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David_LivinginTalisay

An Open Letter to Philippine President Benigno Aquino III: Now is the time to prepare for a massive housing crisis in Asia

By Joe Salcedo on December 17, 2012 3:19 PM

 

Author's note: This is a personal piece that's been brewing in our hearts for a few years now. 
When a housing market breaks down, as we have experienced first-hand, the biggest casualty will not be stock markets or tumbling currencies, it will be the family.  It is they that suffer the most because few will see the crisis coming.  Our hope is that this article will start a dialogue. We don't expect blind acceptance, rather, to start a conversation on what we feel is a very urgent issue.
We'd like to thank Valen Alexis, an award winning writer and director in LA, for organizing our jumbled thoughts and ideas into a readable essay.

 

 

 

An Open Letter to Philippine President Benigno Aquino III: Now is the time to prepare for a massive housing crisis in Asia

By: Joe Salcedo & Ian Mariano

 

I was 12 years old living in Manila Philippines - Romarico Jr. tailing Romarico Sr. as he collected rent payments and called out work orders from fixing busted pipes or putting new travertine tiles. It was 1996. We had eight rental homes, and we were  economic and housing bliss in my home country.

 

It would be the last.

 

Luckily, my father already had his ear to the ground, had predicted the Asian Market Crash that went into full effect in 1997.

Growing up Pops would always share his dreams for us: "I want all four of you to have a house before you get married, especially you two boys -- you'll be the head of your families."

 


Then the Asian housing crash happened.

I remember it like yesterday. The frantic calls to real estate agents, the tense tone in my father's voice as he made deals with  selling our prized investments. When I asked him why he was selling "my home," he said it was needed because of "blah, blah, blah, Thailand." He had heard something about Thailand's housing market falling apart.

 

He was spot on.

 

Asia was in trouble. Thailand, where the first domino collapsed, devalued its currency in July 1997 (devalued baht make Thai goods more desirable internationally to help stimulate lagging economy).

 

Before the problems started, Thailand had experienced a long period of growth that created an over-heated housing market. The pressure came from two fronts: overproduction of houses and central bank's squeeze on lending. New housing units were built to satisfy the ever-growing demands caused by Thailand's hot economy, primarily fueled by liberalization of
capital inflow which lent to local housing developers financed by foreign loans.

 

As the crisis spread, most of Southeast Asia and Japan saw slumping currencies, devalued stock markets and other asset prices, and a precipitous rise in private debt. In November 1997, South Korea, one of fastest growing economies in the world, shocked the world and its citizens when it announced it was seeking assistance of the International Monetary Fund in meeting its foreign debts burden. In 1998 the Philippines growth dropped to virtually zero.

 

And few saw the crash coming, as Asian economies had been doing fine before the crisis, with impressive growth and solid fundamentals.

 

On the eve of the crisis, nearly all forecasts were predicting positive and high growth rates for these economies for the coming years of 1997 and 1998. Hardly anyone asks the hard questions when all is well. "You only find out who is swimming naked when the tide goes out."

 

 

Consumers and local businesses had become "over-optimistic, to over-invest, and to over-produce." The brunt of which was seen in the real estate industry. And then it all came to a screeching halt.

 

Barely fifteen years ago and I'm afraid we're starting to forget the lessons from this crisis. It looks like we're headed down that path again -- sooner than later, one that could equal the East Asian Financial Crisis
of 1997.

 

The Philippines is about to enter its fifth straight year of "good times" which started around 2008 fueled by an "unprecedented construction boom" currently transforming the skyline of the nation's capital, as well as many provincial cities. Consumer
spending, which remained a major growth driver, more than doubled in a single year from 2.4% to 7.1% recorded in 2011. Donald Trump has put his name to a $150-million, 56-story, curtain-glass-walled Trump Tower that broke ground this year -- 70% of the 220 residential units, which are worth up to $1.86 million each, have been sold according to Trump.

 

Before I proceed allow me to share to you why I am writing this letter. Yes I am here to sound the emergency alarm in hopes that the Philippine government can start preparing for this financial catastrophe ASAP. But I am not here to belittle the progress that's happening in the Philippines and most of Asia.

 

I fully support it and share your joy in this new found wealth and opportunities: The country's credit rating has been bumped up to just a step below investment grade by all three major international credit agencies, the Peso is the best performing currency in Asia and GDP is second only to China this year. This is a good thing for theFilipino people especially for its burgeoning middle class.

 

I also admire the intentions of Philippine Finance Secretary Cesar V. Purisima when he said that he is closely watching this economic boom to prevent another asset bubble from happening. But the attitude towards this new bubble is still "if"
there is a bubble. This letter is a plea to elevate "if" to "when" the bubble occurs.

 

We can never over-prepare for a crisis like this. And as you have seen happen in the U.S housing market in 2006 (real estate bubble burst due to rapidly falling demand) and what's currently afflicting European countries (Spain's housing market collapse & severe unemployment, Greece's depressed economy); Asia will not be immune to a Great Recession. Prosperity can put a veil on our eyes from seeping problems. This is not an Asian problem as much as it is in people's nature. People forget.

 

I have worked in real estate for the last seven years (research and marketing under the umbrella of Chase International,
the number one luxury real estate company in Northern Nevada) and have studied, seen and experienced the U.S. housing market collapse; carefully following the Northern Nevada housing market from boom to bust through our in-house graphs and correctly called the market's absolute peak in August 2005 as we advised our top investors to "cut losses short".

 

We were also the first ones to be optimistic about the market in late 2010 when we saw continued surge in demand and dwindling housing inventories. Our story, past research and articles can be found here: Reno Real Estate.

 

Let's go back to our topic.

 

In one of his most important research papers written in 1998 entitled "What Happened to Asia", Paul Krugman, Nobel laureate in economics, professor of economics and international affairs at Princeton, and a columnist at the New York
Times wrote: "It seems safe to say that nobody anticipated anything like the current crisis in Asia. True, there were some Asia skeptics - including myself - who regarded the claims of an Asian economic miracle as overstated...But even pessimists expected something along the lines of a conventional currency crisis followed by at most a modest downturn, and we expected the longer-term slowdown in growth to emerge only gradually. What we have actually seen is something both more complex and more drastic: collapses in domestic asset markets, widespread bank failures, bankruptcies on the part of many firms, and what looks likely to be a much more severe real downturn than even the most negative-minded anticipated."

 

In two to four years, the next severe downturn is likely to happen, and it could even have a bigger impact than the 1997 crisis. It will affect the Philippines and most of Asia. It will most likely start with the housing market and fully bleed into the rest of the economy.

 

Here's why:

 

Let's start with labels that Economists and some business people carelessly use, words like "Asian Miracle," "New Economic Center of the World," "Asian Superiority" to describe Asia's economy. The danger with these labels is it quietly breeds over-confidence in government officials and local businessmen, somehow implying that Asian countries will magically side-step tried and true economic realities.

 

In 1994, three years before the 1997 Asian crisis happened, Mr. Krugman warned us of this "miracle." People were working harder not smarter. This was against the popular thinking in those days as Asian countries like South Korea, Taiwan and Japan were being praised for their "new" ways of managing their growing economies.

 

There was tremendous growth but the growth happened by injecting vast resources into the economy. It was not a miracle. Mr. Krugman was simply popularizing what Alwyn Young at Boston University, Lawrence Lau at Stanford and Jong-Il Kim at Dongguk University in Korea were saying based on their research.

 

They broke out the sources of Asian economic growth into several factors: population growth, investment in physical capital, increased education and "total factor productivity" -- a catch-all term for how efficiently the economies use any given level of labor and capital.

 

To everyone's surprise, they found that many Asian tigers showed no gains in factor productivity over time. What Young and Lau found was that Asian growth has so far been mainly a matter of "perspiration rather than inspiration"-- of working harder, not smarter. These results were and are controversial -- partlybecause many people don't want to believe them and are eager to accept contrary calculations -- but their basic message has held up quite well under repeated challenges.

 

 

In a April 2012 report from PIDS (Philippine Institute for Deveopment Studies), Gilberto M. Llanto reports on the latest Total Factor Productivity in the Philippines: "Various studies showed that total factor productivity (TFP) has not been a source of growth in the Philippines. It seems that factor accumulation, which is not a sustainable source of growth, has underpinned Philippine economic growth. Studies have also shown that the sustained growth of developed countries has ridden on the back of technological advances rather than on increasing use of factor inputs. Total factor productivity improvement is the only route to sustain economic growth in the long run."

 

What was true in the last Asian collapse is true now, "The tiger economies didn't rely on any special tricks for their success, just plain vanilla investment."

 

 

Which brings me to my next point.

 

  • "Hot Money" Flowing     in the Philippines -- Capital investments from foreigners.

 

As the U.S. is still slow in its recovery and Europe is still in a recession, investors from around the globe have poured buckets of cash into Asia, and because their initial bets were successful, they're doubling down on Asia and the Philippines is receiving a big chunk of it, billions of dollars on the casino industry alone. This is one of the major reasons for the economic boom.

 

The Philippines and the rest of Asia are receiving historically high investments from private and public banks all over the world. Most are in the form of debt which in turn is used to finance the housing boom through property building and easier lending to borrowers. Paris Hilton is marketing a condo, Trump is building a tower -- all is great!

 

To be clear, I believe this is good for the country. Investments, higher tourism rates, even Moody's positive outlook is good for the country. The danger is when we mistakenly think foreign investments -- "hot money" -- will never stop flowing. It has and it will.

 

In the 1997 East Asian Financial Crisis and in the 1998 Russian Financial Crises, large amounts of "hot money" came from foreign banks. Before the East Asian Crisis, there had been rapid increases in capital flows from developed to developing countries - a six-fold increase in six years.

 

Sudden outflow of hot money, which would always certainly happen in a threat of economic instability, would immediately deflate asset prices and could cause the collapse of value of the currency of a developing country.

 

We are seeing the same trend now as large sums of foreign investments are thrown into the Philippines and other parts of Asia.

 

This year, foreign direct investments (FDI) reached $917 million in the first half, up by 10.6 percent from the $829 million of the same period last year.

 

It's easy to look competent in a prosperous economy, but the true test is whether you can cope with adversity.

 

And now is the time to prepare.

 

I should mention that the IMF reports that Philippines has an all time high of $81.7 billion in currency reserves ($11 billion in gold holdings) that will surely help if and when a crisit hits -- enough to cover for 11.8 months' worth of the country's imports and 6.5 times the combined debts to foreign creditors of private and government entities in the Philippines. External debt is
$62.9 billion.

 

But as Joseph Stieglitz wrote on the 10-year anniversary of the Asian crisis: "important lessons of the crisis have not been absorbed. Capital market liberalization - opening up developing countries' financial markets to surges in short-term 'hot' money - is dangerous."

 

 

As cash and debt flowed freely the last five years, the Philippine real estate boom is well on its way to unprecedented bubble levels.

 

Most have lost sight of one of the fundamental truths in investing -- lend only to those that can pay. Lending has been loose
as more and more "balloon payment" mortgages are handed out to buyers (usually on the seventh year as their monthly payments more than double).

 

Buyers have lost sight of supply and demand and are investing based on "future windfall profits" rather than tried and tested principles like rental income and long term property appreciation.

 

 As economist Winston Conrad B. Padajinog, senior economist and Dean of the school of management at the University of Asia & the Pacific (UA&P), warned: "There is over-production of middle to high end products, which is not solving
the country's problem of housing supply shortage which is direly needed for the poorer population."

 

 

What is happening now, he says "is developers are supplying the market that does not need housing, but merely for investments, second home, and even for gifts. The market is leading towards glut, if we are not to address the multiple needs across the real estate market segment." "With the favorable interest rate environment, many monthly income-earners can afford to get financing from banks, not necessarily from Pag-ibig." (Pagibig is the the Philippines nearest thing to the safer, FHA Loans here in the U.S.)

 

Not to mention the direct effects of the over building is already tied to the latest mass flooding that caused more than half of Manila to be, literally, underwater.


This is almost the same story as when the U.S. housing went up at a rapid pace starting in early 2000 and then went over the cliff in August 2006. Billions of dollars were lent to banks at very low interest rates that in turn were lent to home
buyers (at then record low interest rates, 6-7%) to people who couldnot pay their mortgages after the "balloon payments" started. American banks stopped doing their due diligence and just lent money to almost everyone who was willing to lie on their income. After the real estate bubble burst, it reached a boiling point that caused the Great Recession here in the U.S. in 2008.

 

What happens next is what I am most afraid of.

 

The current Philippine housing bubble will inevitably burst and will immediately lead to bank liquidity problems, lost of consumer confidence and massive pullouts from foreign investors.

 

All bubbles burst, markets go up and it goes down. This is normal, only in this case, it isn't. As it happened in 1997 even to the strongest Asian economies like South Korea and Japan, people got carried away in prosperity, and a sharp rise in local people's debt followed.

 

A similar thing is happening in the Philippines as consumer spending has greatly increased. People earned higher incomes but they are also saving less for the rainy days.

 

In short, I don't think the Philippines is ready for a major economic crash. Many in the middle class are ill-equipped for a financial crisis. The government cannot save the banks like how the U.S. managed to do so, pouring hundreds of billions of dollars in bail outs.

 

The Philippine government can't afford to do that. What can and will most likely happen is something I call a "financial Ondoy" -- a monetary catastrophe of grave repercussions. A domino effect that starts from the top -- banks and financial institutions, government flushed with cash -- and causing harm all the way down to the government sponsored programs for the poor.

 

Here's the point where you would begin to think that I am just a "doom and gloomer" and that this cannot possibly happen in the Philippines. Open the local paper and you'll find an abundance of upbeat financial news by almost all major Philippine publications.

 

And a strong argument is the Philippines have strong fundamentals: a healthy GDP and strong remittance of OFW worker's dollars -- lending a billion dollars to IMF -- and the rise of IT related firms giving good paying jobs to many Filipinos.

 

These are all valid counter arguments and I have no doubt the Philippine government will do everything it can to help its people in the event of a financial crisis. But if there is one thing we can learn from the
recent U.S.'s and Europe's financial collapse is you can never overestimate the ripple effect of uncertainty.

 

For developing countries like the Philippines, a crisis almost always starts with the bursting of a housing bubble. In the first quarter of 2012, the average price of a luxury 3-bedroom condominium in Makati (financial center of Philippines) rose 4.8% to $272 per square foot according to Colliers International, up by 10.68% in less than twelve months; this year they're expecting another significant rise in housing stock, with 8,253 units added to the Metro Manila supply. High-end residential real estate prices are likely to rise by another 9.9% during the next twelve months. These increases are not sustainable and will inevitably reach a boiling point.

 

Which brings me to my last point.

 

  • Spain

The ongoing Spanish financial crisis was ignited by a housing market crash. Spain didn't get into trouble because it squandered away money. On the contrary, on the eve of the crisis that started in 2008, Spain actually had a budget surplus and low debt.

 

 

 

Large deficits emerged when the economy tanked, taking revenues with it, but, even so, Spain doesn't appear to have all that high a debt burden:
"Spain's deficit problem has emerged relatively recently. The budget deficit averaged only 1.3 percent of GDP from 1995-2007 and the budget was actually in surplus from 2005-2007. As a result, Spain also ended 2007 with a rather modest level of public sector debt, amounting to just 43 percent of GDP."

 

And now, Spain's economy is in shambles, the worst in 25 years (or more).

 

What happened to Spain was a housing bubble -- fueled, to an important degree, by lending from rich, neighboring
European countries - that burst, taking the economy down with it. Now the country has 23 percent unemployment, 50 percent among the young.

 

 

As the title of latest New York Times reports, "Hunger on the Rise in Spain" And this is not just for the poor: "unemployment,
debt and the collapse of industry have brought Spain to its knees - even the middle classes are now queuing at the food banks."

 

Mr. President, we need to prepare as early as now or we could face a similar fate as the Spanish people. We need to figure out what to do before the storm hits. I suggest a combination of prevention and preparation. Perhaps we need to cease lending to other countries, and put more focus on Banko Sentral's campaign to increase our foreign currency stockpile. We need strategic plans for the rapid rise of unemployment, an early and abundant funding for food programs, allocation of future funds to lend to small and mid size businesses to help create new jobs, and preventive measures to ease excessive real estate development.

 

There is hope and opportunity if we act fast. I'm reminded of the story of Joseph the Dreamer in the book of Genesis. During those seven years of abundance, Joseph ensured that the storehouses were full and when the famine hit, not only were they able to help other nations but there was tremendous economic opportunity.

 

With prayers and help from our God, it can be done. But now is the time to act.

 

Co-written by:

Joe Salcedo ([email protected])

Ian Mariano ([email protected])

 

I am not suggesting Foreigners meddle in Philippine Economics or Politics, but then again we are not allowed to own land (apart from Condos, and these are most likely to be affected by any Bubble burst in the property Market - perhaps most of all.

 

Nothing stopping you Filipina wife put her name to such call for the President to consider this potential Housing Crisis, carefully however?



 

Edited by David_LivinginTalisay
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Brucewayne

I have been saying this all along and think there is already a slow down in the housing industry here.

The condos don't seem to have the work crews they had a year ago when all of the over building of condos started here in Cebu.

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Knowdafish

What happens next is what I am most afraid of.   The current Philippine housing bubble will inevitably burst and will immediately lead to bank liquidity problems, lost of consumer confidence and massive pullouts from foreign investors.

 

Hmmm....."bank liquidity problems" in a country that likely can not afford to "bailout" all of its banks.  :animal0019:

Edited by Knowdafish
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mikewright

Wouldn't this only be a problem for property speculators? For the average person buying a property to live in, who can afford their mortgage payments, what's the problem?

 

Say I buy a property to live in for $200,000.To me it's worth that money; otherwise I wouldn't buy it to live in. So if the market drops by 25%, the property is now worth $150,000.  But it's only a loss if I sell.  If I've bought the house to live in, and can afford the mortgage payments, I won't have to sell. Sooner or later the prices will rise again, and I'll get my money back. It might take many years for the property value to get back to its original value but as I've bought the house to live in, that won't matter.

 

The speculator on the other hand, or the person who can't afford the mortgage repayments, will have to sell. Same as share speculators who can't meet their margin call. I thought a big part of the problem in the US was the mortgage providers gave loans to people who were never going to be able to afford the mortgage payments even from the beginning of the loan. 

 

If you have borrowed to buy eight houses for rental, like the guy mentioned in the article, and the value of the properties drop, and your rentals don't cover your mortgage payments, you're stuffed. Wouldn't think the banks in the Philippine banks would be lending to speculators with the same frenzy the US banks were lending pre - GFC. Could be wrong of course, I know nothing about Philippine banks' financial practices.

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Knowdafish

Wouldn't this only be a problem for property speculators? For the average person buying a property to live in, who can afford their mortgage payments, what's the problem?

 

Say I buy a property to live in for $200,000.To me it's worth that money; otherwise I wouldn't buy it to live in. So if the market drops by 25%, the property is now worth $150,000.  But it's only a loss if I sell.  If I've bought the house to live in, and can afford the mortgage payments, I won't have to sell. Sooner or later the prices will rise again, and I'll get my money back. It might take many years for the property value to get back to its original value but as I've bought the house to live in, that won't matter.

 

The speculator on the other hand, or the person who can't afford the mortgage repayments, will have to sell. Same as share speculators who can't meet their margin call. I thought a big part of the problem in the US was the mortgage providers gave loans to people who were never going to be able to afford the mortgage payments even from the beginning of the loan. 

 

If you have borrowed to buy eight houses for rental, like the guy mentioned in the article, and the value of the properties drop, and your rentals don't cover your mortgage payments, you're stuffed. Wouldn't think the banks in the Philippine banks would be lending to speculators with the same frenzy the US banks were lending pre - GFC. Could be wrong of course, I know nothing about Philippine banks' financial practices.

 

Did you miss the whole housing bubble/banking crisis thing that happened recently in the U.S. and how it effected the world economy? Yes, this whole thing effects you, whether you own a house or not. 

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mikewright

Did you miss the whole housing bubble/banking crisis thing that happened recently in the U.S. and how it effected the world economy? Yes, this whole thing effects you, whether you own a house or not. 

Nope, we read about it every day. But the only people I know personally who were greatly affected by it were those people who were speculating and had bought shortly before the GFC.  I'm talking about home buyers here, not people who put all their money into investments backed by sub-prime loans.

 

People like my neighbours, houses paid off but receiving a pension, not affected in the least.  Same with workmates paying off their homes, not affected. In fact, now better off because with the fallen interest rates they can now pay off their mortgages quicker.

 

As I said in my post, it was only the ones who had to sell their properties who crystallised their loss. For the rest, the losses were only on paper, and as property prices rose again those paper losses lessened or disappeared.

Edited by mikewright
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Contango

Real estate lending by Filipino banks is capped at 20 per cent of total outstanding loans, pretty hard to see how a bubble can form with such low RE exposure, the RE development industry has got around this cap by using in house financing and raising money through private bond issues...i can see a time coming when 1 or 2 of the bigger developers may get into trouble, but in general bubbles need abundant cheap money and low lending criteria coupled with a 7 to 9 year run of greater fool frenzy...and none of that is really happening in the Philippines.

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smokey

not the old tired housing bubble speech again   HOW MANY PEOPLE ARE MAKING PAYMENTS ON THEIR HOUSES... IN THE PHILIPPINES as to the speculators who cares not my money they are real estate gamblers one looses and one gains... i dont see how a bubble can possibly happen in the housing sector as long as every OWNS the house , condo with in house payments is risky to me because a condo is to often over 100,000 a sq. meter way to high... Remember the reason for condo in the first  place was to find a way for people to be close to their jobs... so condo living in philippines is just a owned hotel room great for tourist or visitors but come on a family home often under 30 sq meters is not for me..

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Skywalker

I did mention, in another thread, that I could see the indicators of a condo bubble emerging in both Manila and Cebu.  Edit:  As Smokey and Headshot say - the housing market is a different animal to the condo market.

 

I bought a condo here in Cebu City (due for handover next Spring) to live in, and not for speculative purposes at all.  So even if there is a price re-valuation (crash!) it shouldn't have a financial impact on me, because I am not buying to 'flip' - although I am aware that many of the buyers in the same building are speculators.

 

Seems to me that what Mikewright is saying, is that if you are buying a place as a home, and don't really care whether the value goes up or down, you have a built-in (sic) protection against the vagaries of the market - and you have a roof over your head. That works for me.

 

One major problem (in the UK at least) has been that buyers have been 'investing' in their own homes, with the 'wilful' expectation of increasing valuations.  This resulted in owners living beyond their means (earning £5, but spending £10) and re-mortgaging their own homes to balance the books every 2 or 3 years.  I always considered this a fools errand, since you are at the direct mercy of the markets, and you are using your home as an investment vehicle, transformed into an almost endless debt mountain.  But then a fool is born every minute.  Good luck with that!

Edited by Skywalker
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I agree with the bloke up to a point.

 

And the point is,

 

What happened to Spain was a housing bubble -- fueled, to an important degree, by lending from rich, neighboring

European countries - that burst, taking the economy down with it. Now
the country has 23 percent unemployment, 50 percent among the young.


 

I think he is 'using' the case of Spain to frighten the former Spanish colony, The Philippines.

 

The fact is that Spain, contemptible Spain, owes something like US$56 billion to rip off merchants in the world wide Green Scam boondoggle and this bloke is trying to say that Spain's problems are a housing bubble?

 

Hah....

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Brucewayne

There is a condo/housing bubble.

Go to the bank or look online for foreclosures.

Aso, with any sudden stop in a bubble situation, contractors, laborers, suppliers and even small stores which supply to the workers (sari-sari's for example) are all out of work once people stop investing in and building homes or condos.

The building trade is pretty much tha backbone of any economy, that is the reason they are posted before almost any indicator.

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Headshot

Wouldn't this only be a problem for property speculators? For the average person buying a property to live in, who can afford their mortgage payments, what's the problem?

 

Mike, let me explain it to you. It is still pretty fresh in most Americans minds as to what can happen. When the housing market collapsed, it didn't just create a lot of unemployed in the construction industry. It also caused a banking and investments crisis, which tightened credit, which caused other business sectors to pull back, which in turn caused a lot more lay-offs and very few job opportunities, which made it so that those who had bought homes to live in could no longer afford their mortgage payments, which caused foreclosures, which caused even more banking and investment problems, which...well...I guess you can see where it went. It became an economic death spiral in which no business sector and no sector of the population was left untouched. Many people lost most of their life savings, many retirements were postponed (maybe forever), many people lost their jobs and were unable to find any kind of comparable job, so they have to accept lower paying and sometimes part-time jobs with no benefits. When there is a major bubble that bursts, it ends up affecting everybody...not just speculators.

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smokey

and  because of the housing crises i was able to buy a home that cost 165,000 us in 2005 for the sum of 59,900 in 2011 so to some of us it was a good thing ... now my house or the same model as my house in the same subdivision just sold last week for 110,000 sometimes its just dumb luck ,,,, on the other hand my house in Talisay has at best after 7 years of inflation remained close to its cost but i have lived in it so i have had value ... life truly is like a box of chocolates 

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Brucewayne

and  because of the housing crises i was able to buy a home that cost 165,000 us in 2005 for the sum of 59,900 in 2011 so to some of us it was a good thing ... now my house or the same model as my house in the same subdivision just sold last week for 110,000 sometimes its just dumb luck ,,,, on the other hand my house in Talisay has at best after 7 years of inflation remained close to its cost but i have lived in it so i have had value ... life truly is like a box of chocolates 

 

Cash rules and if you have it in hand, you can benefit from the downturns, but most people don't have the resources or foresight to hold on to the kind of money it takes to do what you do.

That is the reason most people suffer, rather than profit from a downturn.

As a matter of fact, there wouldn't be a downturn if everyone had a way to survive, or like you, to thrive in spite of the economy.

Your way works for you, mine works for me and there are other methods, but no one method works for everyone.

You have to be a survivor and have a plan in force if you want to get ahead in this world and for that I applaud you.

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When there is a major bubble that bursts, it ends up affecting everybody...not just speculators.

@Headshot

 

Without going into all the American 'politics' that occurred over the years but I would have to say that the successive American Federal Government Administration's changes to the laws which was picked up by the Federal Reserve, Fannie Mae, Freddy Mack, et al (I actually laughed when I first saw the names of the financial institutions being called Fannie Mae and Fredy Mack, back in 2007 or there about) led to the inflation of the bubble.

 

And I am not just 'picking on' the USA here. Every country in the Western World, or its ties like the Philippines, tried to 'inflate' their electorates into greater well being by one means or another.

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