Mr. Moderate

It was announced recently that the first quarter of 2007 experienced a further decline in year-over-year housing prices. This was blamed on an unexpectedly-large decline in the month of March. Well now, why could that be? Could it be the housing bubble bursting?

Of course, the announcement was inflated by much optimism in that the quarterly number was less than the reduction in the previous quarter, so the announcement argues that the decline is bottoming-out and recovery (higher prices) should occur in the second half of 2007. Buried deep in the details of the underlying article was the statement that the effects of the collapse of the sub-prime mortgage market were yet to be fully factored into the market, and if that kept buyers away, then further declines might occur. Oh, really? Well, then, I predict further declines!
Continue reading ‘Housing: Whistling Through The Graveyard’ »

In his recent book and Salon excerpt It Could Happen Here, Salon columnist Joe Conason argues that George Bush represents a dangerous next step towards an authoritarian fascist dictatorship that would gain power here in the United States much as Adolph Hitler gained power in Germany through winning a popular election. While there might be some reason to fear a fascist takeover of America, given the close links between the Republican Party and big business, I believe that the greater fear would be a popular dictatorship of the type predicted by Oswald Spengler in his book The Decline of the West. The distinction is subtle, so I will begin by defining a few terms.
Continue reading ‘Beyond Fascism’ »

Wikipedia has an excellent article on the housing bubble in the United States. I can’t recommend it highly enough. (At least, as the article stood as of the date of this post; it could be changed tomorrow for all I know.) As it sits, it aligns perfectly with my own thinking on this subject. If you want more on my own take on the housing bubble, please read my page on Greater Wealth & Fools.

The bottom line here is this: don’t buy a house anytime soon unless you are in a low-inflation market or can’t afford to wait (if, for instance, you’ve sold your old home and have to “roll over” the gain within a fixed amount of time). Plan on the possibility that housing prices may go lower for the next 5 to 10 years. If you can’t withstand that kind of a housing market, with low inflation leading to low wage increases for those who still have jobs, then rent and do not buy. Sub-prime borrowers should avoid buying altogether, as the sharks have circled for a final feast, and you had better believe that they know their bubble is bursting!