At the ripe old age of "Nearly Fifty," all I can do is just sit here and shake my head at the current lamestream media hysteria and public uproar over the goings on on Wall Street and the latest round of so called "Bank failures."
Add this on top of Bush administration/global warming induced killer hurricanes on the Gulf Coast and $5.00 a gallon gasoline, and one could be inclined to think that Jesus had been seen putting his carry-on bag into the airliner's overhead compartment as he boards his return flight from Heaven or possibly that people were reported to be strapping on ice skates down in Hades.
Yes, I could see where those that are younger than me or otherwise uninformed could be looking around under their bed and in their closets for evil government regulators or greedy gas station owners lurking in the shadows--intent on stealing their last dollar intended to buy
For instance:
Remember when we had "stagflation" in the late 1970's during President Carter's tenure, and the interest rates, according to this web site, were at nearly NINETEEN PERCENT as the prime rate rose up to nearly 21%?
Talk about the pleasure and pain of home ownership, if you don't believe me just take a look at this chart:
See what I mean?
OK, at the risk of boring everybody to death I'm gonna do a little math.
Say that today you want to buy a fairly modest home, so you run out to the bank and ask them for a $100,000 loan to go with the $15,000 your old grandma left you last year when she went to be with Grandpa.
Assuming that you have good work history and even AVERAGE credit, you're looking at getting a 30 year mortgage at somewhere less than 6.5% with low points, and your monthly payment would be about $632.00 for principal and interest each month according to this mortgage payment calculator website.
Add on your escrow payments for PMI, taxes, and homeowners' insurance, and I'm pretty sure that you'd soon be grilling burgers and chasing the dog in your own little slice of suburbia for about $750 per month.
Such a deal...
Now let's pretend that President "Jimmuh" Carter is president and you've just graduated from college, got that new job and spouse, and since it's almost 30 years ago on the calendar you want to purchase a house that only costs $75,000 new.
Using the same Mortgage calculator web site, in 1979 you'd be looking at handing over a whopping $1,191.67 each month. Adding in the tax and insurance escrow and you're looking at nearly THIRTEEN HUNDRED BUCKS A MONTH FOR A STARTER HOME.
(For comparison, in 1979 a $100,000 house would cost you $1,750 a month...and increase of $1000 over today's mortgage rates.)
Can you imagine what those mortgage costs did to the housing market in the late 1970's?
If you worked in the Mortgage Banking business or built houses for a living I'm pretty sure you lost your ass in the process, and let me remind you that a DEMOCRAT frm the great state of GEORGIA was in charge of things at the time.
Funny thing.
The cost of money doesn't go up when no one is borrowing money.
It fact, it actually goes up as demand increases, and back in the late 1970's the available money supply was being sucked up by YOUR GOVERNMENT spending it on handouts, with business competing for what was left over getting the buildings and equipment in place for the Reagan/Bush/Clinton technology boom.
And another thing, if the government hadn't have been able to hit the highest income earners of that day with tax rates upwards of SEVENTY PERCENT they never could have been able to pay their own interest rates to finance their spending.
No ladies and gentlemen, what we're witnessing today is simply another boom and bust cycle in real estate, banking, and Wall Street.
Pick your reason, act suprised, but I have to remind everyone that it's happened before and it will happen again. I elect to learn something from the pain and try not to let it happen again as a result.
Remember "Black Monday", October 19, 1987, when the market suffered it's largest one day loss in history--with the Dow Jones Industrial Average crashing down from a little over 2700 to around 1700 in one day (that would be a loss of over 35% for those of you that went to Georgia or Troy State.)
Here's the map of that miserable financial journey:
If you listened to the news, the next day you would have thought that the world had ended, and people were running around screaming and pulling their hair out and a whole bunch of assholes in $1000 suits working on Wall Street drove home that day in their BMW's and Mercedes thinking they were penny-less, and in many times actually jobless.
Not to worry, because the ones that left the "financial services" business were replaced with guys that came along just in time to steal five figures of MY MONEY in the the mid and late 1990's in the IPO debacle as Clinton's Technology bubble burst.
SSDD
That lesson was painfully learned, and today as a result of that and a few other experiences I'm just plain "bubbled out", but 'nother funny thing...
I, personally, have learned how to successfully employ the old axiom "buy low and sell high."
I sold in Mexico Beach before the current bust in resort property values hit, and I bought here on the banks of the Mighty Tennessee River as the prices held steady in the local market.
And another thing. Unlike some pockets in the national real estate market like Florida and NY and the West Coast, things are still moving along quite well here, as they are in the lower cost starter home market on the coast of Georgia.
So here I am, insulated from the current financial crisis by a little luck and a good deal of PLANNING. You can do it too if you'll just stop listening to the experts trying to sell you something and buy the things your brain and guts tell you you actually NEED and are in your best interest.
Now if I can just find a a car that gets 100 MPG to drive when we do seven hour road trips burning $4 gas, my life will truly be complete.
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