I believe that the bill, and the mania of suburbanization and corresponding proliferation of small junk homes built to last a 30 year mortgage, together are the worst things ever to happen to the country as a whole. The VA and FHA essentially financed, through low cost loans available only for new ticky-tacky homes in sprawling auto suburbs, the massive flight from the cities that took place in the 50s and 60s. My parents were among that wave- they decamped St. Louis, where they could not afford a traditional older home, for a brand-new ‘burb of cheaply built homes in unincorporated IL, across the river.

Can you help but notice that the crapola that was built for workers on GI and FHA loans is the ugliest, tackiest, saddest crap ever built? I have lived in Chicago now for 20 years, and it’s the same as St. Louis and SoCal and everywhere else- the suburbs that were set down all of a piece immediately following WW2 are devolving to slumhood very quickly, and they won’t come back as the old cities are.

You look at stuff in your locale that was built in the 20s, and perhaps the neighborhood has gone to seed, but it will come back because the stuff built is so good, and so goodlooking. Not so with midcentury modern crapola. Whether it’s a fake-stucco SoCal box priced at $400K or a ranchette in a rapidly slumifying southwest Chicago burb, this crap is only good for firewood. It is not recyclable.

I look at the thousands of miles of prefab ticky tacky across the land, and I could cry for the beautiful old cities in CA, IL, MI, OH, almost everywhere, that were decimated to build this garbage, that is now completely obsolete in less than fifty years. We are now rescuing our old cities in a nick of time.

http://economicdespair.blogspot.com

http://rancid-truth.blogspot.com/

While I think many of us recoil of the thought of someone being kicked out on the street or losing their job, we also realize that these folks are partly responsible for the bubble growing - after all they did sign the contract. However the other side of the coin is that swindlers existed to fuel these flames; the drug dealer and abuser both create the system.

The LA Times had an article this Sunday about a family with a $100,000 yearly income struggling to “make it.” They even mentioned that their kids had to wear hand-me downs from neighbors. What was shocking is the amount of debt they carry:

$213,000 first mortgage
$92,000 second mortgage
$45,000 student loan
$26,000 credit card debt

They mention that $3,500 a month went to service the debt. What did they use the 2nd for? A home entertainment center and vacations. Where most feel a gripe is the illusion of debt as wealth. They are spending future income for present gratification.

Although I believe there is a a general sense of Schadenfreude brewing in our society, that is a pleasure taken from someone else’s misfortune, most people try to do their best with what is available to them. I mean who wants to see their wealth decline? But the system is rigged and unfortunately this massive credit orgy will collapse. The blame game is beginning and you can see on many housing and financial blogs finger pointing starting to happen. This is characteristic of the distress stage of a bubble. In this stage, folks know the fundamentals are out of line but want to keep believing because to lose faith would mean to lose your wealth; after all who would want to buy your home if they knew it would drop 20% the next year? The next stage is crisis followed by crash. It will happen because we are massively in debt on a personal level like the LA Times family but also on a national level. The war is costly and inflation is extremely high; you can look at the CPI but this is ridiculous since it doesn’t factor in true homeownership, health care, education, or the majority of thing we spend the bulk of our funds on.

Like I’ve predicted many times, Q3 and Q4 the market will start to tremble. 2008 and 2009 the market will go into crisis and crash mode. Did you see the DataQuick foreclosure report for Q1? Foreclosures are up an astounding 140%+ across the state. That is not a sign of a recovering housing market.

my faith is shaking. The February 27 correction, which was looking like a classic end-of-cycle correction, has proven to be just another fit followed by another bull start–indeed, had I taken 12,100 as an entry point instead of trading glances with QID, I could have realized a 6% gain today. The “Broadening top” just keeps broadening. And then I look to these housing prices nationwide, where even homes in the crack-infested, murder-ridden inner city of my hometown sell for over 200. Houses in the upstate NY are going for a median of 330, well beyond the reach of any home-”owner”.

With prices this inflated, it is beginning to look to me like I am going to be stuck renting the rest of my life, even should I chose another decade of self-denial and savings. Even looking out on the broader economy, M3 is out-of-control. But not a goddamn soul in the MSM wants to see Alan Greenspan horsewhipped for the ARM con-of-the-decade move.

When New Century got rightly curb-stomped into delisting, I just about set off fireworks. But now its brethen have bought some extra life, and I am looking lost in a market of optimism with almost no points of entry–will I be consigned to life of hoarding silver and counting ammunition, desparately awaiting approval for asylum on Ayn Rand Island?

Forgive my despair, but these chickens are not coming home to roost and my middle-class income simply won’t reconcile with the credit-realized middle-class dreams I see around me.