Stanford beats USC: West Flo Reaction

2007-10-22T10:14:00.000-07:00

Absolutely adorable!

Sister Can You Spare a Dime?

2007-05-24T06:48:00.000-07:00

Just as important as raising your children, keeping a fine home, cooking nutritious meals, owning a diverse tailored wardrobe, excelling at your career, enchanting your husband, and maintaining your looks is controlling your finances. If you have visited my Hypertiger Blog, you know where I stand. Here's the bad news:

Real estate was the main engine inflating the Ponzi finance debt pyramid. We have run out of greater fools and the carnage has only just begun (July 2005 was the top). The real estate crash will take the financial system down with it. What lies ahead will make the Great Depression look like a walk in the park.

Unfortunately, Americans as a whole are totally unprepared for what we face: out of shape, debt-ridden, lazy, lacking in basic skills... Knowing the key role real estate plays in the debt inflation pyramid, I have tracked the market for the past five years.

'Fools and their money are soon parted'

The writing was on the wall for those who chose to read. Unfortunately, amateur real estate seminar suckers allowed their greed to blind them to reality. They are now drowning in it, with a negative cash flow rapidly depreciating debt-encumbered 'asset' as the anchor. In that it was their self-centered 'something for nothing' mentality that helped drive house prices out of reach for young families, it can only be considered justice that they are unable to sell and must now rent for much less than the carrying costs. The markets they infested now offer cheap rents, at their expense, to the same families they had hoped to jack when they flipped their properties.

Also in dire straits are the young couples who, brainwashed by real estate hucksters, shills and con artists (real estate agents, mortgage brokers, late night infomercials featuring Carlton Sheets style real estate rip off investment gurus), bought houses they can't afford with no down fixed or, for the truly fiscally insane, adjustable rate mortgages. They can now look forward to a lifetime of debt service for a house which is no longer valued at the amount that they owe.

Lesson for the day: Don't ever take advice from someone whose commission hinges on your ignorance.

Based on my expertise (and my excellent track record calling the real estate market), I believe California will be ground zero (with Florida, where 70 percent of all sales were to investors, a close second) in total dollars evaporated. Arizona and Nevada are in third and fourth place respectively for both dollar loss and pain inflicted. Anyone who recently bought in these areas is ruined (unless one doesn't mind owing $500k, plus interest, on a mortgage for a house that will soon be priced at $250k or, much more likely, even less).

All is not lost only if misery loves company. In February 2005, Phoenix had 5,000 houses for sale. Today? Over 60,000! And that figure does not include new construction, 'For Sale By Owner,' and the foreclosures lenders are trying to unload. Inventory of used houses for sale in the greater Los Angeles area is now over 129,000.

Get your financial house in order. It isn't going to get better for a long while (decades). We have only known inflation. Deflation is a debtor's nightmare. Get out of debt immediately (I have none; if I can't pay cash, I don't buy it). Stock your pantry (I recommend Walton Feed). You should have at least one year's living expenses saved. Plant a vegetable garden.

Here's the really bad news: There is no good news. Life as we knew it, with tomorrow better than yesterday, is, for most Americans, over. If you want to make it through what's coming, you had better be prepared.

A Rose By Any Other Name

Stanford beats USC: West Flo Reaction

Sister Can You Spare a Dime?