The Perfect Financial Storm? Worries of a seller in a housing slump

November 19, 2007 · Filed Under Business News, Economy, Opinion

When I was a boy all I ever heard was how great America was, how lucky I was to be born here, and how lucky for the world America was there for it in WWII. This self worship still can be found in many if not most places in our country. Don’t get me wrong I wouldn’t live anywhere else. But I’m afraid we’re about to get our “comeupins”.

Many things had to happen before the US would be vulnerable enough to get really hurt bad in the next few years.

1) Since WWII Americans have had the good life, first from being the only factories standing after most of the world had been blown to bits, then by borrowing money and spending it as if there’s no tomorrow. Now we’re upside down on many of our homes and into the credit cards in a big way.

2) In an attempt to mine the human wealth of Asia, US companies as well as European ones has devoted enough capital, plant and equipment, and management to revive our countries twice over to build up a producer/consumer block so powerful as to dictate the US foreign and fiscal policy for decades to come.

3) A refusal of the petroleum industry for the last 40 years to build more refinery plants in spite of increasing demand then say at this point they can’t reduce prices, it’s a demand problem of emerging nations needing more oil.

4) The formation of the Euro, the first mega currency capable of providing world liquidity if called on to do so. The Europeans are super savers compared to the US and therefore a tight fisted approach works well for a steady currency. One point to remember is their CEOs don’t make 100 to 1000 times an average employee.

5) A cold war/ arms race that ended up destroying the Soviet Union, we ended up a debtor nation by the way in the same war.

It used to be not that long ago that “if America coughed the rest of the world caught a cold” now it’s more like “if America has pneumonia the rest of the world would suffer from sniffles.” It’s easy to point out various bad guys in this situation but we all had something to do with if we’re honest about it.

Dropping my asking price for my house each month in response to others dropping their price, I wonder what will this all come to. Since 70% of our economy is American consumers, what would happen if we can’t borrow on the equity in our homes? What spending will I do if I can’t sell the thing for more than I owe, forget having a down for another place?

If China backs off buying US T-bills and gas prices go to $5.00 or more, the world just might get the last laugh after all.

By Lloyd H. Frye
Op-Ed Columnist
The Hot Joints