This was a surprise? Bush has been hiding numbers and debt (even from Congress), and artificially shoring up the economy. Of course it's going to have repurcussions. What does he care? LOL

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'Cave ne ante ullas catapultas ambules' -unknown

I still can't understand why you believe that real estate has no inherent value. If real estate doesn't have inherent value than nothing does. Do you think anything has inherent value? Gold?

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"George W. Bush surrounds himself with smart people the way a hole surrounds itself with a donut." —Dennis Miller

No, he doesn't:

But I am in full agreement with Mr. Franklin on this one. You cannot ignore the facts, and the facts tell us that housing prices in the Northeast (the most populated area of the country) are WAY too high. Case in point. In 1993 my parents' home cost $150,000 in a distant suburb of Boston. Now the home is worth over twice that amount, in a little over a decade. This isn't normal inflation we are dealing with here, it's something much more unnatural, and it cannot last forever. The same sort of thing happened in Japan during the 90's, and it caused a VERY long recession. I hate to say it, but it really looks like we are dealing with a very similar scenario...

Housing prices in my section of town are, in my humble opinion, artificially inflated. This rise in prices is being driven by two things...perceived value and good schools. Unfortunately, the schools in my particular school district are pretty inconsistent. Housing prices are largely driven by the schools that serve each area.

So, my home has almost doubled in value in the past 6 years, a pretty amazing return on the investment. Even after paying off my deadbeat ex, I still have a significant amount of equity in my home. Most folks who are presently in houses don't have any plan to move, so a huge drop in housing values would impact mainly those who have purchased investment properties or who will be moving in the near future and might find themselves upside down because they *over bought* with a low down payment and excessive household expenses.

My bro and sis in law just paid, IMO, way too much for a new house, but they both have good stable jobs and don't plan to move anytime soon (like in the next 10 years), so I suppose that even if the guts are punched out of our housing market, they'll be fine.

The same holds true for me, I have no plans to move and even if my home lost 50% of it's value on paper, I'd still be okay because I view it as a long-term investment. The same holds true with my 401k. It lost alot of value immediately following 9/11, but aside from my Delta stocks everything in my portfolio has increased over 2001 levels and I've still made money. Of course, I have virtually no debt (being from the old school frame of reference where credit card debt is evil), the only money I owe anyone is my house....

So, the two issues that will come into play are the folks who are in over their heads in debt or who are making risky investments, and I forget who said it, but what really hurt us back in the 80s was rampant inflation and a huge rise in the interest rates, which put alot of folks in those balloon or flexible interest rate mortgages on the streets (and I saw alot of them in my area because I worked for HUD at the time in the section that dealt with people who were being foreclosed on, this was back in 1986-88 and I was a lowly secretary working her way through college)....

Americans have increasingly become pretty stupid and short-sighted, though. We overspend, don't save, and generally aren't into delayed gratification. That's now how I was raised, so when I bought the house originally, I got a 15 year mortgage even though that meant I've had to do without some stuff (like a new car every other year) so I could pay it off faster. A major economic course correction like this one would hurt the people who haven't exercised alot of fiscal common sense, and they may well suffer, but on the other hand, I'm not sure how sympathetic I feel towards their suffering, or how would be the fault of the gummint, or how inclined I am to bail them out.

Catz

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Palin/McCain - '08

who will suffer big time. Especially people in interest only type loans who bought houses they could not afford in "bubble" areas. For people who plan to live in their house awhile and have traditional mortages, however, it will be OK.

PJ-

Nothing has inherent value. Nothing. Everything is worth what someone is willing to pay for it and nothing more. Things that had great value in the past aren't worth much today (salt was worth more than gold in the Middle Ages). Likewise, things that are worth a great deal now were not deemed valuable at all in the past (lumber). In Central American Indian cultures gold was near worthless. It was everywhere and they used it for everything, but never really thought about it. However, it also got them killed because it WAS worth something to Europe. In many cultures land is only worth what you can grow on it. The land itself is not considered to be worth anything. Now, I will agree that nearly everything can be sold, so most things have a value attached to them, particularly in a capitalist economy. But their value is only based on people's perceived need for the item, not on any value residing within the item itself.

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I wasn't born with enough middle fingers.

"Americans have increasingly become pretty stupid and short-sighted, though. We overspend, don't save, and generally aren't into delayed gratification. That's now how I was raised, so when I bought the house originally, I got a 15 year mortgage even though that meant I've had to do without some stuff (like a new car every other year) so I could pay it off faster. A major economic course correction like this one would hurt the people who haven't exercised alot of fiscal common sense, and they may well suffer, but on the other hand, I'm not sure how sympathetic I feel towards their suffering, or how would be the fault of the gummint, or how inclined I am to bail them out. "

I agree with that completely...except I am more inclined to help people; preferably in the form of education. Why is it that we do not teach our high school students the realities of practical financial management?

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'Cave ne ante ullas catapultas ambules' -unknown

Why financial areas aren't generally taught is that theres a vested interest in not teaching it.
For accountants (myself included), and other financial services providers to teach everyone how to do finances would take time and effort, and undermine our own market.
Which would be kinda dumb.

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"Better to die on you feet than live on your knees" - Emilio Zapata

No-load mutual funds, software tax packages and online discount brokers have probably taken a bigger bite out of the retail financial services field than a more educated public would. My guess would be that an educated public might be more inclined use those services, as they'd understand the need to save and invest (though I hear saved money will not only burn a hole in your pocket, it will make you go blind and grow hair on your palms... I might have that mixed up with something else ).

You can easily teach someone how to write a real estate contract. You can easily teach someone how to execute a stock trade or write a covered call. You can teach them how to post a pay or quit notice, or file for an eviction - even defeat a deadbeat in court.

The one thing you can't teach is that which is most important: discipline.

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"Tweeter was a Boyscout before she went to Vietnam and found out the hard way... nobody gives a d@mn."

Though accountants haven't really suffered. Theres greater demand now than ever it seems.

As to discipline. I think your right.
Most people when the paycheck comes rush out to spend it.
Plenty of smart people are poor because they don't understand the costs there incurring everyday, and not putting money in assets.

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"Better to die on you feet than live on your knees" - Emilio Zapata