Not by a long shot. We could start almost anywhere and reach the same conclusions, but let's focus on something sacred to the middle class...the price of homes.
The price of homes is not even close to a bottom, and here’s why.
Spendable income is about to drop considerably as massive overt and covert taxes take hold. The problem is that homes must drop in price to fall into the affordability window of the lower middle class majority. And several predictable events will even help accelerate the downward pricing.
1. Additional mortgage defaults and bankruptcies will greatly increase the supply of existing homes.
2. Home equity borrowing will all but disappear, further diminishing spending.
3. Selling of stock portfolios to supplement income will depress the stock markets severely and diminish “paper wealth”.
4. Wealth reduction will lead to sharp spending declines that further depress profits and send stock prices even lower.
5. Durable goods demand will drop to an unprecedented level. Cars, refrigerators, televisions, computers and other such goods will be purchased almost exclusively to replace broken and non-repairable goods, and not to upgrade.
6. Loss of durable goods demand will result in further unemployment.
7. Local, State, and Federal taxes must increase to make up for the resulting revenue shortfalls, and we find ourselves caught in a vicious cycle.
What do you think?
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