The DailySkew

The Hand that Restacks the Dominoes

What is the solution to the looming Real Estate crisis?

Acceptance (tm).

I say, let home prices drop 50%. Let the foreclosures come.

This has to happen.

The Fed Lending Rate should never have been lowered to 1% after 9/11. We were already in the midst of a recession ... we needed to rebound on our own, without the help of Alan Greenspan. He underestimated our patriotic sense of duty when it comes to shopping for goods and services.

We all learned about the Great Depression as school kids. We're all aware that being a consumerist is what drives the economy and keeps us little people employed.

Mr. Greenspan's actions led to a superheated real estate market, with home prices doubling and tripling over the span of five years.

This led to an increase home equity lines of credit, which led to increased spending ... and increased debt....

The dominoes were set.

Then there was the decision to keep building homes by the private sector, even after the Hurricanes of 2004 and 2005 created a situation where people wanted to sell their homes and leave the Southeast and Gulf Coast regions ... thus creating a ton of housing inventory....

More dominoes were put in place, even as other dominoes were falling.

Meanwhile, all those loans from the beginning of the decade with adjustable rates began to kick in at rates that were 3 or 4 points higher ... which caused higher monthly payments ... which some people simply could not afford ... I mean, salaries did not keep up with the rise in housing, you know!

Cascading dominoes.

I called the cascade of dominoes after Hurricane Wilma. While the national media ignored us down here in South Florida for the three weeks we were without power, it was clear to this resident that nature had flicked its finger and triggered the fall of the pieces that had been set in place by us, the government, corporations, and happenstance.

We all need a dose of Acceptance (tm) to get through this.

Prices will continue to drop ... bargains will be had eventually ... some people will lose their jobs, unfortunately ... more bargains ... crisis after crisis....

Acceptance (tm). That is what is needed.

I suppose a million dollars and a ticket to the Philippines wouldn't hurt, either.

Labels: society

posted by Tony @ Thursday, March 29, 2007