The Great Recession – Are We Out of the Woods?
NO, In Fact Don’t Get Comfortable
The "American Way" has some serious systemic problems
This Great Recession in which we find ourselves has had an enormous impact on many facets of our lives. If you’re paying attention, you know that the “American Way” may not have been as affluent as it appeared. Certainly, we know just how over-inflated the housing market became. As a Realtor® I believe it’s imperative that we understand the underlying causes of this recession and, more importantly, we need to consider what’s going to happen in the coming years. Should we be optimistic given the rise in the Stock Market this last year? Should we expect home prices to rise? Will the job market improve?
7 “Inconvenient” Economic Realities to Ponder
Pondering the Future!
Dan Froomkin of the Huffington Post has written a powerful summary of a series of articles from the Nieman Watchdog website which highlight 7 things about the economy that we should be worried about. He writes:
“A common theme underlying them all is that while our leaders — and the voices of conventional wisdom — treat our current recession as cyclical in nature, and are essentially mostly just waiting around for growth to pick up again, there is plenty of reason to believe that this crisis was instead an expression of structural problems. And if that is so, and we don’t take the proper action, then the wait could be a long one.“
I highly recommend you read the article entitled: Seven Things about the Economy that Everyone Should Be More Worried About than They Are.
Here is a summary of the 7 ideas:
- The middle class may never be the same again – Lost wealth + high debt
- The recovery could take a really long time – The recovery has been largely government funded and this won’t last
- The recovery could only be temporary – What will spur new growth?
- Then what? We don’t have the tools to get out of a recession – we can’t keep borrowing forever or lower interest rats any lower
- The “very real” people in Washington are still obsessed about the deficit – let’s not make the same mistake made during the Great Depression
- Whatever is making the stock market go up could go away – where’s all the money coming from to fuel the current rise in the market?
- The hugely irresponsible financial sector remains unchastened – the banks, so far, have been successful in dodging regulation
Why is this important to talk about on a real estate blog? Well, it was irrational speculation that drove the housing bubble that helped bring our economy to its knees. As we face the future, I think it’s important for anyone buying or selling property to think carefully about what long-term consequences there are in being in this difficult market.
