Real Estate Bubble

[lentinman]

Kipp:

Very good article. I had never seen the perpetual motion machine analogy before with respect to cheap credit. Also, the chart on total credit market debt as a percent of GDP is a classic!! I reposted that chart below.

http://img33.exs.cx/img33/2097/DebtBubble2.gif

Believe me, I lived in the depression. Maybe not the national depression of the 30's, but my own family private depression of the 60's. Even so, I didn't realize how poor I was. But, one thing is for sure. I never forgot! And, I live as though I only have $27.14 cents to my name - assuming that can be squared with any investing at all in microcaps.

People don't have a clue about how rich we are. Nor do they have a clue about what props that richness up. Nor do they have a clue about the fragility of it. They just don't understand that all we have done is have a big party based on incredible amounts of free money (borrowed). Not only can't you borrow free money forever, but EVENTUALLY you have to actually PAY IT BACK!!!!

People are in total denial - just as any addict is. What makes it worse here than in most addictions is that everything they do is reinforced around them. In most addictions, the rest of the world around you is telling you not to do it.

I consider our circumstances hopeless. The only question is how bad it will be and for how long.

Len