Thursday, May 29, 2008

Very good article from Canada about US bubbles.

http://www.thestar.com/article/432727

WASHINGTON–Suddenly, it seems, Americans are getting hit from all directions.
Energy and food prices are soaring. The housing market continues to collapse. Government revenue is falling, taxes are rising. Airlines jack up fares and fees while reducing service. Banks are pulling credit lines. Auto companies continue to cut production. Even investment bankers are losing their jobs.


The tendency is to see these as separate developments, each with its own causes and dynamic. Fundamentally, however, they are all part of the same story – the story of the global economy purging itself of large and unsustainable imbalances that for a time allowed many Americans to think they were richer than they really were.

Most Americans understand that an overabundance of cheap, easy credit created a housing bubble that artificially inflated the price of land and housing, produced too many homes and homeowners, and persuaded too many Americans to dip into their home equity to support a lifestyle their income could not sustain. Now that the bubble has burst, we are coming to accept the reality of lower prices, reduced production, declining home ownership rates and the wisdom that a house is not an ATM or a substitute for a retirement fund.


8 comments:

D said...

Boooooo

What a buzz kill!

:)

13thgeneration said...

oh, you only wish it was the beautiful insight of a canuck! Actually it's a mishmash of a Wapo article, don't you get your local paper anymore???

http://www.washingtonpost.com/wp-dyn/content/article/2008/05/27/AR2008052703077.html

Best summed up as "it's a growth recession, stupid", without even having to say the word "recession". No boogeyman here!

D said...

Correction:

It's a "shadow recession".

13thgeneration said...

oooh, yeah, shadow. My dictionary.com definition: "24. without official authority: a shadow government."

Thanks for the headsup!

D said...

Here's another secret...

Jack Bauer = Ben Bernanke

That's why we didn't get the network version of 24 this year, Jack was on a short-seller counter-terrorism mission combating the SRA "Shadow Recession Activists".

Tape bomb extraordinaire!

13thgeneration said...

hmmmm...being a chick, I'm having a tough time with the imagery of bearded Ben...you know...kicking down doors...

But it does put a whole new spin on the assassination subplot of the show....hmmmm....

But really, if you go to the Wapo business section they have a bk article that is a ringing endorsement of mtgspy's article.

Three cars, two adults. Another guy with timeshare payments and a dozen credit cards. For them the music stopped due to job loss, but how many others are just flat out in over their head right now?

MTGSPY said...

Apparently it's a washington post article. Thank you for catching that.

PCap said...

We only reprint the good articles :)