Go to PDF Version | Go to Recent Issues
To save time in the future, you may select one of the preferences below. You may update your eIBD preferences at any time by going into My IBD and selecting Update Your eIBD Preferences.
Set Web-Based Version as Default Set PDF Version as Default Set Recent Issues as Default
Get QuoteSearch Site
Daily Graphs Online
View Enlarged Image
The 2008 financial crash originated with a housing bubble.
Not long ago, the cheap-money policies of the Federal Reserve, the infusion of trillions of dollars in new foreign investment, and the misguided policies of Freddie Mac and Fannie Mae all conspired to extend to millions of Americans lots of easy cash for inflated houses that they could hardly afford.
Owning a house was seen as a "right" rather than the just rewards of household sacrifice, delayed gratification and budgetary discipline.
Builders, lenders, realtors and bureaucrats all got in on the easy-money Ponzi scheme — until a few noticed that the emperor had no clothes and that rather pedestrian homes were hardly worth what unqualified purchasers had paid for them.
Financial hysteria followed when shaky borrowers began to miss exorbitant mortgage payments, walked away, and lenders panicked. The subsequent meltdown is history.
There is a similar pension bubble rising as well. There is perhaps as much as $6 trillion owed in retirement pledges to Americans, $500 billion in California alone. That tab under present conditions simply cannot be met.
For the last 30 years, politicians outbid each other to offer more lavish retirement packages to union members and public employees — more eager for their votes than for ensuring the payment of what they had promised. Receiving a generous retirement package was considered a right rather than an investment predicated on past savings coupled with modest interest and dividends.
There may already be an immediate $1 trillion shortfall in meeting what is owed current retirees. Pensioners on the receiving end are becoming more numerous, older and more affluent, while the younger workers on the paying end are becoming less numerous and poorer.
At some point, a city, a state or perhaps the Social Security system itself is going to announce there is no more money. Then, if there is not another financial crisis and Wall Street meltdown, the fantasy will end with workers paying higher contributions, retiring later and receiving less.
Then there is the higher-education bubble, as collective student debt nears $1 trillion with no guarantee that it will be paid back. Lots of poor college students and their strapped parents are floating huge government-subsidized student loans to pay for ever more costly bachelor's degrees that no longer ensure that the recipients are either well educated, will find a job upon graduation or, if employed, will be better-paid than the vocationally trained.
Who doesn't love a democratic revolution? Who is not moved by the renunciation of fear and the reclamation of dignity in the streets of Cairo and Alexandria? The worldwide euphoria that has greeted the Egyptian uprising is understandable. All revolutions are blissful in the first days. The romance ...
State and local governments face financial difficulties in 2011 and 2012 more severe than they have seen in generations. Pessimists predict major municipal or even state bankruptcies. Optimists insist that, while serious budget problems will increase rather than ease, governments will skirt default ...
Despite the old saying, "Don't cry over spilled milk," the Environmental Protection Agency is doing just that. We all understand why the Environmental Protection Agency was given the power to issue regulations to guard against oil spills, such as that of the Exxon Valdez in Alaska or the more ...
In spite of talking about freezing government spending, President Obama reminded everyone during the State of the Union just how out of touch he is about the defining issue of our time — the fiscal dysfunction that threatens to rob future generations of today's living standards and ...
The November election sent a clear message to Washington: less government, less debt, less spending. President Obama certainly heard it, but judging from his State of the Union address, he doesn't believe a word of it. The people say they want cuts? Sure they do — in the abstract. But any ...
Posted By: Ellman(680) on 2/5/2011 | 1:01 AM ET
When the water pressure becomes too intense the pipes will burst. Our pipes are near bursting and our 'leaders' are the ones intesifying the pressure. When the rupture finally occurs it is not they that will suffer from the flooding but the rest of us. They are beyond 'advice'. They are incorrigible and reckless. And there is nothing we can do about it!
Register
Broad diversification is often a hedge for ignorance.
Get QuoteSearch Site
Read Full Article »
