patrick.net

This article speaks beyond the housing market if you read between the lines.  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.

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 may see some deflation while we reach an equilibrium over the next 40 years as the BB die and the second and third world increases thier standard of living.  Keeping rampant deflation at bay given these two major forces  will be interesting to watch.  I don't think its possible however it will be somewhat interesting to see what programs our politicians come up with in order to stimulate inflationary forces. 

In terms of the housing market I have one simple quesiton.  Who the hell is going to buy all these houses?  There aren't enough people behind the BB's to buy them up.  It's that simple.

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

#housing