Apr 20 2008
American Joe Ii
Bubbles, bubbles are everywhere.
Where is reality or old fashioned classical fiscal responsibility? I am not going to dis Ronny Reagan and his deregulation but it has gone too far and to the detriment of the good of the United States both domestically and internationally. A house built on rock stands and a house built on sand is washed away.
It has somehow become impossible for the average Joe in America to attain the American Dream whatever that used to be. At one point in time, it used be to own your own home. I cannot with my limited financial means buy a $400,000 single family house in one of NYC’s boroughs of Staten Island. That is a low end price.
Can kids with six figure college debt borrow even more to buy a house without mom and pop giving them a massive down payment?
What kind of jobs are left in this outsourced economy for a college degree to maintain the high cost of living, college loans, mortgage loans, bread, milk, Pepsi cola, video games? What kind of lower end jobs are available to ordinary citizens and the illegals etc?
The millionaire talk show and media talking heads grew up in the rich suburbs and have no idea what real poverty in America is all about.
The inflation in investments in the past decade has been, it seems to me, to inflate existing commodities such as housing or oil and squeeze every last drop of blood out of the shrinking middle class. Wealth has been created and invested overseas. Jobs have gone bye bye forever.
There are TWO ECONOMIES in America!
The housing bubble has in a great part been a speculative investment fueled by cheap but not ethical mortgage money. Anybody from the outside could see the bubble growing. Many saw it. Nobody in responsible positions of private industry or government seemed to notice or give a damn.
Now that the Fed is printing money, will housing level off in pricing as a traditional inflation hedge? Or will the capital gains, that should be taxable, will these unchecked inflationary investment dollars continue to wreck havoc or victimize some other part of the economy?
This all reminds me of the early nineties when I moved to Phoenix and realized that all those many newly build skyscrapers were empty with no jobs in them. They were built with junk bonds with no real demand - they were a supply side phenomenon.
This boom and bust economy stuff is like the wild west and the old savings and loan collapse in the late eighties. When banks were regulated and couldn’t sell stock in the crap shoot stock market, a bank was a bank.
These days the biggest banks of a bygone era don’t do banking. These former banking lobbies of a forgotten golden age in downtown and midtown Manhattan house Starbucks, fitness clubs, or merchandise outlets. Don’t tell me that turning former office space into condos creates wealth.
Paper money these days only makes more paper money and seemingly only for the rich or hedge funds. After you factor out a few temporary construction jobs for the creation of condos, office space disappears, and no real long terms jobs come out of the creation of this artificial paper wealth.
This recent inflationary, job draining, capital gain, artificial paper wealth is what needs to be taxed to pay off the national debt and bring America back to fiscal responsibility.
Tags: boom and bust economy, bubbles, inflation, junk bonds, Two Economies in America, paper wealth
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