The Last Man Standing - America - Mark in San Diego

The old saying goes - "in the land of the blind, the one eyed man is king."  This morning, published report suggest that European banks still hold more bad USA housing debt than the total  bad debt from Greece, Ireland, Spain and Italy combined.  HSBC announced that they will need to write off more bad loans in the US because the number of "strategic defaults" (people walking away from loans), continues to increase.  To make matters worse, the front page of the New York Times business page featured two persons who did walk away, and how great this was for them - certainly an article which will encourage more defaults.  To their credit, Citibank, BofA, etc. took more drastic steps than their European counterparts and were more aggressive in these write-downs (with the help of the US government), so their balance sheets are actually in much better shape.

But back to the American economy - by this time, the dollar should be worth about 3 cents on the international market with Uncle Ben's printing press in overtime, but the USA seems to be the "one eye man" in this case,and perhaps historians will actually vindicate Bernake, Hank Paulson, and even the hapless Obama for at least taking decisive action to "save" the economy - something European leaders can only dream of.  Perhaps this mountain of paper-money will come back to haunt us some day, but there is actually the possibility the US could grow out of this mess - time will tell.

The DOW is back to near 12,000 on a good day (one in which there is no Euro disaster), and companies have never been so cash rich - even unemployment is showing signs of coming down, as American finally gets used to the New Reality Economy.

I am sure my counterpart on this Blog will have a different opinion, but for my two cents, I put my money on the USA this time around!

Pigs in Finery - The end of the American Dream (nightmare)

One of my oldest and dearest friends, and basically my mentor for the past 40 years, once made the comment about "pigs in finery" to describe those people who were living on credit, drove a new car, lived in a new McMansion, and lived a lifestyle two income levels above their modest salary.  She said this not in the 2000's, but way back in the 1980's.  Of course during the housing boom these "pigs in finery" became the norm, and I met people who made less than 70K a year (household income) who had a new house, new car, motorcycles, and every other adult toy one could think of.  How did they do this?  HELOCS - (home equity line of credit).  Every time their modets house went up 50K, they would refinance and buy some more toys.

Now that the mother of all bubbles has burst, these are the very people who are the most shrill - they are literally small children with their toys taken away, and blame everyone but themselves.  Personally, I am glad glad glad that these people are screaming and crying.  I think the current economy is great - companies are making money, and many people are at least making an attempt to save.  I just finished an article by "Mister Mortgage" (google him) that said, "it is a myth that banks are not lending"  The fact is there are not enough credit-worthy borrowers.  Do we really want to go back to 2005 when anyone with a pulse could get a 200K loan??  

Where is it in the Constitution that says everyone needs to buy a house and a new car?  Let us try to NOT re-inflate the economy, but accept the present time as the "new norm" and deal with it!