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number 37 for 8-28-05:
OH NO! THE HOUSING BUBBLE! (Crash=Simmering Down)
"The housing boom will inevitably simmer down." So says Alan Greenspan.
Translated by Drudge:
That's right. US HEADED FOR HOUSE PRICE CRASH!
This is a prime example of the media and their fear mongering, keeping the population irrationally afraid of things that, with slightly less sensationalism, wouldn't be as daunting to your average automaton.
What Alan Greenspan said, and what I agree with, is that in many richer markets of real estate, prices are skyrocketing. For instance, I read that in Florida houses are going for sometimes 200 percent of what they're really worth in terms of the rest of the country. This creates a pocket of wealth attribution where it shouldn't be attributed, because if you refinance for over a hundred percent of the value more than the house is worth, and then you get in deep shit by losing your job and/or not being able to afford your payments, you're screwed.
That's not the case with most of the market. With most of the market, AT BEST, if the interest rate skyrockets it will be 1) Harder to sell a house, and 2) Harder to have a house that appreciates quickly.
All of this bullshit about the stock market bubble happening again is just that, bullshit. Houses aren't subjective commodities. They're LAND. There is no housing bubble beyond what I've mentioned above. At worst, your house will stay at its current value, or maybe go down slightly. Greenspan said that, too, but they didn't quote that. That doesn't sell papers and scare the rich white people investing in houses. Or the poor white people investing in houses like me.
What I am at a loss to understand is why anyone would compromise the truth and their integrity just to sell papers. But then, that's why my writing is a hard sell.
Try reading the story when it was released a few days ago, with the non-sensationalist, accurate reporting.
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Then read this article...and tell me if this article isn't full of sensationalist bullshit.
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What Greenspan is warning against is the fact that currently, the national savings rate average is ZERO. A ton of people are maxing out their equity so they have cash onhand to pay off debts, and are using their houses as money in the bank instead of an equity storehouse. For instance, I accrued equity on one house, used it to buy another house with more equity and fix up the next house. Your average moron says, "Hey, my mortgage is down to 80%!" and they max out their debt to 125 percent so they can have a new car. THAT retarded shit is what Greenspan says is going to bite the consumer who does that in the ass. Common sense, in other words.
Assuming the housing bubble DID burst, and just like the stock market. A 20 percent decline in housing prices across the board would mean NOTHING to anyone who was not over 100 percent in equity refinance. IE, the average joe, who has 50% equity statistically.
This is fear mongering bullshit. Don't fall for it. The housing price rise may end, but it will NOT lead to a recession. Shit, Greenspan would drop rates again first. Think about it.