{"id":2034,"date":"2013-03-26T20:43:42","date_gmt":"2013-03-27T03:43:42","guid":{"rendered":"https:\/\/scotshonor.com\/?p=2034"},"modified":"2013-03-26T20:43:42","modified_gmt":"2013-03-27T03:43:42","slug":"bubble-bath","status":"publish","type":"post","link":"https:\/\/scotshonor.com\/?p=2034","title":{"rendered":"BUBBLE BATH"},"content":{"rendered":"

The California housing bubble caught a lot of people, including me, by surprise.\u00a0 I knew that housing prices in California were insane.\u00a0 But that had been true for years.\u00a0 I knew that some really smart people said the bubble could burst, but it was hard to imagine.\u00a0 There were times when prices had dropped in the past, for about 15 minutes, but soon they soon came back even stronger.\u00a0 In addition, I didn\u2019t personally know anyone\u00a0who really believed\u00a0the bubble was about to burst.\u00a0 We were all afraid that if we didn\u2019t buy a house now, we would never be able to buy a house in the future.\u00a0 For a long time that was accurate.\u00a0 If you didn\u2019t buy a house when you could, the next year it would be 15% higher but your income sure wouldn\u2019t be 15% higher.\u00a0 Houses seemed to move farther out of reach with no end in sight.<\/p>\n

Of course now we all know that the collapse of the housing bubble was inevitable.\u00a0 The numbers weren\u2019t adding up and in hindsight, this is really obvious.\u00a0 I did some research about an upscale community in Northern California in 2007.\u00a0 This area had a median household income of about $118,000, which is near the top.\u00a0\u00a0 The average price of a home was $535,000.\u00a0 That means that even in this extremely affluent community the average family could not afford the average house.\u00a0 How on earth did we expect that to continue?<\/p>\n

Now we are looking at an international financial bubble that makes the housing bubble pale in comparison.\u00a0 Once again the numbers just don\u2019t add up.\u00a0 Supposedly smart people are trying to get out of debt by borrowing more money.\u00a0 Other supposed smart people are\u00a0trying to help\u00a0by loaning them more money.\u00a0 When, exactly, has this ever worked?\u00a0 Our fed chairman thinks that if we just keep interest rates near zero that everything will be just fine.\u00a0 If he keeps in up, we will eventually be paying people to borrow money.\u00a0 This reminds me of the kid who tried to skate across a pond on thin ice.\u00a0 As long as he went really fast, it was ok, but the minute he started to slow down he was in serious trouble.\u00a0 Well things are slowing down all over the world and it sure looks like trouble.<\/p>\n

The latest and greatest bailout deal in Cyprus is astonishing.\u00a0 The EU is going to give Cyprus banks 10 billion euros, but only if the banks first take (steal) 4.8 billion from their largest depositors.\u00a0 Senior bondholders will be unceremoniously wiped out.\u00a0 The Laiki Bank will be shut down and the \u201cinsured\u201d depositors will be moved to the Bank of Cyprus.\u00a0 In the meantime banks will not reopen until at least Thursday and the government is going to limit the amount of capital that can be withdrawn.\u00a0 I suspect people all over the world are looking for an exit strategy.\u00a0 It won\u2019t take much to trigger a mad dash for the exits.<\/p>\n

Perhaps, just perhaps, the EU will pour enough water (actually watered down currency) on the financial fire in Cyprus to stave off the inevitable.\u00a0 But at best, this will not solve the problem; it will just kick it further down the road.\u00a0 Then another fire will erupt somewhere and there will be even fewer options for containing the results.\u00a0 The only real solution would be a booming world economy, but all of Europe is run by socialists who have never succeeded in creating a strong economy.\u00a0 The former economic engine of the world, the United States, is following Europe down the path toward economic stagnation.\u00a0<\/p>\n

In an interview today Charles Krauthammer made an interesting comment comparing the situation in Cyprus to the assassination of Archduke Ferdinand.\u00a0 Following is a link to a Daily Caller article about that interview:<\/p>\n

http:\/\/dailycaller.com\/2013\/03\/26\/krauthammer-compares-cyprus-bailout-to-assassination-that-led-to-world-war-i-audio\/<\/a><\/p>\n

The problem with Krauthammer\u2019s comment is that it has the ugly odor of truth.\u00a0 The collapse of the housing bubble was bad enough.\u00a0 This time the entire world could experience a bubble bath.<\/p>\n

TDM<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

The California housing bubble caught a lot of people, including me, by surprise.\u00a0 I knew that housing prices in California were insane.\u00a0 But that had been true for years.\u00a0 I knew that some really smart people said the bubble could … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_coblocks_attr":"","_coblocks_dimensions":"","_coblocks_responsive_height":"","_coblocks_accordion_ie_support":"","footnotes":""},"categories":[1],"tags":[],"class_list":["post-2034","post","type-post","status-publish","format-standard","hentry","category-latest-headlines"],"yoast_head":"\nBUBBLE BATH - SCOTS HONOR<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/scotshonor.com\/?p=2034\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"BUBBLE BATH - 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