This is just the beginning of a very long and arduous path to a complete readjustment and probable collapse of the global economy.
Before this is over, blame will no longer be of any consequence…
Having your nation not starve will be.
I predicted this 5 years ago.
But my parents being smarter than me, built our family a farm.
I live in the Mid-Atlantic, which is the wealthiest part of the United States (Look it up, 5 or 6 of the highest income per capita counties in the USA are right here,) and connected directly to the federal government.
Many of my moron conservative buddies argued that it could never happen here. Well it did, home building in this area is down about 98% and houses in some areas have lost 60% of their (fake) value.
There is going to be another wave of foreclosures and it will be more devastating than the first. The first wave was mostly in lower income families for three reasons:
1. They’re generally more vulnerable
2. There was a social impetus to provide home ownership to these families.
3. The higher end markets were more saturated 85% ownership compared to 61% for lower end.
A large percentage of the move up houses, which were mathematically overpriced for their respective demographics by 60% or so, required people to buy them by utilizing arms and other mechanism to artificially make the payments temporarily lower than what was normal for a home of that price range.
This practice was idiotically based on real estate continuing to out pace inflation by 20% annually and the availability of qualified buyers in the future.
Obviously these assumptions proved to be grossly incorrect. I’m just a carpenter but had they listened; we wouldn’t be here now.
So the upper middle class foreclosures could potentially dwarf the first wave, and with all the layoffs coming, this is going to be a depression to rival the first global depression, of the 20th century.
If that weren’t enough, oh yes there’s more to come.
Commercial real-estate is going to go through a similar or worse downsizing.
But all this is just the tip of the iceberg, after all this shrinking has occurred, what we will be facing ,as a race; is mass starvation, either induces by the next global conflict or the natural progression of, for the first time in history, 80% of the world’s population living in cities and an average of 1500 miles from the food supply (1500 miles is USA figures, it’s actually worse for people depending on Australian and South American farms for their food)
Now as to the blame. It’s far to simplistic to blame either the financial institutes or the borrowers, hell no one even mentions how much the big builders were making on all those homes and how coincidentally the money flowed from the big, high profit, builders to the banking industry where we are now bailing them out.
Very interesting.
Let’s leave the builders, the banker, and the borrowers for a second.
The real cause of this global devastation might well be Armageddon, predicted by the bible, but we’ll leave that out as well.
Overcapacity
Simply stated overcapacity in the system has produced all of the current woes, and there is no end in sight. Isaac Asimov predicted this type of social problem in some of his books from the late 30s.
More Later.
Edited for clarification: I live in Northern Virgina, next to the District of Columbia.