Perception is all it ever was and ever will be
29% of people approve of President Bush. 14% approve of congress. 6% view the economy positively, yet more than 80% say they are satisfied with their circumstances and even more are happy with their jobs. While most Americans hate congress, they are overwhelmingly happy with their own congressman. Only 18% of Americans think they are worse off than their parents at a comparative stage in their parents' lives.
There is a mortgage crisis. That huge crash you hear is only the market correcting itself. In this case it was allowed to grow far too large, and the subsequent economic downturn and market correction are going to come at a huge cost. Even so, buoyed by the weak dollar and increased exports the US has yet to have a single quarter of reduced output. A house is not an investment, yet there's an entire generation of people who thought it was.
The "recession" is a combination of increasing gas and food prices and decreased asset value due to the housing correction currently taking place. Combine flawed regulation, bad US monetary policy, consumer perception about the housing market, the perception of easy money from reinsurers, and terrible underwriting practice by everyone involved and you have our current situation.
The best thing the US could learn from Europe is how to run a central bank. Controlling inflation should be the top priority rather than fueling economic booms and trying to soften busts. From 2002 - 2006 the top 1% of earners in the US had an average increase in income of 11%. For the remaining 99% there was an average increase of 2.4%. For the lowest 90% the average increase was 1%.
The moral of the story is, the news is full of crap. Everything you thought was happening in the last 6 years was a lie. Most things that are happening now are to your benefit unless you got an interest only loan, or took out an ARM and were planning to refinance. Most importantly, videogames are still only $60.
FYI. Most stats were yanked from this week's economist.
There is a mortgage crisis. That huge crash you hear is only the market correcting itself. In this case it was allowed to grow far too large, and the subsequent economic downturn and market correction are going to come at a huge cost. Even so, buoyed by the weak dollar and increased exports the US has yet to have a single quarter of reduced output. A house is not an investment, yet there's an entire generation of people who thought it was.
The "recession" is a combination of increasing gas and food prices and decreased asset value due to the housing correction currently taking place. Combine flawed regulation, bad US monetary policy, consumer perception about the housing market, the perception of easy money from reinsurers, and terrible underwriting practice by everyone involved and you have our current situation.
The best thing the US could learn from Europe is how to run a central bank. Controlling inflation should be the top priority rather than fueling economic booms and trying to soften busts. From 2002 - 2006 the top 1% of earners in the US had an average increase in income of 11%. For the remaining 99% there was an average increase of 2.4%. For the lowest 90% the average increase was 1%.
The moral of the story is, the news is full of crap. Everything you thought was happening in the last 6 years was a lie. Most things that are happening now are to your benefit unless you got an interest only loan, or took out an ARM and were planning to refinance. Most importantly, videogames are still only $60.
FYI. Most stats were yanked from this week's economist.
Now that is inflation! Why only 20 years ago videogames were only $49.95 and now they are $60 what is the world coming to.
ReplyDeleteI know it sounds terrible but I am more excited about the real estate crunch than I was about the boom. Someday I may want a house after all.
I will also go on record as saying I don't approve of my congressman or congress in general.
15 years ago videogames were $59 - $69. Heck, Virtua Racing for the Genesis was $99.99. Phantasy Star 4 was $79.99.
ReplyDeleteAnyway. Hooray for disappearing imaginary money. Luckily, entry and mid-level housing in Texas is/was largely unaffected by the boom/bust. My only current worry is the inevitable consolidation of mortgage guarantors due to closure and then selective bailout by the government, leading to huge holdings in FNMA and FHLMC who currently are guarantors over half the US housing market. Watch that number climb to 70% over the next few years.
Government sponsored monopoly. It might make regulatory sense if the two companies weren't compulsive liars about their earnings.
Name me a company who's not a compulsive liar about its earnings. Heck, even the government is a compulsive liar when it comes to financials. (I'm working in a budget office now- I should know!)
ReplyDeleteI bet most companies will fudge something, sometime or another, although most don't do it to the tune of $5 billion.
ReplyDeleteYou also didn't see the government springing to bail out Enron or Worldcom. FNMA and FHLMC are two companies who get bailouts regardless of how idiotic they're acting.
And yet somehow Worldcom in the form of MCI continues on, perhaps due to it being a major contractor for phone services in the DC area
ReplyDeleteWhoops, I missed that one. Although I'm not trying to argue that they should get preferential treatment or that bailout is a good thing. My example was a bad one only because there's a huge lack of accountability amongst US corporations.
ReplyDelete