Wednesday, September 16, 2009

The mystery of idiotism

Some more mainstream economists and other clueless morons are starting to smell the housing-bubble in Sweden. Another couple of warning flares was sent up today since the prices continue to move upwards.

However fun it is to be right all the time, I cannot help wondering why they didn’t see this coming? Or did they but don’t care?

Economics is very simple. It’s not a barrey of mumboes and jumbos; it’s not magic or as hard as our enemies want us to think. It is very easy. All one really need to know is how supply and demand always coexist and how 1+1=2 and 2-1=1.

Keep those very simple facts in your head and think about what happens when the central bank makes money very cheap to financial institutes (much more money in the system) and interest rates go down to zero. Add then in how the supply of housing is scarce at the same time as the central bank does this. What’s your conclusion?

And above is during normal circumstances when we’re not in an economic crisis. The same apply, however, today, which is why despite very high unemployment and very high debts within the system - already before this madness - the same still happens.

This is the very definition of a bubble, and they have created it, most likely willfully to keep you, the people, spending money you shouldn’t have on things you in reality cannot afford.

So, now, what will happen when interest rates goes up (which they haft to) and the central bank withdraw money from the system? That’s right, crash boom and smash. If you/we/they are lucky, the defaulting levels (people not being able to pay back) just goes up a few percentage and the banks have counted on this and manage to stay floating. But think about that for a moment, is that very plausible? Is that best case scenario really how this will turn out? Are the banks really good at math and knows how to handle money?

And please remember, the housing market is not the only market, it’s not alone and standing by itself, it’s a part of the whole economic system. In other words to really find out how things are progressing with the economy and this bubbles future, one needs to take a look around. Use the same basic concept of economics above and apply it to more markets. The math doesn’t tell lies, our politicians and most of the mainstream economists always lies, or do not know what they are talking about.

Mark my words, the absolute worst thing you can do right now is taking out a mortgage and buy a house. It is not a good idea even if you get a very good deal with very low interest rates. It is the worst possible timing of buying you can ever find. However, if you are able to sell, do it. Don’t wait; the number of morons buying will decline sooner or later. It does not matter if prices goes up another couple of percent, now is the time to sell. Renting is often less costly anyway, why have all your money tied up in a house or apartment when you could make better use of them?

No comments:

Post a Comment