The Dearing Dialogue

Dr. Housing Bubble gives a convincing argument on the coming collapse in our economy due to the factors that supported the inflated housing market over the last 5 years.  He explains that historically, housing prices paralleled inflation, now roughly at 3-4% according to US government data.  So the current housing environment must be representative of either an outstanding inflation rate or an inflated housing market.  He also explains that roughly 70% of our economy is fueled through consumer spending, and 70% of Americans own their own homes.  Take into account the use of home equity loans in supplementing stagnant middle class wages and you can see the presence of unsustainable spending and the alarm bells following it.

My prediction?  The market propagandists from their studio pulpits are heralding a summer “bounce” as just the thing to get it all rolling again to 20% growth levels.  As the end of summer rolls around, the figures will start to show that not only are homes not being sold, but the level of foreclosures will grow exponentially as interest rates adjust.  This will be just the right ingredients to slip us from a contagion of fear into outright recession, if not worse.  We’ve already seen the market “adjust” itself for the second time since March, with the S&P losing 4% in one week.  It’s likely to see by far, greater adjustments.  A move to corporate bonds, short-term treasuries, or energy stocks is my prescription for preventing a loss in the market.  One market observer agrees:

“In our view the potential effects of the falling housing market on both the economy and the financial arena puts the stock market in an exceedingly risky position in the period ahead.”

A video report by Jeffrey Gettleman on the Ogaden National Liberation Front (ONLF) in eastern portion of Ethiopia.  The Ogaden people are ethnic Somalis.  The ONLF are fighting a political battle for independence from Ethiopia.  Their mission statement states they are “a grassroots social and political movement (…) as both an advocate for and defender of the people is dedicated to restoring the rights of Somalis in Ogaden to self-determination, peace, development, and democracy”.

Understanding this organization is paramount in attempting to stabilize Somalia. 

ONLF website

After watching Greg Palast’s documentary on New Orleans, one year later: Big Easy, Big Empty, I realized a few things that perplexed me while visiting.  The Housing projects outside the downtown area were not damaged by the floods, however residents of this huge housing project were locked out of their apartments.  The reason?  Years of wanting to get rid of the poor in this district to free up the property for expensive rental units.   His report brings out many frustrations I felt in New Orleans.