Juggling Dynamite

As unfunded liabilities and debts mount, pressure to cut services and raise property taxes will continue and increasingly deter potential buyers from cash-strapped areas. (Indeed finding an area that is not cash-strapped today is no small feat!)

Not good for current owners who will need or want to sell real estate, especially given the glut of expensive homes in most areas.  See: This suburb has too many $1 million-plus homes for sale. Chicago is certainly not alone in this plight.  Also see:  Toronto home-buyers beware and Someone is spending your pension money for a bit of necessary scope and scale on funding deficits today. Bankers have extracted savings and left iou’s in empty tills all over the world. It’s everywhere.  And still we are allowing them to run the show… so far.  We have to change this system!

This Fox clip is certainly on point re Illinois, but laughable in its assertion that Democrats have been worse financial managers than Republicans in this mess. Unfortunately financial mangle-ment the past couple of decades has been pretty much ubiquitous, transcending party and territory lines…

Illinois Policy Institute Vice President Diana Rickert and United Advisors Chief Market Strategist Scott Martin on the budget crisis in Illinois. Here is a direct video link.

Marc Faber, publisher of the “Gloom, Boom and Doom” Report, examines China’s economic slowdown and what he sees as an “epic” credit bubble in the nation. Here is a direct video link.

For more important insight on the weight of debt hampering the US corporate sector today see: This is why it’s going to get even tougher.

Rock bottom rates, asset bubbles and capital fleeing Asia, we have seen this movie before. Prices at a “permanently high plateau” anyone?

Our family has been priced out! Has the Bay Area gone crazy? Real estate prices have doubled in the last few years, a tent in the backyard can rent for $900/month, foreign investors are driving up prices, evictions and rent hikes are everywhere, people are commuting longer than ever, the middle class is disappearing, empty investment homes are everywhere, and locals are leaving in record numbers. The worst part? Some people are calling it “progress”. Here is a direct video link.

I would take exception with the real estate agent’s contention near the end of the film that you just need to have a higher IQ and better education today to be able to afford a home. Massive leverage and debt driven asset bubbles typically make participants look brilliant on the way up, and then really dumb on the way down. Stay tuned.

For more perspective on the extent of the most recent tech bubble from an insider see Venture Outlook 2016:

“…looking out into the 2016 horizon, what do I see? Perhaps I would call it “Mourning in VC [Venture Capital]” as in mourning for the days of rational behavior. There is nobody to blame for this abandonment of common sense – it is simply the market being the market and we’re doomed to repeat history. Boom and bust.”