Some people have been posting economic-doomsday scenarios on FR for 3 or 4 years. Yes, eventually there will be an economy-wide recession and they will crow, “I told you so!” But I won’t be impressed ...
One writer made an interesting observation about this. I do not remember his exact words but it went like this: These things always take longer to get here than people expected, but once here, they unfold faster than people expected.
There is positive news, no doubt about it. But it is a mere drop in the bucket compared to the bad news staring everyone in the face.
My first hint that we had a problem was when my wife (then a real estate agent) told me one day several years ago that the ~30% number for housepayments (as a percentage of your takehome pay) was being abandoned for something around ~50%. I said back then that they were merely creating demand for homes - which would temporarily raise prices - but would be bad in the long run.
That 50% thing seems like the hight of responsibility compared to what followed. And the simple fact is that you cannot sustain an economy that is propped up by people using their homes as ATM’s in a falsely rising market.
That is called a Pyramid scheme and they ALL end very badly. This one only took longer because they kept putting off the day of reconning by making it easier and easier to buy a home - thereby continuing to prop up a false demand.
And the longer you put off the end of a pyramid scheme, the more people it affects.
Some people (me included) were saying two years ago that this could be as bad as, or worse than, the great depression. It was not lost on any of us when the CEO of Wells Fargo said that the last time some of our housing numbers were as bad as they are was during the great depression.
But the really bad news is that this is JUST BEGINNING. This year gave a glimpse of how bad it is going to be when it hits. Next year is when it actually hits.