If you’re one of those that’s been thinking that there’s some sort of solution for the U.S. housing market that would result in our country’s economy getting growing again, and that our government is ignoring or unwilling to implement, I have some good news and some bad news for you. Which do you want first?
The bad news? Okay… The bad news is that there is no possible solution… so, what you see is what you’re going to get for a long, long time. There will be no writing down of debt, no mass debt forgiveness, no answer to the foreclosure crisis… nothing.
Ready for the good news? Okay… There’s no question about it, so there’s no point in thinking about it anymore. It’s what you would call an absolute certainty and you’re about to see why.
First of all, however, let’s just take a moment to understand some economic highlights. I think most understand that our economy is not really growing and most of us are still feeling like we’re in something close to a recession… or worse.
As of last year, real median household income had declined every year for the last five in a row, from roughly $55,000 to $50,000… and during that same time period, 2007-2012, the commodity price index, which is a basket of food, fuel and other essential commodities, rose by 20%!
Is it any wonder that during those same years the number of Americans living in poverty increased by 31% to 49.7 million people? Or, that the number of Americans on food stamps went from 11 million in 2005 to over 50 million in 2012? (An increase of 80%!)
We will be much worse off in 2016, than we were at the end of 2012. And as each year goes by, we will increasingly experience the same sort of anxiety and anguish of those who lived through the 1930s.
Just two years from now, in 2016, it will have been 10 years since foreclosures first spiked in the fall of that year. At that point we will have completed our first “lost decade.”
And you know why all of this is, right? It’s the result of what macro-economists would refer to as “household mortgage debt overhang,” which was the subject studied by Irving Fisher, a man some have called “the greatest economist the United States has …read more