Yesterday on CNBC, the Bank of America CEO Ken Lewis talked about the financial meltdown. He pinned on a few things: greed, leverage, and keeping up with the Joneses. Lots of homeowners out there are in trouble with their mortgages. Some got defrauded, some simply made poor decisions. But Wall Street executives that earn millions of dollars a year also got caught up in the exact same mistakes.
Greed & Keeping Up With The Joneses
John and Jane Taxpayer want a nice big house. They’ve never been able to own one before, with only tiny savings and so-so credit. But they want one so bad! Besides U.S. home values would never go down, right?
Wait… maybe this might not be smart. But my friends and neighbors have new houses, so that must mean it’s okay! Sign me up!
Bob and Christina the CEOs run an investment business, and want big profits. He’s earning a decent amount with his hedge funds and traditional bonds, but man, these collateralized debt obligations (CDOs) are yielding like 10% and still look safe. They are based on mortgages, and U.S. home values would never go down, right? With these increased returns, I’ll be an hero, and my company’s stock price will soar!
Hmm… maybe this might be riskier than it looks? But wait, the big boys like Washington Mutual, Bear Stearns, and Lehman Brothers are doing it. Sign me up!
Leverage
John and Jane Taxpayer used to need 20% down and good credit for long-term fixed rate mortgage. They only have $5,000 saved up, but want a $300,000 house. Hey, no problem! You just need that $5,000 and you can have your house… with 3/1 ARM that resets to a sky-high rate (which you can refinance later, I promise…). Mortgages are the easiest leverage to obtain for consumers. Three years later… the house value dropped 25% and is now only worth $225k. They put up $5k, and are now down $75k.
We can ride out the storm, as long as we can refinance this adjustable 15% rate! Somebody lend me more money!! No? Crap.
Bob and Christina the CEOs usually only buy investment with their assets. But man, these CDOs are such a good deal. Based on my currently good credit rating, I can borrow at like 7% and these CDOs earn 11%. Sweet leverage! So even though I only have like $10 billion dollars, I can use that to buy $100 billion dollars of tasty mortgage-backed securities!
Of course, if they start getting valued at 75 cents on the dollars, my $100B turns into $75B. I started with $10B, and now on paper I’ve lost $25B. Our credit rating drops. We need more capital. Somebody lend us more money!! No? Crap.
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While we may be in a down market and it’s easy to say ‘I told you so’, I don’t think this type of thinking is really the answer.
Granted, I am not the most eloquent writer, but think about this for a second. What’s the real risk when someone decides to do such a thing? We really are talking about risk/reward after all, with no risk, there is no reward.
For John and Jane above, there is the risk that they will have to declare bankruptcy, but really they are just risking ‘other people’s money’ so if they take their spin at the big wheel and lose, they will have a hard time making another spin for a few years. They won’t go to jail, won’t lose their job, etc. Bankruptcy is not as bad as going to jail.
For Bob and Christina the risk is even less. If the deals go sour, exactly how are they going to be held accountable? They might lose their job, but they have a golden parachute to guard against that. If things go really horrible, maybe they might not get their golden parachute, but really they have been paid well all these years, so big deal if they aren’t working for a short while. The potential reward is large bonuses as opposed to losing a job while getting to blame it on the ‘market’, they don’t even have to take responsibility for their actions.
No, these problems will go on as long as there is no serious consequences. No one is going to jail over it. It WILL happen again.
The part I don’t understand is this: did some event happen in the last few years that allowed people to borrow so much money without having a sufficient down payment or sufficient income?
Did all lenders decide to take bigger and bigger risks, knowing that they could resell their loans to because Fannie Mae was there to broker the loan?
Was the problem that the government backed these loans (implicitly) and that they let their standards get too loose?
One of the best explanations I’ve heard regarding this whole mess comes from This American Life. The episode entitled The Giant Pool of Money goes into some great detail about the real-life equivalents of John, Jane, Bob and Christina.
If you go to thislife.org and hit the ‘all episodes’ link you can stream the whole show (it’s episode 355.)
Maybe I’m taking this wrong, but I feel like you are belittling / making fun of / putting down people who are in financial trouble. I totally get that there are people out there, probably even the majority of people, who don’t understand financial markets and risks and who bought into all the hype of the formerly booming real estate market. I like that your blog is very easy to read and explains a lot of financial things for many people. I just don’t understand the need to put down people who are struggling. It’s kind of hard to take from someone who publishes their own net worth Again, maybe I’m taking it wrong, but it comes across kind of smug.
Uncle Same used to only spend what he collected in taxes. But man, these earmarks and social programs are such a good political deal. Based on my historically good economy, I can borrow at like 3% and these favors get me re-elected. Not only that, we can fight two wars and not worry about where the money is coming from. Sweet leverage!
Of course, if economy goes in the tank so no capital gains, no income taxes, and no manufacturing to generate wealth. Our credit rating drops. We need more capital. Somebody lend us more money!! No? Crap.
Wait we can print more money and not tell anybody. Nobody notices inflation.
No?
Yes!!! FED will borrow!
I meant taxpayers.
“The average person may not understand the financial markets.”
What I’m saying is:
“Neither, apparently did Wall Street”.
I’m not saying “I told you so.” I didn’t know this was going to happen. If I did, I wouldn’t have bought a house myself in Q1 2008.
People used to think for decades, that buying a house was a critical step to wealth and riches. But these days it is the fastest way to bankruptcy.
EdV – It’s like you said – someone would buy the mortgage from the originator. Fannie/Freddie bought a lot, and the rest got bundled together into complex things like CDOs and bought by hedge funds, Bear Stearns, Lehman Bros, etc.
Matthew – Interesting link. Audio costs $, but here is a direct link to transcript of show. Kind of long at 20 pages, but I agree that it does a good job of explaining things.
Tom – I like it! 🙂 I’d laugh, but I’m too busy being scared stiff.
Nobody can be smug about this meltdown. It’s going to be painful for everyone.
The husband of a coworker of mine worked for a little bit (less than a year) as a mortgage broker. He did a loan for another coworker of mine. Details as he relayed them to me
– 0% down
– Couple make $125K/year. Wife has good credit, husband has bad credit
– House they want to buy is $625K. This being Southern California, late 2007, not that huge
– My coworker’s husband set them up in an interest only loan. The 4 of us (me, my huband, my coworker, her husband the loan broker) sat around the dinner table one night, and he relayed these details to us and said it was a great loan, a great deal for everyone involved.
– Husband bailed shortly thereafter. They’d like to sell but they’re underwater and there is a pre-payment penalty. Husband has called the bank about seeing if the bank will take a short-sale. The wife wont’ do that, doesn’t want the ding on her credit. So she has taken in roommates….
That’s a big problem right there. This couple never should have qualified for that loan. And for a mortgage broker whose wife is friends with the borrower to sit there and say it was a good loan, that is absolutely unbelieveable.
It should go back to the days of 20% down and people getting fixed rate mortgages. Just my opinion
Problems will ensue whenever a large amount of wealth is created from nothing. A creation of wealth, however, will naturally follow the development of a technology which increases our standard of living.
In the two financial crises we’ve witnessed over the last decade, a large amount of wealth was created from nothing. The .com bust was largely a speculative house of cards collapsing. The real estate bubble, with the associated mortgage/banking fallout, is the same.
I wonder how this will affect future employment of the financial services and real estate sectors? I wouldn’t want to go into a real estate or financial planning career any time soon. I would look for a career that adds value to the economy by increasing our standard of living.
Unfortunately the issue for Corporate CEOs is even when they screw up they still receive a large severance package for leaving. John and Jane Taxpayer gets nothing when their house is foreclosed.
true, Peter. There are many, many many cases of people, who through absolutely no fault of their own, lost their houses or are losing them.
But it seems my local paper tends to only print stories about people losing their homes who shouldn’t have purchased in the first place, no money down, interest only loans, and then when the loans reset, they couldn’t make the payments. These types of people shouldn’t “get” anything when their house is foreclosed, they should just og rent a place since that is essentially what they were doing in the house.
Jonathan, the This American Life episode can be streamed for free via the ‘Full Episode’ link. It spawns a pop-up window with their streaming player, so it might be getting blocked by a pop-up/script blocker. They only charge if you download a copy of the show via iTunes.
Though I suppose if you’ve read the transcript already you’ve gotten the gist. 🙂
Thats an awful explanation of the mortgage problem.
Did borrowers suddenly become greedier? certainly not!
The demand for mortgage backed bonds exceeded the supply. Standards were lowered so people without solid finances could get a mortgage. Eventually these people defaulted and thats why we are where we are today.
As Mathew says above, check out the this american life explanation. they do a great job.
I like the writing style of all the dumb mistakes made by a lot of people. The trophy for the dumb mistakes goes to the CEO’s.
And, see, I have no problem putting people down who are ***FOOLISHLY*** in financial trouble!!
Me, myself and I had to buy our house based on my wife’s and my credit score, 20% down (I was going to continue to rent if I couldn’t come up with the 20% ‘cuz I REFUSED to pay PMI) and a fixed rate loan…..all in a house that I could sufficiently afford (IIRC, the bank wanted the house at NO MORE than 33% of our income).
And I don’t buy “Well, that’s great for you, but MY situation is blah, blah, blah,” ‘cuz it all goes back to my belief that THIS COUNTRY DOESN’T KNOW WHAT IT’S LIKE FOR THINGS TO SUCK ANYMORE!!!
It’s OK to NOT have…granite, stainless, iPods, xbox, plasma, swimming pools, new cars, boats, quads, toy haulers, D&G this & True Religion that, dinner out, weekends at Bernie’s, etc. etc. etc.
I’m so over the “We were suckered into $5K/mo worth of debt by crafty salesmen” bullsh!t that I’m ready to start strangling people.
/rant
Melvin quit being so bitter. When you make 40k/yr it is hard to justify buying a house for 600-700k with very little down when there are a lot of us who make 4-5x that and smartly didn’t get in over our heads. Start over and think twice next time.
I wonder if this will turn into the lost decade……
We bought a very small, fairly cheap 2br ranch back in June 2006 with 0% down and no PMI in an OK neighborhood with excellent credit. We’d like to sell the house because of a crazy neighbor, but of course if we do that now that means we’ll have to come up with cash for someone to take the house. It doesn’t quite make sense to us to do that, so for now we just wait…I’m not sure if we fall into any of the categories, but I’ll say that if we need a down payment of 20%, we couldn’t have gotten the house back then and will have the money to buy a house cheaper now. I think requiring a down payment of 20% is a great idea, and the government should have a tax free account for that specific purpose instead of mortgage interest deduction.
wow, good article, good examples. thanks.
Actually, buying a house recently may not have been as big a disaster as some think. If inflation rears its ugly head. (Which happens when you print money) then the people who have big fat loans out will benefit.
If you think about it, if a loaf of bread doubles in price, then wages will have to double in price, and “fixed” interest payment like home loans will essentially be cut in half. (Extreme examples, but you get my drift.)
Also, I disagree with the poster who felt it was a bad time to be in the financial industry. While yes, the scammers are going to be out of luck, if anything, people will be willing to pay more for trusted advice and feel more helpless than ever before. (I mean, if Merrill Lynch and Lehman Bros. can’t figure out the markets, how does the average joe fare?)
It will be interesting times for sure. What is bad, is that those of us who saved our pennies, didn’t overspend and put money in the bank will watch our purchasing power erode, while people in big houses will pay off those big fat loans with worthless dollars.
Maury, I think you are a bit confused here …
“If you think about it, if a loaf of bread doubles in price, then wages will have to double in price”
Ummmm, no that’s not how it works at all, and I think you can see that in practice. What will happen is wages will *not* double, and in real terms may even fall. What’s got to happen is people have to be “OK” with … shock, maybe “having less” and “making do”
Thanks to years of Bush rule, pandering to big corporations and “growth growth growth” at all costs, people seem to be working more hours for comparatively less pay and even if unemployment has been historically low, I think there is some evidence that the quality of jobs is lowering as is job stability.
And I think it probably is something of a crappy time for a lot of people to be in the money business (not that they didnt bring it on themselves) as a lot of the market is based on confidence, and so it is that a relatively small amount of bad investments can scare people away from a market as a whole, causing a huge knock-on effect (what is a mortgage or other loan after all, but a rating of confidence that the lender has that the borrower can & will make the repayments)
I agree completely with you Jonathan. I’ll even take it one step further. The cause of the problem is that, as a whole, the American people don’t know how to save anymore. We don’t remember how to save for a rainy day, save for something we want (like 20% down on a house), or even just save for the sake of saving. This “keeping up with the Joneses” has become our downfall.
It’s not as if people who make < 100k combined can’t afford a nice house. My parents make < 100k combined, yet purchased a 500k house using savings and a 40% downpayment on the loan. If you live frugally and tripple think all your expenses, you’ll be supprised at what you can afford.
It’s more than just the big things, its the little things as well. It’s the $3 starbucks every morning, the $6 lunch, the $40 cable bill. You’ll be surprised how much money you can save.
EDV –
Answer to your question. Yes mortgage brokers were willing to sell anybody a mortgage, even in cases where people did not disclouse their income. The reason being, frannie brokered the loan. This means zero risk to the mortgage broker/bank as they werent carrying the risk when they sold off the loans.
auntie_green
It will certainly go back to borrowers needing 20% down and income to pay the rest of the loan. Cash is now king and sub-prime will no longer exist.
FHA still seems to be functioning just fine. I believe it’s the “other” ways of getting 3% down that are disappearing.
Also, it has just become easier in many areas to get 0% down with FHA, as legislation to place restrictions so the seller cannot finance the 3% has been struck down.
I had to provide a lot of documentation to get one of these, but they are still available. It just means that buying a house takes about 6 months, rather than 2.
In addition, many homes are selling way under even their current market value, so there are areas where you can get a larger home for less than or equal to what you pay in rent.
At which point, even if your home devalues, you should still be in a position you can afford. Assuming you like your house, of course.
Back when I was looking to buy a house in 2003 I read a lot before hand. I was only 26 so I knew enough to know I didn’t know enough. I remember there was a Money Magazine issue that year that said something like, “Is there a housing bubble?” right on the front cover! It had a balanced analysis of the risks and potential rewards of home ownership at that time. So even regular non-finance people like myself had warnings back then. I also read a few finance books that had been written in the 90s, before the whole real-estate craze had started in the masses. These books took the usual approach to the question of buying a home: analyzing rental prices versus ownership prices, telling you that you need to own your home at least 5-7 years before you can say it was financially worth it (given historic price increases), and to steer clear of ARMs and other exotic mortgages. I took all that advice and still bought a home but only because I knew that my town was a fairly good-bet for housing price increases given military fluctuations and some other factors.
Now I see a few relatives dealing with problems related to the mortgage mess who didn’t do their homework like I did. They were really just betting, not investing.
When I bought my first home at age 25 without any parents’ or boyfriend’s help, I had a hefty emergency “what if worse case” fund set aside. I lived meagly so that I could pay my mortgage responsibly. I didn’t get the stainless appliance and nice flooring upgrade even though it would’ve been awsome. It’s called responsible home ownership. Like you said, most home buyers wouldn’t complain if price kept going up like $ falling out of trees. Everyone points fingers and blames everyone when things are bad. Just shows the majority are very irresponsible and don’t care. When banks make bad decisions, other banks come to the rescue and buy them out. What happened to accountability???
Does anyone else think that exposure to the sub-prime market in mortgage backed securities is being a little exaggerated? First, what is the real percent, or dollar value of sub-prime mortgages versus normal mortgages that were issued — and in what securities have the worst loans been wrapped up in? I’m really getting the feeling that some of this is just being used as an excuse to dis-member companies on Wall Street, so other firms can get bargain basement prices by cutting up the best businesses. Most of the companies have liquidity problems, that somehow are drummed up into being insurmountable and I don’t really believe it. I think a couple of years from now, even those “horrible” traunches (sp?) that were given away for pennies on the dollar will suddenly be worth quite a lot. Not every mortgage is defaulting, so there must be value in those.
Jonathan: I’m not saying “I told you so.” I didn’t know this was going to happen. If I did, I wouldn’t have bought a house myself in Q1 2008.
That’s some serious humility there! If others want to go back to the posts from that time period, there were definitely some voices on the board telling Jonathan not to buy.
Jonathan: I’m not saying “I told you so.” I didn’t know this was going to happen. If I did, I wouldn’t have bought a house myself in Q1 2008.
That’s a little shocker for me too who religiously read this blog as a operation manual on Personal Finance and all things around it including real estate. But I guess no one has a crystal ball.
Now I seriously hope Jonathan doesn’t take a U turn on market timing as well, by declaring “Principle Protection during bear market and Moderate Growth during bull run” is new theory replacing efficient market theory. Honestly his portfolio hasn’t seen a bear market since inception (and neither has mine). I hope this bleeding stops before it becomes a full blown meltdown wiping retirement savings to irrecoverable extent like what happened in Japan in 1990. Nikkei hasn’t recovered (from highs of 40,000) yet nor has NASDAQ (from 5000), is S & P (1400) next in line ?
“Now I seriously hope Jonathan doesn’t take a U turn on market timing as well”
I don’t think I made a U-turn. Of course, if I was psychic I would have waited. But I’m not. Housing prices can go down, and I accepted that when buying. In the end, I have a nice fixed 5.6% mortgage that we can still afford comfortably, and no need to sell.
Market timing? Nah, I’m not going to pretend psychic about that either. I’m actually sending in a big fat 401k contribution this month. But, did you see Suze Orman advocating market timing on Larry King? My respect for her is wavering…
Oops! Wrong post.
Jonathan,
GLAD YOU CAUGHT THAT TOO!!!
I saw her on Anderson Cooper and my jaw started to drop and my wife looked at me and said, “What’s wrong??”
I said, “Well, she’s not saying it by name, but she’s basically suggesting market-timing!!!! WTF??”
The major problem stems from the idea that all Americans have the right to own a house, formulated under Bill Clinton’s presidency and put into practice by his treasury secretary, Rubin. You know -the “American Dream”.
The Community Redevelopment law of 1995 changed the requirements for lending, allowing an American with NO credit, NO down-payment, and NO income to get a loan to buy a house!
Now, the “Dream” has become a nightmare for the entire country!
Not that Greenspan always gets things right, but the following statement from a 2003 article looks a little prescient to me:
“Federal Reserve Chairman Alan Greenspan said in a letter to Congress that it should keep a close eye on the risks of Fannie Mae and Freddie Mac because the markets have trouble assessing risks at the companies because of their ties to the government.”
http://www.usatoday.com/money/perfi/housing/2003-06-09-fannie-freddie_x.htm
Doing a news search from 2000-2005 on mortgages or Fannie/Freddie is quite revealing. Congress got us into this mess by doing exactly what Nathan said, deregulating lending to increase home ownership rates. But, of course, greed helped chart the course through the new deregulated landscape.
You failed to mention the main cause of these collapses; that of government deregulation and lack of government oversight.
What a fantastic article to simply explain the financial mess.
Leverage is a great way to make money but the Wall Street CEO’s were only thinking of capital gains on stocks they own and big fat bonuses not the other side of the equation that over leverage would seriously erode company capital if the plan went sour.
Can we talk about the government getting out of the housing promotion business yet? The US federal government is now the largest mortgage backer in the world. Welcome to socialized borrowing? Come on! This crisis has been 60 years in the making ever since the government decided it needed to convince people that homeownership was the way to wealth and prosperity. We have added so many government incentives to buy homes through the decades that we inflated home prices beyond reason. Every time there is a bad market, the solution is to add more incentives… why don’t we just start giving people homes? Now you can take out a mortgage backed by the tax payers with artificially low interest rates and get a $7500 interest free loan for a down payment! Throw in the other tax breaks and the government is basically holding a fire sale. The answer is not more incentives! The answer is to get the damn government out of the housing market. Yes, temporarily it will cause economic stress as things balance out, but it will be worth it in the long run. All we are doing now is spending more money, getting the country further into debt, which is only going to prolong and worsen the pain in the end. What do you think is going to happen when interest rates have to rise because of runaway inflation and decreased foreign investment due to high debt risk? While I’m glad not to be in the property investment business right now, if I was I would get out as soon as the market comes back, because its only going to be worse next time. The real problem is that this ridiculousness affects us all, and not just those who are trying to borrow over their heads.
Hi there,
I’m a finance professional and a long time reader of your blog, and have begun blogging recently on the credit crisis, and the housing market in general. I think there is a lot more pain to come, unfortunately. While I agree about the whole keeping-up-with-the-joneses theory, there are other aspects, in my view.
I think that this whole crisis was created, not by too much risk taking, but by too little. Investors had money to invest, and tons of potential investments. They could invest in startups, or corporate debt, or in biotech R&D ventures, or in retail – They had the option of investing in just about any area of our economy.
But they invested disproportionately in two areas – First, in safe treasuries, and, second in nearly-as-safe mortgage securities of all stripes.
All it takes is a close look at the economy – where have all the record profits of the past 5 years gone? Where is the big spending? Where is the corporate expansion? Where is the massive R&D? Where are all the little startups? Where is all the risk-taking that is the US economy’s greatest strength?
It all got crowded out by what appeared to be the least risky option- “safe as houses”.
I would have to agree that all Americans have the right to own a house,….PROVIDED they can pay for it. Period. And I agree that Greed and Keeping up with the Joneses are big problems.
As a single person, on a low income,($20,000) it’s hard to qualify for any mortgage, even with money in the bank. So I bypassed that option – and bought a poor little orphan fixer-upper in very bad shape and have been working on it ever since…. Of course, since it was in such bad shape, it wouldn’t finance, so I paid cash for it. $40,000. And have been elbow greasing it, sheetrocking,painting, and fixing it up as I go, paycheck to paycheck without getting into debt over it. You’d be surprised what an over 50 yr old woman can learn to do! A few ‘friends” said I should burn it down and start over, and a couple said they wouldn’t be caught dead in it, and some said, You’ve Got to be kidding! But 2 years later it is a cheery comfy home for me. No morgage – At least I can sleep nights!
If more people would be willing to put some elbow grease into a home, not have to have all the fancy gadgets in it, and be willing to let the house grow with the family, I don’t think we would be in such trouble. However, that takes PATIENCE and Planning – and I think people have forgotten what those words are.
Since 80’s words like “leverage” and “OPM” (other people’s money) are became enshrined in the culture of “investing” on both Wall Street and Main Street. As any bubble before, it started with easy supply of money, subsidized by our government in form of programs promoting “home ownership”, and directly on indirectly supplied by Fannie Mae, Freddie Mac etc. This was done deliberately to revive the economy after dot com bubble and 9-11 disaster (remember Dow Jones index hovering just over 7000 mark?) to fend of scare of global war on terror and its effect on economy.
The recently hailed as success rate of home ownership reaching 70% nationally is clearly unsustainable, yet as recently as May ‘08 National Association of Realtors promoted so-called the power of leverage as best investment vehicle.
For a bubble to fully form, besides money, one needs to create fresh stream of ready buyers by exciting the public and creating “public frenzy”. TV shows like “Flip that house”, “House Hunters”, “My house is worth what?” fueled the public desire to “own” (albeit with 0 down) or “invest” in real estate. Soon everybody (and their brother) owned or was about to own a “property” sometimes in form of glorified shack that could be patched up, painted and re-sold again, or simply held “as investment”.
IMHO, FED and its chairman Greenspan knew well about the housing bubble, even mentioned it on few occasions, only to quickly backtrack and make it non-issue. There was a mountain of money to be made, and Greenspan needed to shut up to let the cycle continue.
As any bubble, nothing lasts forever and while it money is good while it lasts, assets quickly deteriorate upon bust. The key is not to get caught with “pants down” and exit the market early, while it is still on the upswing. This is what Goldman & Sachs did and few others.
Shrewd banks and investors knew that it will burst, question was when. They were waiting on so called “black swan event” or whistle-blower that would sound the alarm for exit. This time it arrived in the form of previously obscure Oppenheimer Funds analyst Meredith Whitney. And so the bubble started unwinding. The “blame game” started.
It even became “topics of choice” in presidential politics, which conveniently blamed mortgage brokers for the disaster. True, since there was money to be made, mortgage industry attracted a lot of felons and scumbags looking for quick buck. But majority of them sold the interest–only and negative-amortization loans because they made available by lenders and because public demanded them to make their “real estate investments” possible.
Mortgage brokers are in essence “outside sales force” of the wholesale mortgage lenders. They did not put together the loan programs not they made money on selling Mortgage Backed Securities on the aftermarket to bond investors.
There will be quite a few unscrupulous mortgage brokers that already landed or will land in jail soon. Question is, how many policy makers, bank directors, CEO’s or investment analysts will do. I venture to say – not many. The worst fate they will endure is possibly loosing their golden parachute; even Countrywide CEO Angelo Mozillo after the sell out to Bank of America fared well so far. In the TV interview he said “no one predicted that housing bubble will go bust” (Sic!). So he exits the stage a “fallen hero” of “affordable housing”.
What now? Recession, credit crunch and more slide in real estate prices or…another bubble for gullible public. I think one is in the works as we speak…What it will be this time? Anyone venture to guess?