Don't believe the hype

In my job, I get to watch a lot of financial news. My conclusion: we are being robbed blind by so called "experts" in financial markets. I have NO access to info that is not available to anyone else. Yet in the fall of 2006, I called for a decline in the housing market. Why? A little story is in order.


A friend of mine who calls herself an entrepreneur sent me an email announcing her new job as a mortgage broker. She said to call her, because she could get me a mortgage. This was about the time I was struggling to pay alimony, child support, and my rent. "No problem", she said. Flashback to the time when my ex and I bought our dreamhouse with a documented combined income over $250k, and another house and stock in our portfolio. My first colonoscopy will be less painful than the scrutiny I got from the loan officer. First alarm went off.

Next was article in local rag about the poor fellow who was losing his $500k house. he was a carpenter, and his wife was a maid. He had tears in his eyes because he was losing his slice of the "American Dream". What? How does a carpenter and a maid afford $500k? Answer: they could not. Second alarm went off.

Next were all the talking heads talking percentages versus hard numbers. Of course only 2% of the loans were going bad. However, that translated into 2 million homes that were being lost. Good luck maintaining your home price when you have an empty house-or two or ten-in your development. As I drove to see my girls, the "For Sale" signs bloomed -first like dandelions, then like rhodedendrons(reference being evergreens). Yet Ben Bernanke, Hank Paulson, and many talking heads were signing "Don't Worry, Be Happy"

And that, boys and girls, was when I knew the economy was in trouble.