Sunday, September 03, 2006

Welcome to the Brave New World...Where Nothing Is Your Fault

Hmmmm. If you've been following the mainstream media lately, you'll see that the North American (and specifically, the American) economy has hit a bit of a rough patch, specifically in the housing market.

Turns out that taking on more debt than you can afford is unsustainable. How about that? That fact, compounded with the stalling of the housing market, is bringing in gale-force winds to fuck with the fed's economic high-wire act.

So now, the search for the scapegoat is on. It's the Fed's fault, they lowered interest rates too far. It's the bank's fault, they made it too easy for my impulsive ass to get vast sums of money. Now they're suckering us all by raising rates and going to get rich off of us.

If you are in this situation, the person to blame is staring back at you through your mirror. No one forced you to take on more debt than you can afford. I've had people tell me "but I wouldn't have been able to afford a house otherwise". Then guess what? YOU COULDN'T AFFORD A HOUSE, WHY WOULD YOU BUY ONE? Then compound it by taking on a neg-am mortgage?

You may think that I'm being smug about this, but it's the furthest from the truth. I'm in the same situation - I was forced to buy a house because of my work transfer and my wife's pregnancy. However, I went for a fixed rate and am paying off my debt aggressively. That said, the housing market in my area seems to have leveled off, and I am quite likely "upside-down", meaning I owe more on my house than what it's worth. The difference is that for the remaining 4.5 years of my mortgage, I should be able to get myself into better shape.

It would be easy for me and other Canadians (aside from the Westerners) to look at our mildly cooling housing market and thank our stars that we're not going through what's happening in other places. But really, if the US is heading towards a major recession, the likes of which we may not have seen in 80 years, how long will it be before all of Canada starts to suffer? I'm not naive enough to think the worst is over. On the contrary, I believe it's just beginning. It's like we're sitting in the back car of the roller-coaster, watching the people in front head down the hill. It's only a matter of time, folks. The economy, like the links between the roller-coaster cars, binds us all.


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