Letters to the Editor
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Not to mention job anxiety
The cold draft of a recession also brings a blizzard of pink slips. It's hard to justify buying a new car, widescreen TV, or other big-ticket items (or even many small-ticket items) when you're anxious about being unemployed in the near future.
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Home Equity is a poor component of Net Worth
I've never understand the wealth effect that comes from increased home equity. It's not like people who are house rich actually decide to sell and move. A home is place to live, not an investment. Until people are willing to relocate willy nilly based on home equity to view it as such is financial trap.
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Fill up and groceries is about it
Greetings
Fill the gas tank and buy a weeks groceries...
That pretty much takes care of the "big tickets" for most of us!
Home values are tanking and jobs are evaporating as the sub prime bubble economy deflates. We are all caught in the undertow. No one sensible is going to use their rebate for anything but groceries, gas or 'rent'
That light at the end of the tunnel?
3:10 from Yuma...
Enjoy the journey
WarLord
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Change the tax law then
With the stroke of a pen we could essentially wipe out the housing collapse.
Allow homeowers to take capital loss carry forwards on real estate JUST LIKE THEY ARE ALREADY ALLOWED TO DO WITH ANY OTHER CAPITAL ASSET.
Hell, you can write off gambling losses against winnings. But in the US you get hosed on real estate losses. You have to pay the gains tax on the upside but the law has never permitted you to take losses and offset them against current and future gains. Unless the property is income generating.
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Home equity as worth...
reminds me of the paper millionaires of the .com boom. Some of my co-workers partied like they actually owned the millions in the late 90s. Their thought was they would just sell some if they needed cash.
At least in their case, selling stock - which some did - actually netted some of them money. Sell your house and you're back to renting.
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Why are falling housing prices a bad thing again?
"...according to the latest numbers from the influential Case/Shiller home price index, housing prices fell ten percent year-over-year in January."
And this is a problem why exactly?
I mean it's a problem if you're a home owner who paid too much for a house, expecting to sell it for even more to someone else. I mean you KNEW you were paying too much, but what the hell, there would always be some other chump who would pay more so why not screw him?
But for those of us who would like to own a home and who have a realistic notion of what a home is actually worth, we have been locked out of the market since, oh, 2004 at least. When gross asset inflation was hitting the dot-coms it was no big deal because we didn't need dot-com stock to live--I could opt out of the madness. With housing, I am forced to play in the same imbecilic game as you bush-league Trump wannabes. I don't want to get rich. I just want a place to live. Is that okay with you?
The greed and stupidity of millions of get-rich-quickers has resulted in a vast overbuilding of overpriced, flimsy, energy-intensive, and financially- and environmentally-ruinous suburban sprawl. People like me and my friends have been gentrified out of our cheap, funky old urban neighbourhoods. All I ever wanted out of life was to live downtown, walk to work, work enough to pay my rent, read books and not bother anybody. That's all I wanted but I couldn't do that anymore because somebody thought they could turn our workshops and apartments into $300,000 condos which would be bought and flipped for $500,000. (To anyone living in Montreal, Quebec, two words: 10 Ontario.)
If you are one of those people, you're stupid and greedy, and you have destroyed my world, and you deserve everything that's coming to you. I hope you lose everything and go bankrupt because that will keep your credit rating low enough that it will be years before you can wreak havoc with your moronic herd behaviour again.
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"Gas" Money
The reason big 'investors' see a silver lining in almost everything, besides the financial avarice of short sellers, is that cash seems to have almost nowhere else to go but the various markets.
Residential real estate has tanked. T Bills have tanked. The dollar has tanked. Ordinary savings have tanked. Even business real estate has tanked. The incredible amounts of capital stolen from ordinary people over the last years has built up in the banks, the 'hedge funds' the private investments, and created a 'need' for investment, and the higher the return, the better.
They aren't going to put it under their mattress. Yes, they just lost billions, nearly a trillion. Still, someone has money ... even after that. Commodities and equities and debt. Oh my. Commodities and equities and debt. Oh my.
I don't know what the next bubble will be, but watch it coming.
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Short term investors - they need to worry, Long term investors - that is money in the bank
I don't really give a crap what the Fed does or what financial institutions report (unless I'm a shareholder, then I care). I've been and will be investing into my Roth IRA and taxable portfolios at actually slightly above my normal rate. Why? Because for over 100+ years real returns (meaning purchasing power) has increased on average of 7+ percent a year for the long term diversified stock investor. Even after tax it is nearly 6 percent for the investor in for the long term.
Now, for short term gamblers, who sell when they shouldn't, bought into high risk investments they're unsure of, and over leverage their portfolio. (And the common man did exactly this with his home purchases as well.) I'd be looking for comfort too. They're probably also just like the traders at Bear Stearns that got us into this mess.
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@Chernobyl Kid
Amen, brother.
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Keppie the key word is average
I'm not sure how far you are from retirement or whatnot, but the actual long term gains have occurred over only half the years, while the rest of the time it was flat or had severe losses.
http://bigpicture.typepad.com/comments/2005/12/100_year_bull_b.html
There is a good chance that it will be another 10 years before you see the start of the next secular bull market.