bubble - a thin film of money, guarantees, and financial dependencies inflated
by consumer confidence
Napalm has been talking about the housing bubble, and while it's a sad, sad thought (this being another indication of an extremely lengthy recession/depression/deflation I see occurring), it's also an encouraging thought that once the bubble bursts, we're likely to be able to afford as much home as we need. In a family with three adults, two kids, two animals, and an absolutely necessary computer lab, we really need room.
Or rather, rooms. A five bedroom house would be totally swell, but likely still outside reach even with a burst bubble. But a three bedroom house would work just fine if it has the kind of configuration I see rather often, where there is a living room apart from a "family room" or a "great room", and where there is also a separate dining room as well. The lab need not be secluded space, but it also must not pre-empt the existence of a dining room table.
The thing I wonder about is whether the bubble can be caused to burst on purpose. All one would really need to do would be to replicate what caused the bursting of the dot-com bubble - just talk about the possibility. Then start talking about the possibility becoming a probability. Then start talking like it's begun.
I watched the dot-com burst in horror, and it was a horror because I could see that it was happening for no discernable reason. No event occurred. It's not like there was a fire or a strike or a collapse of a small nation setting off a chain reaction. All that happened was that people started to get a little cautious. And when other people saw those people get cautious, they got cautious too. Next thing you know, consumer confidence is dropping, and so is the market. Kaboom!
Looking back now, I understand it better. It's like in D&D when it occurs to someone to say, "I disbelieve the illusion." Some people who should have been skeptical all along started GETTING skeptical, and it was seen as a drastic change. And then everybody was skeptical. I couldn't believe it. The layoffs started happening, and I was pissed off at people for letting a mass mental condition wreck our economy. So anyway, looking back now, it's obvious that releasing the pressure slowly would have been healthy, but that never happened, and so there was a burst.
According to what I'm seeing, this real estate bubble is too big for the swelling to go down gently. It's not a matter of if, but when. If that's the case, would the responsible thing be to try and make it happen? You know, like a spinal tap to relieve cerebral swelling? It wouldn't be hard; just start talking. Talk with people who know more people. Sooner or later the talk will reach the ears of someone who can reach thousands, who will then also talk.
People will start saying to each other, "Yeah, I really want to buy a house, but let's wait until after the bubble bursts." So, what if lots of people wait. Lots and lots of people?
And there are other reasons to wait, anyway. Thanks to all the new financial demands on state and local governments due to the 9/11 attacks, as well as massive lost revenue in the wake of the dot-com bust, these governments are incurring massive deficits. Many of them are under legal compulsion to deliver a balanced budget and they are tightened night unto death. Where's the rescue money going to come from?
Property taxes, and tons of them. I am hearing about increases in property taxes which are so great that they totally wipe out the benefit of all that low-rate refinancing that's been going on. Not only that, but while interest rates have been so low, homebuyers have been buying much more house than they could otherwise afford. More asset value equals higher taxation. Kabam!
So would that be bad, or good? Or neither, really? The burst is going to be very bad for a lot of people, a lot of regular people, but is it any better or worse to get it over with quickly?
