Friday, September 26, 2008

Welcome Kitsap Sun Readers

Thanks for taking the time to stop by. The purpose of this is to discuss the rise, fall and consequences of the property bubble, or more accurately how the underlying credit bubble caused the property bubble and how it will play out in the coming years.

My basic thesis is that the US economy was underpinned on the false premise that "real estate always goes up," and since that is economically and mathematically impossible, the US economy is going to suffer for that mistake.

If you disagree, I want to hear from you. I don't offend easily, so don't be shy.

All I ask is that you stay on topic and not be excessively profane.


Anonymous said...


You make several good points in your letter(s). I agree with most of them. Initially, I felt we had no choice but to finance this mess but the more I think about it, your point of making all suffer would hopefully provide an awakening to the greedy and irresponsible.

Regardless of which route we take, bailout of cleansing, we will all suffer from this mess. I am no financial genius, but live with within my means and pay bills on time. I, too, saw this train wreck as you call it coming in 2005 at the rise of the real estate bubble. So now to see our officials looking surprised is outrageous. It's time to bring out the pitch forks and send the message that we will not finance fiscal irresponsibility. It is time to take back our government and reform it for which it was initially created. We need to clean house in Washington D.C. and Washington State! Inaction of the people, will only allow more of the same. Kudos to your efforts. Keep up the good work.

Anonymous said...

The latest Forbes magazine listed the 400 most wealth Americans. Only 200 of them making an "investment" of $3.5 billion produces the $700 billion needed to refloat the financial sector.

Any patriotic wealthy Americans out there? besides Warren Buffet?

If the bailout is such a good deal for taxpayers, you'd think patriotic wealthy Americans would be flying to Washington with a check faster than John McCain jumped on his white horse.

Bush doesn't have to become socialistic faster than instant oatmeal becomes oatmeal.

Eleua said...

You don't get to be a billionaire without knowing a thing or two about markets. The billionaires know that if they were to throw their own money at this, the money would be vaporized as soon as it hit the market.

If not, we wouldn't be in this situation.

Ken Jarstad said...

Hi Matthew,

You are obviously a bright guy. I especially liked your reference to the 'Institute for Economic Reality' and the house evaluation workshop. My skills are in another field so I always felt like a sheep while I signed dozens of documents I didn't really understand while buying a house! Thank you for the enlightenment.

It occurs to me that in our current presidential race we have a choice between an obvious Marxist and a sort of .... uh .... capitalist? Since the upcoming Supreme Court vacancies are so important I am voting for Palen.

Getting back to the current economic crisis it seems to me that what we are experiencing is the predictable result of 95 years operating under the Federal Reserve Act of 1913. Hasn't anyone in Congress discovered in the ensuing 95 years that this Act was fraudulently passed, unconstitutional and would lead to economic ruin? Does anyone even know that the Federal Reserve isn't federal - and has no reserves?

Eleua said...


Thanks for stopping by.

I'm not really a fan of the FED, but I don't see it in the sinister light that many do, as I believe that the FED is largely misunderstood. I agree that it is not "federal" in the sense that it is a branch of government, and I am not of the understanding that the FRA of 1913 was fraudulent in nature.

I will agree that the FED is out of reserves. It had over $800B worth of reserves in December. Since December, the member banks were on life support from the FED, and at the burn rate they had established by Spring, the FED was scheduled to be dry by September.

Well, here we are.

The banking system of the US is insolvent, and has been so for almost 10 months.

Veritas Maximus said...

Congratulations on your write-up in the SUN from a long-time fan of your blog.

Keep it coming!

Ken Jarstad said...

Matthew, the most salient book on the Fed is The Creature From Jekyll Island which chronicles the institution of this deficit-spending monstrosity. Both parties claim to be able to fix things economically but I think it will be broken promises no matter which party is next in charge. This economic collapse was predictable years in advance and certain power brokers are intending to benefit greatly.

On a separate issue, we have recently seen a number of CEOs bail out of failing corporations with "golden parachutes" consisting of millions of dollars. First point is - exactly where do they get the millions out of a bankrupt firm? Second, if this behavior is acceptable for "capitalism" then we will drive the masses inexorably toward socialism/Marxism.

I hope I haven't strayed too far from your acceptable range of economic discourse.


One very fine post