Quote:
Originally Posted by PBzeer
The dirty little secret with credit is, that sooner or later, somebody has to fork over some dough.
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True. When housing prices were increasing 20% a year, homes made great ATM machines and debt was refinanced into mortgages. All this did was mask the fact that the economy was in trouble, middle class was shriinking and jobs disappearing. I've said this here 20 times.
Some here have said that this bubble created a class of people who lived beyond their means. Well, look at consumer spending, home and auto sales today. They're down significantly. If people are just being conservative and holding back on purchases until the economy gets better, which is understandable, we would all be reading about the sudden spike in American savings accounts. We aren't reading about this, because it isn't happening. So if people aren't spending, where is all this money from our real economy? It can't just disappear, so where did it go. People aren't stuffing their mattresses, are they?
No, the truth is that there is no money. This should be obvious to everyone now. As it turns out, people were using those ATM machine refinances on their homes to actually make ends meet. The economy was in trouble from the beginning of the Bush administration, and it was handled by Greenspan putting the petal to the metal which created the bubble we are watching burst right now.
The lack of good paying jobs is the problem. It's the only problem. You can't buy a car or a house making minimum wages. Fix this and the economy takes care of itself.