Thursday, December 29, 2005

MTV Cribs, Bling, and...the housing bubble?!?!?


I got an e-mail from a reader today that posed the following question to me:

Do you think there is a direct correlation between MTV Cribs and the housing bubble?

I have thought about the very same thing on many the MTV Cribs, pimp-my-ride, bling-bling attitude IS having an affect on society. I was talking with a title rep friend today, and they mentioned the "bling factor" that everybody is striving for and I said the same thing: that everybody wants to "live" like "mtv cribs" but they don't have their albums on the charts yet, movies in theatres yet, or play for a pro team yet. On a side note: the title rep didn't like the financial situation that many people were getting into, but they said the same thing that soooo many others say "if we don't do the deal, somebody else will".

I don't think MTV Cribs or any of those things CAUSED the bubble, but they are definitely influencing the perspective of generations of Americans. I think it extends to way more than housing's the cars, big chrome wheels, tv's in the cars, Crystal in the fridge, etc. It is a "look" that you have to have if you want to be "somebody". MTV Cribs even has their own line of home furnishings...for those who want to "live like a celebrity".

I enjoy watching Cribs, as I enjoy flipping through a Robb Report. There has always been an interest in "lifestyles of the rich and famous" and there always will be. The difference is that living that "lifestyle" has become more "attainable" through lax credit standards. Years ago, if you wanted a TV, you saved your money, and bought a TV. You didn't make buying a TV a 4-5 year process. I happened to be in Los Angeles recently and heard an add on the radio where you can lease and/or finance wheels for your car! Call me crazy, but if you have to lease the wheels to put on your car, then I think your priorities are slightly out of whack. But hey, at least you are living a "pimp-my-ride" lifestyle!

Almost every single person in MTV cribs...says "you ain't a playa without a plasma on the wall". I just happened to be at Best Buy this week, and EVERY lcd and plasma tv has a little sticker with a bow on it "take me home for $47/52/77/120 a month" "no interest for 18 months on TV's $299 and up" etc. Sure, many of those MTV Cribs were done by a professional designers, for millionaire sports stars, actors, or recording artists. They can actually afford to pay cash for the TV, and not finance it over 3-5 years. Debt is what happens when people try to live a life they cannot afford today. Everybody wants to live like a millionaire, but does anybody really want to do the work, or wait the time it takes to REALLY be able to afford these things?!?!? Why wait until tomorrow, when you can finance today?!?!?

It is even having an impact on childrens toys. I happened to be in Target the other day to get some detergent and other necessities. There was a display in the toy section for remote control DUB cars. If you don't know what DUB Magazine is, here is the link. Anyway, these cars are all "pimped" out with big chrome wheels, lowered, and all the bling you can imagine. Check the 2 links I just highlighted to see what is showing up in the toy section. There is nothing wrong with the cars, bling, etc. in and of itself, it just becomes a problem when people make it a priority in life, and will go into great debt to "look" like they are a "baller".

Been to Vegas lately?!?!? All the young people "ballin" with their expensive clothes and jewelry, pimped out cars, and thowing big money down on the tables and $400 VIP bottle service in the "hot" clubs. Heck, a drink at most bars now is $8-16 bucks! I know there are a lot of young people that are making lots of money (especially after the stock boom, and now real estate boom), but I have a feeling that a majority of people in their 20's are not millionaires. I have seen some of my brokers that have made a big montly check, and head to Vegas to drop 3-5k in a weekend of partying. The problem is that they don't have health insurance or a long term plan. I know this, because I'm starting to sense some desperation with some brokers (mostly the younger ones) that thought 20k a month was going to go on forever. Some are wishing they had 5k back in their savings accound, instead of memories of a great weekend.

If you haven't read or heard of the book "The Millionaire Next Door", I suggest you check it out. Here is a shameless plug on my part...but I have a link to the book on the right hand side (scroll down a little bit). I think people should check out that book if they want to see how people become REAL millionaires. Here, I'll give you a big hint: it involves living beneath or within your means, and not taking on needless debt for things like "bling".

I guess the way I was raised, is that you buy all of the "stuff" after you have taken care of the "important things" i.e. savings, insurance, investments, retirement, risk management, etc. I know that isn't popular, doesn't make for great television, but it makes for a responsible member of society. Don't get me wrong, I like all that "stuff", I just don't think it is prudent to go into high levels of debt to put on a "show" or live a lifestyle beyond your means. I am by no means perfect, and there was a time when I was younger that I financed an TV/surround/DVD system because it was at 0% interest for several months. I had the money to pay for it up front, but since it was 0%, I ended up spending a bit more than I had planned and paying for it over several months. So yes, even I was guilty of doing this...albeit when I was younger and on my own for the first time.

How are you going to feel when your taxes go up because the government decides to bail-out all the people that wanted to live an MTV Cribs lifestyle on a Gomer Pyle income?!?!? How much are you going to wish that there were more financially responsible people in this country.

So that is what I think. I don't think any of those things CAUSED the bubble, but they are definitely influencing the perspective and consumer spending of generations of Americans. Several months ago, one of my brokers was telling me that their daughter thinks she is getting an H2 when she turns 16. The thing is, she thinks she is entitled to it, and that you are a nobody without it. It seems that many children in their teens see the lifestyle, but they have no comprehension of how hard it is to really earn the 50k needed to buy a Hummer...and how old it gets spending $500-1000 a month on gas to keep it running.

I know there are many responsible parents and children out there, but I have a feeling their numbers are falling behind those of the MTV generation. If the number of people overextending themselves to finance homes, cars, and consumer "lifestyle" items is any indication, I think we will be in for trouble in the long run if we keep extending credit for everything in the world.

I know this wasn't a totally housing related post...but I think that people chasing a lifestyle is definitely contributing to the consumer spending that is being financed through this housing boom. Debt, and living beyond your means, whether through housing, lifestyle, or a combination of the two can certainly make somebody an FB.

What do you think?

I look forward to the comments...



Anonymous Anonymous said...

I'm not gonna deny that there's a lot of pathological consumerism out there, but remember, American history is littered with spasms of excess. Roaring Twenties, the Gilded Age? Hell, in my own lifetime, I don't recall the Reagan Eighties as an era of thrift and deferred gratification....

12/29/2005 2:06 PM  
Blogger SoCalMtgGuy said...


I know that investing and planning for the future is boring, but that doesn't mean we should neglect it as a country.

Again, it just goes to show that Americans must always be entertained. They need a tv at home, in the kitchen, in the car, on a phone. And the content there is delivered in short choppy cuts to keep the eyes moving and the brain "entertained".

Ever since the "get rich quick" stock market, and now RE market, you have thousands of people that are becoming accustomed to getting rich quick.

Buy a stock...wait a few set for retirement. Buy a property, wait a few months, make 6-figures.

I just have a hard time believing that will continue forever. Becoming a millionaire for most of us, is going to involve a long and steady plan.

I know that isn't cool, popular, or sells lots of "stuff", but it is what truly works.


I hear you. I too have cash stashed. I could go buy the biggest plasma TV for cash...I just can't imagine doing it. It doesn't make sense. Until you are really making huge dollars on a consistent basis, and you have the "boring" stuff taken care of, I don't think it makes sense to spend 5000 on a tv set.

The main thing that helps me keep my sanity is that I have had a few people confide in me that they aren't doing as well as they "lead on". They ask me about the market and "what is going on?". They have big lifestyles, but very little savings.

I might be wrong, but I figure if we keep doing the right things right, we will be OK in the long run.


12/29/2005 2:06 PM  
Anonymous Anonymous said...

Nice post.

Thrift will be back in style in the U.S., it's just a matter of the timing.

It is a fascinating cultural issue and begs the question of what, if anything, a government should do to influence behavior. Our current leadership has set a horrible example regarding debt (fiscal and monetary policy), and that is reflected, to some degree, in what ordinary people are doing today - the degree to which people have become comfortable with debt and speculation is really astounding.

The Millionaire Next Door was a great read - like my grandfather actually - he waited until they he was in his seventies until he bought a Cadillac, then he died two years later. I guess being in your thirties in the 1930s will scar you for life - the exact opposite of what it must be like for many thirty-somethings today.

12/29/2005 2:19 PM  
Blogger SoCalMtgGuy said...


I didn't want this to be a "moral" post, but a financial one. It IS the easy credit that is given for all of these things.

My point is that there is a major fascination with "celebrities" like I have never seen before...and people will go to great lengths to "look" like they are "somebody".


12/29/2005 3:31 PM  
Anonymous Anonymous said...

Your post is cool!! I like it!!! You are cool!! I mean it!!!

12/29/2005 4:01 PM  
Anonymous Anonymous said...

I call it the "I'm worth it" attitude, sometimes displayed by American women.

I feel out of place in places like Circuit City and Fry's. I have the money to buy some of the things on display there if I wanted to, but I don't need them. I always tell my husband there is a difference between "need" and "want".

I am happy shopping at Walmart - for day to day items that are needed, even groceries at the SuperCenter. Groceries are cheaper at Walmart than Albertsons or Safeway, even cheaper than Whole Foods (for organic stuff).

If I feel the urge to buy a new T-shirt or blouse, I buy the fabric(on sale for $1.00 / yard), and stich it myself; I cannot get myself to spend $20.00, $40.00 even $300.00 on a blouse. I cannot understand women who pay so much money for clothes. Even if your work requires you to dress well, you don't need so many suits and shoes.

I drive a 12 year old car; my co-workers make fun of me as they drive their new Honda Accords and Toyota Avalons and minivans - bought by taking out a home equity loan.

I save and save and save. For me, not spending money on unnecessary Christmas gifts gives me more joy than buying more crap at the Box-mart. Buying crap does not give you happiness or true joy.

We did purchase a new 36 inch flat screen Sony TV (I guess the analog TV, not the HDTV or digital) because our old TV died; we paid cash, and the sales guy couldn't believe we didn't buy the HDTV. He tried to convince us that all programming channels are moving to digital version, but stopped short of saying we won't see anything on ours. Guess what, we can see the digital channels on our analog TV just fine, with no convertor box needed. And we just watch the free channels (with a $20.00 antenna). We refuse to pay money to the cable / satallite company each month.

We cook all our meals at home, and rarely go out. The waitress expects 20-25% tip. I feel like asking her - do you know when was the last time someone gave me a 20-25% bonus for a task or project I completed? Never. All I get is a thank you, and here's your next project.

So, it goes.....

12/29/2005 4:29 PM  
Anonymous Anonymous said...

I've always lived way beneath my means--sometimes I feel like a fool for saving $1,000 a month "for a rainy day", but it's nice to know I have a big buffer in my bank account if I need it.

My current dilemna--trying to figure out how to maximize "medium" (3 year horizon) returns. For now, I'm buying I Bonds, even though I hate locking up money for a year. But it's sure nice to defer the interest.

12/29/2005 5:51 PM  
Anonymous Anonymous said...

Enjoy your Blog. Good commentary and humorous.

A unique "in-the-trenches" perspective:

I can't agree more about previous comments regarding the exorabatant lifestyle people live all the while drowning in debt.

My spouse and I own a small escrow company in Washington State and over the course of the past year or so, we see massive debt only to be exacerbated more by interest only loans, hybrid arms and other loan products.

We've closed hundreds of purchases/refinances. I've mentioned in previous blogs that the position people are in has moved from stupid and foolish to down right frightening.

Our country is in for a far different adjustment than in 1990. Folks, we are in a bubble and it's beginning to leak. Although I may offend the real estate community that feeds my kids, I cannot tow the line and listen to the garbage coming from National Association of Realtors anymore.

The market will become ugly and financial ramifications could be far worse than the Savings & Loan scandal of the 80's. I just hope the politicians stay out of it and the government doesn't bale the lenders out. We just need own up to the problem we created and get through it.

Blogging brethren please take my advice: live under your means.

The best to all in 2006,
Legacy Escrow Service, Inc.

12/29/2005 5:53 PM  
Blogger SoCalMtgGuy said...


Thank you very much for your honesty! I know I'm not the only one who sees how rediculous things have become.

I'm glad to have your input here!


12/29/2005 6:19 PM  
Anonymous Anonymous said...

To SoCalmtgguy-

From Legacy Escrow Service, Inc.:

Thank you for your kind words. I'm really tempted to link your Blog to our site, but I don't know if that is a noose I want around my neck.

Truth and transparency is never easy, but in the long run I know it will reap rewards, both professionally and personally.

In the meantime I'll stop in your Blog from time to time. Let me know if you'd like any commentary from an escrow perspective for future discussion.

The very best to you and your family during 2006.

Legacy Escrow Service, Inc.

12/29/2005 6:43 PM  
Blogger moonvalley said...

We just recently (after doing consumer research) bought a 50 inch Panasonic Plasma TV. We shopped around first. Bought at Best Buy for cash, then called the next day and told them that it was 500 bucks cheaper at Circuit City, we wound up getting close to 1k back.I love getting a deal.
We work in the movie industry and live in the country. We only go to LA when we need to be at the studio for meetings. We live a very low key lifestyle, and we pay cash for most everything, or use a debit card. Our Credit Card balances are kept to a minmum and paid in full every month, most everything is done through electronic banking anyway. We bought the TV because watching DVDs is our main entertainment, and it's a write off for our corporation. We rarely see a movie outside the house (we're renting)
I was raised to be frugal.I frequently will pick up an object and carry it around the store, decide I really don't need it and put it back without purchasing . Sometimes my husband thinks I carry it to an extreme. I could of course buy the thing but I don't buy something unless I need it.I believe in a small footprint.
I see many people who really can't afford doodly squat throwing money around, no savings, no health insurance, etc. I wonder sometimes what they're thinking.
There are a lot of "flippers" up here in Sonoma, tossing their paper wealth around, but the people up here who have the real money, and I am talking hundeds of millions from the wine business look like the farmers they are. They know who they are, they don't have to impress somebody.In fact one of our good friends up here buys most of his clothing at a thrift store. We were at a cocktail party at his 2 million dolllar house on Christmas Day and he answered the door in a tee-shirt that read "Happpiness is a Positive Cash Flow"
It's one of the reasons we live here and love it. No pressure, nobody trying to get me into investment condos in San Diego, or Fendi purses. After all, it's just stuff.I love what I do and I like knowing what I've got stashed away. Like beauty it's what's inside that counts.

12/29/2005 8:25 PM  
Anonymous Anonymous said...

All great comments. I want to add that I believe the government does have one important role in the cleanup of this mess, and I want comments on my suggestion for a law. I think the refinancing industry needs to be regulated such that equity loans can not be greater than the amount paid on the house plus normal appreciation (inflation + 1.5% according to NAR over 30 or 40 years of data). This would prevent excessive and unsustainable credit / paper wealth and a future bubble.


12/29/2005 11:54 PM  
Blogger Out at the peak said...

I'll go to a poker game with my friend, and I'll be frugal in some manner. My friend will then complain to everyone in the room that my yearly income is more than everyone's salary combined (in that room), and that I can afford to do x. I always try to explain that wealth preservation is important to me.

Also, many people at these poker parties have a negative attitude. They already know they are going to lose, "I'm going home after I lose $40." I guess they are just their to have fun. I have only lost once in the last 30 games. Maybe it is because I am determined that gambling is only fun if it is a wealth preservation/gain activity (only poker qualifies).

12/30/2005 1:58 AM  
Blogger txchic57 said...

"I'm Worth It" is a great advertising hook. What's sad is that it is so easy to tap into the psyche/ego of the average idiot consumer.

I find that stuff insulting and manipulative but I see how it works on most people.

I have done all my buying of things online for years now. Went into a high end mall this fall (not by choice!) for the first time in probably 5 years and was alternately shocked/overwhelmed by the sheer magnitude of "stuff" being pimped. It was sensory overload to the max. I couldn't get out of there fast enough.

12/30/2005 5:36 AM  
Anonymous Anonymous said...

Thanks for discussing an issue I have been thinking about for the past six or so years.

I used to be a professor and I was always puzzled by the fact that my students all drove better cars than I did (okay...let me be really honest...I was puzzled by the fact that they were even driving their own cars as most of them told me that they had massive student loans). They had cell phones, CD players, DVD players etc. They went away to great places on spring break and so on.

I taught at a public university where most of the students were first generation college kids. They didn’t come from wealthy families.

It took me a while to figure it all out. Part of it became clear when I realized that the university bookstore used to put credit card applications in every bag so each time the kids made a purchase, they were basically being steered toward easy credit.

The sad thing, of course, is that these kids were graduating from college with $50,000 in student loans and $10,000 in credit card debt. They were walking into jobs which paid roughly $35,000 or so. And now, of course, four years after I left teaching, I have been reading about how twenty-six year olds (my former students) are buying $400,000 condos here in the DC area where I live.

When I think about my bailing out these kids or other people who live above their means, I get pretty tense and angry. I know how difficult it is to live on a fixed income (I was a professor and left because the salary was so bad!). Now I make a very good living but I still live under my means. I still drive my little Corolla although I am surrounded by colleagues in BMWs, Lexuses and so on. I still rent because I live in DC where prices are a joke.

I am always confused by the fact that people who make less than I do and who don’t have family money are able to afford things I can’t. It was an eye-opener when a friend pointed out that most of the BMWs I see are leased and that the people who drive them could not afford to buy them. Ditto with credit cards (I pay mine off each month but I guess that is unusual in the US).

Living in DC, I have seen the most incredible excesses. The killer is that this is a government town where most people are federal employees (on a GS level, the salary tops out at $135,000—it TOPS out at this level). While I know that there are lobbyists etc. who make buckets of money here, the fact is that the federal government is still the largest employer. So, the truth is most of the people I see here driving in their BMWs, shopping at Neiman Marcus (Needless Mark-Up), Whole Foods (Whole Paycheck) etc. really can’t afford their lifestyle.

12/30/2005 7:20 AM  
Blogger Lou Minatti said...

SoCal, you should submit this to some newspapers to reprint in their editorial sections.

12/30/2005 8:12 AM  
Anonymous Anonymous said...

How are you going to feel when your taxes go up because the government decides to bail-out all the people that wanted to live an MTV Cribs lifestyle on a Gomer Pyle income?!?!?
Boy is this ever the ultimate question. Personally I really don't care if other people do stupid or short sighted things.

But the thought of being taxed to pay for this bullshit or enduring higher inflation or earning low returns on my money (due to the Fed) really pisses me off big time.

So the question is who is more politically powerful - the blingmeisters and all who serve them or the people who are financially responsible?

12/30/2005 8:52 AM  
Blogger Silver Lightning said...

I just had a great time walking on a 'secret trail' I've discovered. The scenery was awesome, no noise pollution, nothing but wildlife. Cost..$0 and I feel great after the fact. After an hour into the walk guess who appears on the trail? Two flippers! They began boasting about how they bought a new house a year ago and just moved in and caught the appreciation of the new house and are selling the old house for some good appreciation. They were so excited about their smart decision. They had $ signs in their eyes and I'm sure they had chrome wheels to match. They were trying to get me to buy their house I just didn't comment. I know this free ride is coming to a close when you meet someone out of the blue in the middle of no where and they talk about their house flipping tales.

12/30/2005 11:08 AM  
Blogger moonvalley said...

BTW My sister in law (which lives in an average house, average income) rented a limo for her daughter's 9th birthday and put dozen of her 9 year old friends in it and had the limo drive them around town for a while! And we wonder where the kids get this "i'm entitled to it" feeling.
great story, very symptomatic of what's wrong. We were in LA for a meeting with studio execs a couple of months back. We were eating at the Beverly Hills Hotel (their choice..expense account) anyway at a table across from us were a party of two year olds, having an elaborate birthday celebration for one of them. Scads of toys, waiters kissing their tiny diapered asses, they actually were more interested in the wrappings than the crap in the boxes. I'm sure they would have been just as happy in their own back yard at a picnic table..but noooooo..the mommies have to outdo each other. If these kids are partying at the BH Hotel at the age of two what the hell will they do when they're 15?

12/30/2005 12:43 PM  
Blogger moonvalley said...

Alomost forgot has anyone seen the MTV show My Super Sweet Sixteen..starring some of the most spoiled brats one could want to meet..
if you haven't seen it you've got to take a look.
The way these kids scream at their families, and demand demand demand....well no wonder it's all going to hell in a handbasket. Wonder how may parents are pulling $$$s out of their houses to financial these bacchanals

12/30/2005 12:47 PM  
Blogger moonvalley said...

sorry to be so obsessive..but this was the worst one of all...
the crank will shut up now..

12/30/2005 12:51 PM  
Blogger Contrary Guy said...

Very good stuff. Reminds me of what Jim Puplava at has typed up as a narrative: The Day After Tomorrow (in a financial sense),

He describes a combination of consumer motivations, political and Fed machinations, and the dark dank world of hedge funds, all in story form. The rest of the site has other relevant commentary.

Sweet 16! The Brittney/Jazmin link is hilarious... at 16, I recall selling my 10-speed and working up gas money to drive the family's 72 Torino station wagon which (thank heaven!) was a stone tank. It could joust with an H3 and come out the winner. The 'blin' car on my block at the time: none really, maybe a few Caddys and Corvettes.

passthebubbly sums it up well: Reality TV. American Idol. Who Wants To Be A Millionaire. $300 million Powerball jackpots. Pimp My Ride, Flip My House, Swap My Wife, Fill My SUV. Sex In The City, or its slightly more PG-13 version, Desparate Housewives. You're fired, and so are you, you, and you, but you over there, you get to work for Donald Trump. Welcome to the 21st century, where past realities are no longer in force.

Good post SoCal, have a great New Year.

12/30/2005 5:55 PM  
Blogger Contrary Guy said...

One more idea: r_patrick, your mention of personal goals stirs a thought. It has long been my belief that in an ever-expanding population, not just in the US but globally, it's harder to be someone special, to 'be' anything, given the demographic competition. Since I graduated from college, the US population has grown by about 60 million, while US business has consolidated and in some cases contracted or disappeared. Add to that all the offshore contract workers, that are in direct competition with me and my peers, and skill sets give way to mere availability (i.e. who wants to be on-call this week? Show of hands?)

Now that's just the working world as an example, but the same applies to the average late-teen going finishing up their K-12 years at a high school with 3000+ students in attendance, or the working parents who find that they're jostling with dozens of others for a day-care slot for the kid.

Given that dilution of identity, the individual swimming in an ever-increasing ocean of commoditized humanity, what is the alternative? If you can't be something, then BUY something. That's the mode our society seems to be in right now.

12/30/2005 6:26 PM  
Blogger moonvalley said...

I remember being ecstatic when I turned 16 for having the privilege of getting to take my parents' old car to the store down the street to buy some milk.
Haha...I can't even remember what we did for my 16th..I think my parents took me to a movie or something..obviously not show-worthy.
My husband was saying this afternoon the proper ad saying is "I deserve it" and they certainly will deserve every bit of it.
PS..Flipper City..otherwise known up here in Sonoma as Bel Terrene is flooding tonight.

12/30/2005 6:59 PM  
Anonymous Anonymous said...

Money, it’s a hit.
Don’t give me that do goody good bullshit.
I’m in the high-fidelity first class traveling set
And I think I need a lear jet.

12/30/2005 10:33 PM  
Blogger moonvalley said...

My favorite brainwashing commercial is the Lexus Christmas commercial. What a joke! I can't believe anyone would even fall for what they are trying to push. Has anyone ever received a car, let alone a Lexus for a christmas gift?
that commercial is sick..a friend of mine bought a Jag last year, it's basically a Taurus with a cat stuck on the front of it and no legroom in the back..he had his he's about to trade it in.
Keep up all the good work brighten my day.

12/31/2005 2:15 AM  
Blogger Mark said...

I see we've hit a nerve here ;)

We all are clearly bewildered at the excesses of the consumption society that's sprung up around us. Indeed, what's next?

What does it mean economically and socially when everyone you know owns (or leases, or appears to be able to afford) a 'luxury car', a boat, a huge RV, etc, etc?

There is something much worse however than the 'bling bling' lifestyle these shows are pimping, I think. That is the Machiavellian attitude that programs like 'survivor' embrace and reward. This 'win at all costs' behavior challenges our trust in our neighbors and co-workers, and provides a rationalization for betrayal. It's sick. Society is sick for celebrating and enjoying it.

So.... will the partying on easy money stop in 2006? I have the feeling that it will, and that it will be painful.

On the bright side, perhaps everyone will face economic reality again, stop speculating to aquire wealth and instead start working to aquire wealth. Ha! That one was on my wish list from Santa anyway.

I'm convinced that the Fed will try to inflate (print worthless money) the federal deficit away and those of us who've bothered to save will be punished. Those that have gone in debt up to their eyeballs (and their lenders) will be saved. It'll be a bailout, and the taxpayers don't even get to vote or write their congressman about it.

12/31/2005 6:44 AM  
Blogger 41cadillac said...

Mr. Idaho_Spud:

Not to worry! You are assuming men have control of this earth. The eternal principle of truth will prevail.

Buy some oil and gas stocks carefully selected.

Do not buy on margin as did the 1929 investors. Then hold on for a few years until you find that house of your choice at a reaonable price.

The USA is a great country, not perfect, but never in the history of the world has a nation been so free. Free to go into debt; free to recover. So. Be. It.

12/31/2005 7:19 AM  
Blogger Mark said...

41 Caddy:

Yep we live in a great country - no doubt about it. As always we argue over how to make it a better one, but at least everyone on both sides of the aisle agree that is the goal :)

As for the home of my choice for a decent price, I'm reasonably content right now. I used the easy $ Mr. Greenspan provided to get into a 15 yr fixed rate at 4% a few yrs ago. I'm rapidly building equity the old fashioned way (by paying down the principal).

When I'm done working, and no longer have to be close to heavy industry, I'll probably get a smallish house on a river or lake.

We'll just have to see how rough the shake out of the speculators is in the next 2 yrs. No bailouts, monetary inflation or otherwise!

1/01/2006 10:00 AM  
Blogger Mark said...

This comment has been removed by a blog administrator.

1/01/2006 4:17 PM  
Anonymous Anonymous said...

yep... sigh.. that is how things went and are.
What is the matter with some folks these days, dont they know how to think?
Very scary when young ones make tonnes of money and think it is normal. Wonder if they think homelessness is normal too.( Also, is this the kind of people that actually graduate from universities?
It is about serious time they increase the quota of brains into the universities and not rich spoiled and soo deserving young adults.)
Dont they ever stop and ask themselves why they have such desires to have all this crap? It sure isnt instinct.. so, oh.. was that a brain wave?..somebody is influencing you to have these desires. TV? magazines? radio?
Instead of breast implants and retina burning white teeth.. how about a brain implant?

1/01/2006 4:28 PM  
Blogger Greenspan Screwed US said...

Great post and top notch blog!

As you alluded, the things you mentioned didn't cause the bubble, but rather, I believe, are direct manifestations of the massive credit bubble that's been building for nearly 20 years thanks in very large part to Alan Greenspan's wreckless and grossly expansive monetary policies.....

1/01/2006 5:49 PM  
Anonymous Anonymous said...

This is a huge problem. We (as consumers) are constantly bombarded with messages shouting "BUY ME OR YOU'RE A LOSER".

I'm 27....have an older truck and a nice late-model Mustang GT 'vert for nice days (both paid off), rent, not much in student loans and a couple credit cards I'm trying to pay off (from stupider days). I'm the exception among my friends - most of them own houses, drive fancy SUVs, don't think twice at spending $100 for dinner, are making payments on RV, boats, second homes, tvs, computers, granite counters at Home Depot, etc.

I often get chided by them because "I make good money" and I'm "entitled" to a new truck because my old one is old. Nothing wrong with it, it's just a piece of junk because it's 10 years old and not in style anymore. They just stick up their noses when I reply that I paid cash for it and am really happy about it; one of my friends went so far to ask to see the title for both my cars (she's 38 and has never seen a title and was curious what it looked like). I'm also "stupid" for renting because I should be buying a house, never mind that they seem to think my desire to go to graduate school is stupid because "you'd be quitting a well-paying job and not be able to buy a new truck".

I will say that lately most of my friends who are up to their necks in debt payments have finally shut up about the old truck and boob-tube 25" TV and stereo that I've had for 10 years that "looks like it came from a pawn shop". I let many comments roll off because I'm able to spend 5 weeks a year on fishing trips and visiting family across the country. I'm able to fly somewhere once or twice a month for a weekend trip watching sporting events. Of course the concept of having disposable income is also foreign to them because of all the debt payments trying to show their neighbors up.

So what - I missed out on the housing boom. I'm not worried about paper wealth. I've got over $30k in my retirement accounts and it's growing by $10k+ a year. Some of my friends cannot even contribute to a 401k because of house/car payments. I've also got 6 months of living expenses in a savings account. I'm getting to the point where I can tell my boss to fly a kite if I get pissed off. That's real freedom that no 4-bedroom house can provide.

I'm still young yet the older I get the more I'm becoming turned off to consumerism.

1/01/2006 7:56 PM  
Blogger B. Durbin said...

I have had the pleasure of actually owning the car I drove— for about four months. Then a hit-and-run driver took that out, and now we have a new car. It's new because it's exactly what we need, there's no other comparable model, and it's a new model/style.

Oh well. This delays our buying a house for a few years. However, given the trends, that might well put us at the bottom of the market. Here's keeping our fingers crossed.

1/02/2006 8:12 PM  
Anonymous Anonymous said...

Lived in my mom's basement during my 20s. People laughed. I didn't care. Stacked up over $500,000.

Paid cash for my car.
Paid cash for my Master's.
PAidcash for my apartment. (And gutted it to brand new for $15k)

My remaining $400k gives me about $20k-$30k a year in interest..

Now, I only work parttime and take my summers off. I play in a band, run marathons, and have become a good cook. I also write a lot. My friends are all wage slaves.

Bling bling you cubicle monkeys...!!! I'll be at the swimming poool.


1/03/2006 7:19 AM  
Anonymous Anonymous said...

It seems that many children in their teens see the lifestyle, but they have no comprehension of how hard it is to really earn the 50k needed to buy a Hummer...and how old it gets spending $500-1000 a month on gas to keep it running.

If I had to shell out five figures for low fuel consumption, it wouldn't be a Hummer. It'd be a fully-restored Sixties classic muscle car or sports car. GTO, Charger, 'Cuda, Mustang, 'Maro, Cougar, Firebird, Challenger, 'Vette, Cobra...

I live (well below my means) in Da O.C., SoCal, and the only Hummers I've ever seen off pavement or in less-than-bling-bling condition are the genuine military models.

4/25/2006 2:54 PM  
Anonymous Anonymous said...

Regarding the word "Crib" (or "Kribz" as it's spelled these days).

Isn't a crib what a baby sleeps in, not where an adult lives?

Think about it...

4/25/2006 3:05 PM  
Blogger Hapto said...

Right on. There's a metric fouqueton of useless crap being used and consumed.

But the thing I've learned while fixing credit scores and such is that CreditCards/Lenders want you in debt -- its how their investment makes money... and without rampant consumerisim, there woudn't be debt, so they offer you more money. As my credit score has increased the number of 'free creditcard offers' has declined.

Now consider the cultural applications... the Dub/Cribs aesthetic is largely appealing to the young african american. ( ) Which doesn't seem to trust the debt for houses and education (major cultural generalization, true) but does trust the debt for tangible items. When I lived in Mil-Town (thats Milwaukee for all y'all) my neighbors had a washer and drier (not hooked up) in their diningroom (no diningroom table), three TVs 2 VCRs, 6 portraits of Tupac, a couch from the 'lease to own' - you know the type gold laminate and valour - Tommy Hilfiger clothing, and not much else.

Now at the heart of it, is that life sucks... completely and utterly, and this 'stuff' is kind of the new church. You walk in and you feel proud, you feel a part of something. And I wish that lenders weren't taking advantage of that... but if it ain't broken, how can they come offer to 'fix it'?

4/27/2006 11:31 AM  
Anonymous Anonymous said...

The gov't bails anyone out for excessive spending I will be very pissed off. medical - their problem. Bankruptcy keeping them down - their problem. Can't buy another house because they lost the one they had due to being too deep in debt - their problem.

There will always be poor uneducated people in society. These will be the ones. The hard workers should NOT have to pay for the excesses of the fools.

As to saving $500K by living in mom's basement, nice. I don't believe it, but nice.

Hey, here is another symtom. How poor is the spelling and grammar of some of these posters? Will a real employer find these people to be worth the money they seem to "need"?

5/10/2006 2:16 PM  
Anonymous Anonymous said...

If you buy a $20 stock because you think it's worth $40, it might get there... in three or four years.

The stock market really does return 10-11% a year, but that gets spread out over 250+ trading days and oodles of little ups and downs. Real estate *does* mostly only go up and everyone does need somewhere to live, but in the long run it pretty much tracks inflation.

wow gold oppotunity.

Boring, boring, boring. To the average American, how can that possibly compete with a house, or a Hummer, or some shiny new spinning hubcaps?

7/17/2006 8:12 PM  
Anonymous Anonymous said...

If you buy a $20 stock because you think it's worth $40, it might get there... in three or four years.

The stock market really does return 10-11% a year, but that gets spread out over 250+ trading days and oodles of little ups and downs. Real estate *does* mostly only go up and everyone does need somewhere to live, but in the long run it pretty much tracks inflation.

wow gold oppotunity.

Boring, boring, boring. To the average American, how can that possibly compete with a house, or a Hummer, or some shiny new spinning hubcaps?

7/17/2006 8:14 PM  

interesting subject.

1/09/2013 11:40 PM  

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