It’s like one of those TV shows where after an entire season in which everything goes wrong for the star, he finally awakes to find it was all just a bad dream–everything was just fine!
Only, in this case, what we have are government officials who have been saying repeatedly that the economy is not as bad as we think but now, as if awakening from their own dream, are saying the economy is actually a lot worse than anyone thought!
Jesus. Who wants to watch a show that has an unhappy ending?
Apparently, we all have to watch it and, worse yet, live through it!
What began as a real estate debacle is now a full grown global economic crisis.
A New York Times story out of Washington says that a consensus has been reached among federal officials that , as the Times puts it, “the turmoil plaguing the housing and financial markets is likely to spill deep into 2009…”
Foreclosures? Want to See Foreclosures? You Ain’t Seen Nothin’ Yet!
No sir. Treasury Secretary Henry Paulson is now saying that even if a comprehensive housing relief bill is passed and signed into law, “many of today’s unusually high number of foreclosures are not preventable.” He estimates there will be about two and a half million more foreclosures by the time we get to the New Year.
So, what is being done?
Congress appears on the verge of passing some type of legislation aimed at giving a helping hand to homeowners in trouble, only, according to some experts, that hand only has one finger and my guess is, it is the middle one.
The nonpartisan (can there really be such a thing??) Congressional Budget Office has done some research which is, after all, what it does. And, according to Reuters, it found the pending legislation “would do little to ease the housing crisis.”
That’s just great.
Who Was Watching The Watchers?
Apparently no one was watching them. A review by the Securities and Exchange Commission has concluded that the three main credit rating agencies–Moody’s Investors, Standard & Poor’s and Fitch Ratings–failed in their primary responsibility to make sure there were no conflicts of interest in awarding high ratings to securities that were destined to tank because they were backed by—–subprime mortgages!
Putting The Dots Together
Here’s pretty much what it comes down to–if you are thinking about investing in real estate and are operating on the assumption that things could only get better in the not too distant future, then you operating with a wrong assumption and need to be fully aware that you are before shelling out any of your hard earned but inflation eroded cash.
I have said it before and will say it again: If you do NOT know what you are doing when it comes to real estate investments, or do not have someone with enormous experience guiding your hand, forget about it. Use your money to pay down credit card and other debt. Wait until the wind stops blowing and you can truly evaluate what the damage has been.
Whenever I have said this in the past there is always some real estate broker who gets all flushed and writes something to the effect that this is a golden time to invest in real estate because prices are so low.
Well, you know what….if they think this is such a great time to invest in real estate, ask them to loan you the money and see how fast they stop returning emails!
When federal officials start saying things are really worse than anyone thought, that should make the hairs on your body stand up and fall out.
By any measure, we are in for a very rough flight. And, what do you do during a rough flight? Yep. You stay seated and keep your seat belt on.
Think of this as a sort of metaphor for real estate investing now–only, instead of staying seated, what you want to do is stay solvent by keeping your money out of real estate investing UNLESS YOU KNOW WHAT YOU ARE DOING! (The bold letters are to keep real estate brokers somewhat happy so they won’t write nasty comments.)