Wednesday, November 28, 2007

Welcome Aboard Wall St Journal

Whatdaya know, the Wall St. Journal has finally figured it out. Only about a year late but better late than never I suppose. This is pretty much what I have been saying for months on end.

First there was a housing bubble. People went HELOC crazy and bought useless shit like 90" LCD on borrowed money. Money they figured would never have to be paid back since housing only goes up.

Then there was a housing crash. The HELOC party is over. That easy "tap your equity"money is gone. And the morons who tapped that equity are getting a shock. The shock is they have to pay back the money and their house is losing value. Ooops. These over indebted Americans can no longer afford to buy useless shit like 90" LCDs and/or Hummers. Not only that they owe so much money they can't afford to buy the basics anymore without using a credit card and going even more into debt.

Today the Wall St Journal wakes up and comes to the startling revelation. Who could have possibly predicted this? Not me.

A recession is coming and it will be a bad one. A significant chunk of the economy was built on nothing but buying and selling houses as sport. Millions of people's incomes was derived from nothing but being the middle man. Realtors, mortgage brokers, appraisers, escrow and title company employees. Other industries were heavily dependent as well. Moving companies, furniture stores, home improvement stores, landscapers, pool installers. All of these companies are doing significantly less business than 2 years ago. In some cases less than 50%.

And yet some people believe all this economic output loss will somehow magically not lead to a recession. They must all be drinking the Larry Kudlow Kool-Aid.

2 comments:

Jeremy said...

I'm not even in the shitty position of the suckers you describe (ad nauseam ;) )but this still depresses me.

We're all gonna get a leg caught in the whirlpool as it goes down the drain.

Jeremy said...

p.s. can I get my cooler back?