I've written before about the madness of man, wondered at the disconnection from "reality", and mumbled about a depression coming. Some might say that I am bedecked in a shiny metal haberdashery, but there is a real strangeness going on.
Why did the US stop reporting M3? Why would CMHC fuel this madness by dropping to 20% the down payment required to avoid mortgage insurance? Why do "they" jig the way that inflation is reported - leaving it understated?
I was at my bank the other day and was discussing mortgage qualification with the manager. I mentioned to him that his bank had qualified me for $600k, and that I would just not be able to afford those kinds of payments. He told me that "everything changed, and disconnected from sound lending practices a couple of years ago. He agreed with me that those practices are dangerous, and plain crazy. We discussed the RE market, economy, education, etc. for a while, and he didn't know much. He almost offered me a job, saying that I should work for the bank. Me? I know things are bad now.
Where I'm going with all this is that I think we are in for some serious economic meltdowns in the very near future. I read that Cameron Muir said that things are cooling, and a more modest increase in housing prices is expected for this year, and into 2008. I believe he said 8% for this year. How could that possibly be? The Chipman Report indicates that prices are declining very marginally (1%-2%) - as I read it. I am really beyond caring anymore. It just doesn't merit reporting on.
I can't for the life of me figure why the BoC did not raise rates. The prices of energy and housing have become so daunting that something needs to give. I've always had a good feeling about David Dodge, and am wondering what comes next. Being that our dollar is closing in on the US$, it can't but indicate that the US is in very rough shape. Those who don't make the connection to our own economy are in for a rude surprise.
We are heading for a major breakdown. As freako so eloquently described it - 'humming down the Autobahn, and all the warning lights on the dash are blinking furiously, and nobody notices (or something like that). Just wait until the costs of whatever the guvmint comes up with to "battle" greenhouse gases start to crush us. There is already talk of upping the GVRD gas levy, hydro rates going up, property taxes up, food costs, pay per use this and that. Something's gonna give. There is just not that kind of money around. Not real money, anyhow.
Those who "steer" the economy (and us with it), should have put the brakes on a long time ago, but they didn't. In the US, it was purportedly to avoid recession, but the situation is so exacerbated that a recession would be the kindest of fates. The whole thing is like swerving to miss running over a chipmunk, and going head-on into an oncoming truck. It's crazy.
Below I have pasted a few quotes from an article that I read, that spurred me to drag this rant out again. I read the article as broadly contextual, and recommend the reading - with the economy, and RE (and so much more) in mind.
Conflagration coming link
System breakdowns are normal, but complete collapses can be permanent
By Michael Nenonen
By now it’s clear that our world faces a series of unprecedented ecological, economic, and geopolitical challenges. Too often, we look at these challenges in isolation from one another, perhaps because we don’t have a theoretical foundation to help us understand how they interact. Thomas Homer-Dixon’s The Upside of Down: Catastrophe, Creativity, and the Renewal of Civilization (Knopft Canada, 2006) provides just this sort of foundation. His work allows us to see past the sizzling trees to assess the direction and scale of the fire that’s consuming the forest.
It’s dangerous to prevent breakdowns. The longer we delay a breakdown, the more likely it is that it will occur at the same time as breakdowns in sub-systems and macro-systems.
Our woods will soon be ablaze. Our actions will determine which seeds, if any, will survive the fire.
What me worry? I have a tin foil hat!