Will it take a depression?

[PerryChase]

Some of you have argued that I’ll take a major recession or depression to bring back the values that made America great.

I’m hoping for a Real Estate crash (so that houses are affordable) but not for a deep recession or depression. I think that we’ve come too far along to go back to the “good ol’ days” of segregation, poverty and no air-conditioning (I like my A/C, ha.ha).

Certain values such as hard-work, thrift and compassion certainly need revival. We need a better educational system that instills ideals rather than breeds cynicism and intransigence. We also need inspiring leaders such John Kennedy who will encourage us to travel the world and discover new horizons.

No, I’m not hoping for a recession. I just wish people would re-adjust their priorities away from over-priced real estate and towards softer more important things in life. I don’t beleive that a 50% drop from the peak in real estate prices necessarily means a deep protracted recession in the general economy.

[VanMorrisonFan]

PerryChase said:

“I don’t beleive that a 50% drop from the peak in real estate prices necessarily means a deep protracted recession in the general economy.”

I think it does, actually. Real estate doesn’t exist all by its lonesome. It interacts with the broader economy. In some ways it influences the economy, and in other ways it is influenced by the economy.

A 50% drop in value wouldn’t happen all by itself…it would have an effect on the broader economy and it would also be caused by things happening in the broader economy. For example, if interest rates shot up (say, a 30-year mortgage going to 10%) there would be a huge drop in real estate values, but there would be other consequences as well. A lot of jobs in lending and finance would be lost. Business capital spending, which employs a lot of people, would be decimated. Interest-sensitive stocks would be hurt enormously. Millions of people would be “underwater” on their home loans, potentially defaulting, etc.

Think of the last downturn we had in So Cal. Many people (myself included) lost their jobs and struggled to pay the bills.

I am hoping for some sanity in the market, but a 50% drop would be way too harmful for the economy.

[bgates]

John F Kennedy?! The man who said,
“the same revolutionary beliefs for which our forebears fought are still at issue around the globe—the belief that the rights of man come not from the generosity of the state, but from the hand of God.”
and
“Let all our neighbors know that we shall join with them to oppose aggression or subversion anywhere in the Americas. And let every other power know that this Hemisphere intends to remain the master of its own house.”

Why, that’s the kind of arrogant rhetoric that can lead to failed military intervention in peacable little Latin American communities like Ortega’s Nicaragua. Or Castro’s Cuba.

It’s a free country, Perry, but don’t let your friends deadzone and ps find out your views on a president who mentions God – and approvingly!

[FormerOwner]

PerryChase, I agree that, long term, the best thing for the country would be if the government took a “hands off” approach and let the market determine prices. Since real estate is obviously over-valued, let the market determine fair prices. That would be about 50% lower than current So Cal R/E prices IMHO. It would cause a lot of foreclosures, bankruptcies, bank failures, pension fund losses, unemployment, and probably a stock market crash, but long-term we would become a stronger more balanced globally competitive nation. It would also remove the false sense of entitlement that many people now have as well as the distraction of trying to keep up with the Joneses.

The only problem is that people on this blog tend to be forward thinking/planning/investing types. That is NOT the norm in this country right now for anyone under 60. Most people out there just want as much stuff as they can get beceause they feel they deserve it and will vote people into office that promise to keep the good times rolling. They don’t realize that the “good times” really aren’t that good. Who needs this false sense of affluence and keeping up with the Joneses? I’ve reduced my spending quite a lot in the last few years and I’m actually a lot happier now. I have less to worry about – except, of course, inflation. If this housing downturn doesn’t get this country back on track, then I’m afraid things will get even more out of balance and the eventual correction/depression will be even worse whenever that comes. I would like to think that we are leaving the country in good shape for future generations but, unless we have some sort of major correction, things are just going to keep getting more absurd.

I think a 50% drop probably would cause at least a mild recession, but only time will tell. If the R/E drop is allowed to happen then it would put the economy in a better shape for a strong, balanced, legitimate expansion going forward. Capital would be allocated to where it’s more productive and people’s energies would also be directed to more productive and socially responsible avenues. And, yes, it would help get us back to thinking about each other and family values rather than property values.

I think the greater risk for a depression is that if we DON’T have a large correction of the current imbalances soon, when the correction DOES come it will for sure be the Second Great Depression. I don’t want to see that happen.

[Anonymous]

FO, I perfectly agree with your points.

PC, I was no fan of JFK — womanizer, Rush-like prescription drug-abuser, took credit for work by his ghost writer, incompetent handling of the worthwhile Bay of Pigs ‘adventure’ — but bg’s quotes may have changed my mind to positive about JFK!

PC, I hereby recommend Truman as your standard bearer.

[PerryChase]

bgates, I have no problem with invoking God since I’m a non-practicing Catholic (I would say I’m a humanist). To me, invoking God, when done appropriately, is simply calling for altruism.

I just don’t want some politicians’ interpretation of what they believe are God’s words (and laws based on their interpretation of those words) to control every aspect of our lives.

JFK was by no means perfect; but he was a great orator and had the ability to inspire.

[bgates]

Got it. You have no problem with people who share your own ‘appropriate’ views of God. It’s just when a President interprets what he believes to be God’s words to control every aspect of your life by invading Iraq that you are irate. Or when the government seeks to increase its control over our lives by not taking as much of our money – how altruistic is a government that doesn’t forcibly confiscate wealth?

[blahblahblah]

jg, I wouldn’t compare JFK’s drug abuse to Rush’s. JFK got hooked on the junk as a way to ease his pain from injuries he received in battle. Rush got hooked on hillbilly heroin, perhaps to deal with pain from his anal cysts, or maybe to deal with the depression he suffers as a closeted homosexual.

[PD]

Concho, so pain related drug addition is okay so long as the injury was sustained in battle. Any other pain related drug addition means that person is a fool.
I don’t quite see it that way. I think you are making excuses for Kennedy (maybe because you like him) but aren’t willing to make excuses for Rush (maybe because you dislike him). What does this say about your partiality?

I think their drug additions reflect poorly on both of them.

[bgates]

CONCHO told us yesterday to “all grow up and stop posting to these stupid threads,” apparently so we could spend more time discussing a subject more important to him:

Rush Limbaugh’s ass.

[blahblahblah]

PD, I never said pain-related addiction was “okay”, I just called the comparison invalid. Also, JFK wasn’t ever arrested on drug charges, nor did he repeatedly and publicly condemn those suffering from drug addiction like Rush did on his show.

Notice how these distractive debate techniques always come back to “you like so-and-so, so you’re not impartial.” I never said I “like” JFK. Being an educated, informed adult (who for some reason feels compelled to post on these silly blogs), my opinions of public figures are more nuanced than simply “like” or “dislike”. Every one of us has bias, so if you’re saying that no impartial person can ever express an argument, these boards would be quiet indeed.

[bgates]

You tell’em, CONCHO. Keep away from those distractive debate techniques to focus on the main issue you brought up:

Rush Limbaugh’s ass.

You are the first educated, informed adult who’s ever given me information about Rush Limbaugh’s anal cysts. Please keep me up to date on other equally nuanced stories about the rectums of prominent conservatives.

[blahblahblah]

Actually, this thread gives a good example of how these flame wars get started through distraction techniques. The original poster listed some quotes from JFK, who is then compared to Rush Limbaugh in a later post. I refuted the comparison and the debate becomes about my impartiality. Success – the thread has been successfully redirected away from its original topic and now reverts to essentially a childhood game of “my daddy can beat up your daddy”. We all post and try to catch each other in little gotchas in an attempt to prove our superiority to one another. So sad…

[PerryChase]

Thanks for the link CONCHO. I didn’t know that Rush was a closet case, but now I do. I have gay friends and I can assure you that no self-respecting gay man would go to bed with Rush. As a closeted gay man, Rush probably has to work very hard for sex, hence his bitterness, ha.ha.

I’m glad that those hateful gay bashers have all been revealed to be gay themselves.

[bgates]

Yeah, you didn’t so much ‘refute’ the comparison as spread personal attacks, including rumors about somebody’s sex life. It is sad.

Perry, what about that link did you find especially convincing? The picture that was photoshopped to turn Limbaugh’s eyes red?

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