hasn't balanced the books in 30 years not only balance the books, but generate a surplus to repay the debt? It seems, at best, unlikely. Is an entire generation going to repudiate the only lifestyle they have ever known. I really, really hope so. But I also think it unlikely. Ever increasing interest on the debt must be repaid. Missing a debt payment would result in t bills being used for toilet paper. There will be a breaking point where interest on the debt consumes all the money in the federal budget.

It's a long hard road back to a sound fiscal base and I don't hear a single person in a position of responsibility talking about sacrifice of any kind. The only message I hear is that we are somehow going to get back to the unsustainable pre crash status quo. It's very sad and scary state of affairs. Like others here I have been responsible, paid cash, and saved. I also have multiple citizenships. If things go horribly wrong I would reluctantly renounce my citizenship. Still I am worried. My future and my children's future are being mortgaged to pay for the irresponsible, the greedy, and the reckless. I hope I am proven very wrong.