Thursday, May 04, 2006

The New Road to Serfdom

Does anyone have a subscription to the article by Michael Hudson and who is willing to quote snippets from it? Anyway, I did find an old interview with Hudson here which is rather depressing.

7 Comments:

Blogger fredtobik said...

"Does anyone have a subscription to the article by Michael Hudson "

I read all my periodicals at the library.

May 4, 2006, 1:06:00 PM  
Blogger Marinite said...

But that means I have to do some real foot work!

Ok, then that is my weekend assignment.

May 4, 2006, 1:29:00 PM  
Blogger jhawk92 said...

I'll quote the final two paragraphs of the article. (It's definitely worth paying for, by the way...)

Free markets are based on choice. But more and more homeowners are discovering that what they got for their money is fewer and fewer choices. A real estate boom that began with the promise of "economic freedom" almost certainly will end with a growing number of workers locked in to a lifetime of debt service that absorbs every single spare penny. Indeed, a study by The Conference Board found that the proportion of households with any discretionary income whatsoever had already declined between 1997 and 2002, from 53 percent to 52 percent. Rising interest rates, rising fuel costs, and declining wages will only tighten the squeeze on debtors.

But homeowners are not the only ones who will pay. The overall economy likely will shrink as well. That $200 billion that flowed into the "real" economy in 2004 is spent, with no future capital gains in the works to fuel more such easy money. Rising debt-service payments will further diverty income from new consumer spending. Taken together, these factors will further shrink the "real" economy, drive down those already declining real wages, and push our debt-ridden economy into Japan-style stagnation or worse.

Then only the debt itself will remain, a bitter monument to our love of easy freedom.


Maybe we'll look back on these as the good times?

May 6, 2006, 6:51:00 PM  
Blogger Marinite said...

I just picked up a copy of this article...The New Road to Serfdom. It is quite good; a very good summary of the information you will find on this and other "bubble blogs"; the conclusions are the same. The article contains a lot of very nice charts.

The author concludes that we will end this cycle with Japan-style stagnation or worse. Anyone who bought a house in the last few years is screwed. If you bought long enough ago you might be ok in the sense you won't be in a position of selling your house for less than you paid for it unless they did the cash out refinance thing too much. As people are trapped by debt and going bankrupt the economy will suffer, people will lose their jobs making servicing of their debt even more difficult. This down cycle will feed on itself to who knows how bad.

I highly recommend picking up a copy for yourself especially if you are one to doubt the credibility of what the bubble bloggers have been saying (if I don't say so myself).

I don't think I am going to post a review of the article or quote much from it.

May 7, 2006, 2:50:00 PM  
Blogger Mike said...

Hi, I'm a long-time lurker, first-time opiner...

Hudson is an interesting cat, but I think the Harper's article is a little thin and mostly a summary of arguments that readers of this blog already know. I found the online interview that Marinite cites much more interesting and challenging. It lays out a critique of finance that the Harper's article only hints at.

An aside: today for the first time ever, I saw six realtor "For Sale" signs on the sidewalk across from the Whole Foods in Mill Valley. The Spring sales bounce myust be a little late this year...

May 7, 2006, 5:23:00 PM  
Blogger Marinite said...

the Harper's article is a little thin and mostly a summary of arguments that readers of this blog already know

Agreed. But I am glad this info is finally getting out via the more mainstream media. Better late than never I guess.

I saw six realtor "For Sale" signs on the sidewalk across from the Whole Foods in Mill Valley. The Spring sales bounce myust be a little late this year...

Please send photos if you have them; I would love to be able to post reader's pics.

The data I've been reporting/graphing also shows that this spring season is turning out to be a pathetic dud. But we'll see as there is still a lot more selling season to go.

May 8, 2006, 10:10:00 AM  
Blogger Marinite said...

This guy summarizes much of the Hudson article in Harpers:

http://tinyurl.com/he8or

May 8, 2006, 11:10:00 AM  

Post a Comment

Links to this post:

Create a Link

<< Home

Terms of Use: The purpose of the Marin Real Estate Bubble weblog (located at URL http://marinrealestatebubble.blogspot.com/ and henceforth referred to as “MREB” or “this site”) is to present and discuss information relating to real estate and the real estate industry in general (locally, state-wide, nationally, and internationally) as it pertains to the thesis that recent real estate related activity is properly characterized as a “speculative mania” or a “bubble”. MREB is a non-profit, community site that depends on community participation and feedback. While MREB administrators do strive to confirm all information presented here and qualify all doubtful items, the information presented at MREB is neither definitive nor should it be construed as professional advice. All information published on MREB is provided “as is” without warranty of any kind and the administrators of this site shall not be liable for any direct or indirect damages arising out of use of this site. This site is moderated by MREB administrators and the MREB administrators reserve the right to edit, remove, or refuse postings that are off-topic, defamatory, libelous, offensive, or otherwise deemed inappropriate by MREB administrators. You should consult a finance professional before making any decisions based on information found on this site.

The contributors to this site may, from time to time, hold short (or long) positions in mentioned and related companies.