< meta name="DC.Date.Valid.End" content="20050825"> Amendment Nine: Stay Calm

Wednesday, November 24, 2004

Stay Calm

Roach's big bad bear comments apparently have generated quite a stir in blogland. Everyone needs to just chill the fuck out though. The wolf-man is on the way...

Yes there are some pretty bad storms on the economic horizon. Yes bankruptcy attorneys are licking their chops. And yes, inflation, even a little wild inflation, is a distinct probablity.

But this isn't going to be the end of world. There will be economic pain, and it will be felt by a broader cross-section of society than the Bush-II recession. The doomsday scenarios many of you are chatting about right now are highly unlikely. A little bit of inflation isn't going to stop the music, it will just change the tune.

However, there is a very real possibility that record bankruptcies will cause many lenders whose sole collateral is over-encumbered property (over-encumbered because real estate, like all forms of collateral, is subject to market valuations and in an inflationary economy the equity in households is eaten away by rising rates) to fail. Yes, thats right, they will fail. Banks, where all the money is right, could fail across the country. A bail-out of FNM might very well be required. And homeowners may find themselves in an impossible position. I urge each of you to take seriously the very real need for debt relief, Mitya K's further explanation of it, and to start chatting about it, it will keep the consumer and the creditor in business which is good for us all.

Happy Thanksgiving!