POP Goes the Bubble!

Some interesting observations from Mike Whitney at CounterPunch.org.

Here's an excerpt (find the entire story at this link):

The Federal Reserve has managed to keep the economy running on fumes by dropping rates 12 times to a rock bottom 1% after the fall of the stock market (another Greenspan fiasco which cost the American people $7 trillion) It was basically "free money" loaned out to keep the country limping along (and to facilitate Bush's tax cuts) while millions of Americans tried to recoup from their losses. Regrettably, the cheap money and shaky loans simply created an even bigger and more lethal bubble that is following the same trajectory as the Hindenburg.

Ka-booom!

Adding insult to injury, the Federal Reserve announced 2 weeks ago that new steps will be taken to regulate low-interest, high-risk loans. In the third quarter a full 33% of first-time home buyers took advantage of "non-traditional" mortgages. ("No interest" or "ARMS" adjustable rate mortgages) Try to imagine the chilling effect on the housing market when 33% of first-time homeowners are removed from the pool of potential buyers?

Still think you"ll be able to sell your house at a profit?

Jittery Americans don't need a crystal ball to spot the shipwreck looming just on the horizon. The last remaining droplets of prosperity are trickling from the ailing economy and Greenspan's 18 year quest to flatten the American middle class will soon be realized. 'the Economist" summarized it best when they said, 'the worldwide rise in housing prices is the biggest bubble in history. Prepare for the economic pain when it pops".

— The Boy in the Big Housing Bubble