View Full Version : How The Housing Crisis Will End The U.S.A. As We Know It

October 06, 2010, 14:52
Some interesting scenarios in this article:


A snippet:
Imagine a world where you must report to a government official in a bank or other financial institution, maybe even a government office building to apply for a mortgage. Think about the new “green” wave of regulatory bureaucracy plus OSHA style ergonomic designs which will be instituted to “protect” the government’s investment in you the homeowner. For example if a husband and wife of eight years with two children walked into a home that they felt they could afford, the government regulatory regime could determine that this particular home is not ergonomically friendly enough for their children and the transportation costs in carbon would be excessive as the husband and/or wife would live too far from their place of employment. Sound insane? Review the stories emanating from the Mother Country of Jolly Old England regarding absurd regulations and government meddling in their citizen’s daily affairs.

Take this one example then consider the consequences of Kelo v. City of New London decision which could force a homeowner who are current with their payments out of their homes as the Federal Government owns all of the properties within a subdivision and their presence disrupts the ideal of economic diversity because they did not need nor want a government mortgage and their inhabiting of that property could make the new residents feel inferior, thus causing emotional distress. Or worse, if the one homeowner refuses to sell to a potential government sponsored buyer because the seller feels the price is inferior to market conditions the government could force the price to meet the standards of the bureaucratically established level of financing to match the price or use eminent domain to seize the property at the price level some beanie head feels is “just” for the GSE to pay.

This goes far beyond the concepts of financing, buying, and selling homes however. The entire real estate industry will end up subservient to a government master in Washington, D.C. Want to build a new subdivision? Better submit the homes to a standardized review to the Department of Housing Development team. Want to modify your GSE financed home by building a tool shed in the back? Fill out GSE form 4417-E/109.1367 available at your local bank’s GSE department or Federal office building and pray they approve it before the apocalypse. Want to sell to the family that wants to pay cash for the home instead of waiting for the minority who has the fifty year mortgage financing that is offering you 4% less? Nope, that would be discrimination and you no longer have control over property which technically belongs to the people.

Seems very plausible to me.Long read,but worth it.

October 06, 2010, 17:25
Your average Joe that voted for the Bolshevics in office now are just now
starting to realize their plight. If you make enough money and many union
folks do, to use an accountant to file your taxes, he's probably already warned
you what's coming around the curve.

The other thing that's artificially distorting our lives is all the empty or soon to be
empty homes. BB is already inking the checks to buy more bad bank assets to try
and free up more capital, but it's likely to only make their bonuses bigger, you and I
are only going to see higher prices for everything. $5 gasoline?

October 06, 2010, 18:35
It's no obvious to me that we will be paying higher prices for everything.

It's just as likely that, at least for a while, we will be paying far less for things but will be even less able to afford them at the reduced prices than we ever were.

It's pretty clear that regardless of the price, most of us ordinary people will be harder pressed to be able to afford even basic things and a lot of what we currently take for granted will be considered borderline luxuries. Owning a home will be one of those luxuries

It's also pretty clear that the well connected will be doing very well by comparison, thank you . While the world is running down they are getting the best of what's still around. We are paying for it.

Thats what TARP and stimulus funds were all about.

Welcome to hope and change- Obama Chicago style.

November 2 is our last chance to take back our country via the ballot box. Hard times are coming regardless.

October 06, 2010, 18:42
Chrs - the fly in the ointment is commod prices - we are getting the double whammy - a tanking $ drives the prices of groceries and gas UP and we have wage suppression due to an over supply of warm bodies - the corps have figured out how to wring the max amount of productivity out of the fewest number of workers - don't like it - move along, there are six people in line for your job and they will do it for less pay...

October 07, 2010, 17:12
In a world where price manipulation is the norm and the government is one of the manipulators it's really hard to predict where things are going to end up.

I'm betting on a pretty good bout of serious temporary deflation to allow all of the well connected who have scammed the system to transfer their liquid assets into hard physical assets at bargain basement prices to preserve their wealth and protect them from the consequences of either a currency collapse/devaluation/systemic banking default event and/or the onset of serious inflation.

Regardless, the the well connected people who largely caused the problem in the first place will skate and probably profit enormously from their misdeeds - just like they always have in the past financial crisis that they helped to create.

The Phoenix real estate market in the early 1990's comes to mind as particularly good and reasonably transparent example ( some of these guys are not real smart and did not cover their tracks very well - or they really could have cared less 'cuase they knew they'd skate free regardless) with lots of interesting case studies.

Google "Conley Wolfswinkel" for a primer on how it's done by a pro with real chutzpah

At any rate prime industrial land in developed industrial parks may soon be back down to the $0.48 per square foot price it was selling at during the early 1990's bust for at least long enough for the predators to scoop it up while the gettings good.

Call me a cynic but this is like my 5th or 6th boom and bust cycle. Why should this one be any different from the rest?

The only thing that I see different this time around is that things are going to be so bad this time time around that the guilty may not be able to hide behind the legal system like they have in the past and the people they screwed may actually break out the Tar and Feathers and take matters into their own hands to encourage restitution where possible and the administration of justice.

October 07, 2010, 20:09
well... considering the scope of this credit collapse and the lack of "whats next" (rebuilding the world post ww2) I agree thats its impossible to know where things end up -I know the connected would LIKE things to turn out the way they always have but... something tells me it IS going to be different this time - we're in Kondratieff Winter - last time we were here we got the great depression... Greenspan and Bernake knew all about the Kondratieff wave cycles and THAT is why they blew the bubbles and Bernake is doing so now in as many asset classes as he can - they have been doing it since the early 80's in an attempt to stop "Winter" from coming - didnt work...