The Collected Works of Author and Blogger Larry Roberts

Archive for 2009

Imagine living in a world without consumer debt. The first credit cards did not appear until after WWII. Prior to WWII, if you wanted to buy something, you needed to save money from your wage income until you could afford to pay cash for it. There was an absolute dependency upon wage income to provide a lifestyle; living beyond your means was not possible unless you had previously saved money, and it could not continue beyond the day you went broke. Times have changed. With the invention of credit cards, it became possible to borrow from future earnings to live better today--better than people can currently afford. Credit cards make it possible for people to live beyond their means. However,…[READ MORE]

Rather than paraphrase, below is the full text of OC Progressive's post: Housing Bubble Busts Every Local Budget - Get Ready for Extreme Makeovers In trying to follow local politics here in Orange County, I've been looking very closely at local government budgets, and there' s one trend that seems to be emerging rapidly. We're seeing a precipitous decline in local sales tax revenue. And this is not going to be a temporary problem, but rather one with serious long term impacts. I was absolutely floored by OCTA's fiscal review that showed a difference over three years, in the projection of revenue from sales tax, that lowered the 2009-2010 projection of sales tax countywide by 19% over their previous projections.…[READ MORE]

Despite the news headlines of a real estate bubble and economic termoil, many sellers believe their properties have appreciated since they paid peak prices. They are asking, "What Bubble?" Denial comes in many flavors. One of the more interesting forms of denial is exhibited by those sellers who are completely oblivious to the price crash. Either these people are completely ignorant to what is happening, or they are willfully ignorant and believe the problems all around them do not apply to their property. If I had to guess, I would lean toward willful ignorance as the most likely explanation. The market for mid- to high-end homes is like playing the lottery. There are very few sales occurring at these price…[READ MORE]

Many of the sob stories in the mainstream media have been focused on what are characterized as "responsible homeowners" who are in danger of losing their homes. Several articles of this type have been posted here, and many commenters have noted the extravagances and poor decisions that often make these homeowners look less than completely responsible. Let's be clear about one thing: Responsible homeowners are NOT losing their homes. To see the truth in this statement, one needs to have a clear definition of "responsible homeowner." A "responsible homeowner" is a buyer who, if they utilized financing, did not stray from the conservative parameters set forth by lenders (prior to the bubble) and financial planners. This includes using a maximum…[READ MORE]

Japan simultaneously inflated massive financial bubbles in real estate and stocks during the late 1980s. The slow deflation of this bubble and the general economic malaise that impacted Japan during the years that followed became known as the "Lost Decade." The United States is facing a similar set of circumstances in the aftermath of the Great Housing Bubble. So far, we have been following the same policy actions as the Japanese did. Perhaps our officials have come to believe a Lost Decade is preferable to the next Great Depression. Today, I want to demonstrate how easy it would be to have a similar result in our own housing market. By lowering interest rates to artificially low levels, the Federal Reserve…[READ MORE]

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