WHAT KIND OF ECONOMIC FUTURE CAN WE EXPECT - WAGES STAYING THE SAME - COSTS SKY-ROCKETING

In the days after the tsunami in Japan, the result of a devastating earthquake, I knew as a news' junkie, that the nuclear power plants were going to melt-down. I think it was because of the baloney being fed the public, to buy some public relation time to sort out the chaos. Many of the Japanese people were skeptical, based on past experiences, that government sources would not tell the complete story……because that might frighten folks. I think there's a more sinister financial interest that factors in to truth-distorting of this magnitude. Now this week, when they announced that…..well, we sort of had a melt-down after all, it really isn't much of a surprise to critical thinkers, who have seen and heard distortions and mistruths about other major world-wide events….and just filled in the blanks with common knowledge.

The problem today, is that with our high tech, intrusive and real-time reporting, and the failing attempts to muzzle opinion over the long haul, we're all going to be faced with the bare face of reality, and have to deal with a more vivid shade of truth than we have been accustomed. Whether it is at home or abroad, the days of muzzling the press, distorting truths for unsavory gains, is in serious decline. And we should all be pleased about this…..in time, because we're so used to being lied to, and misled, it's not easy to handle the jagged shards of unfolding, rough hewn actuality……as we watched a tsunami claim thousands of lives in Japan. The technological breakthroughs have made reporters out of us, and there was no chance for the government of Japan to mislead anyone…..unless one surrendered voluntarily to propaganda and distortion despite what we could all see. Instead of the government over-ruling the power company, responsible for the reactors, and telling the nation that melt-down was an inevitability, they continued to let the ridiculous charade continue despite, what the experts could see for themselves, was an out of control situation. They have done a disservice to their country. The contamination they tried to minimize, will defy what the government and the power company insisted was being controlled…..but damn thing is, you just can't mop up radiation with a hardy dose of P.R.!

But what really bothers me today, is the B.S. we're getting in our own country, especially on the economy and its well being. While the statistics gathered, paint us as an extremely fortunate country, as compared to the rest of the world, the figures are only that……and if you adopt the generally rosy overview we've been fed, and you take out that whopping big mortgage because real estate is always a solid investment, then you pretty much deserve your fate. Taking the critical approach, like knowing Japan's damaged reactors were going to melt-down, (without having to be told as much), the astute investor would look at a wide array of point and counterpoint, not just about the shape of the general economy, but where the housing market is headed. I don't pay much attention to the diatribes by bankers and realtors, or the vested interest generally. I chose those who have an opinion, who are not getting rich from the industry.

When I hear about the size of mortgages being taken-out today, by young folks, some newlyweds setting down roots to raise a family, I can't help but be distressed about the carnage yet to come. As it was in the United States before the real estate bubble burst several years ago, the propaganda, the good news reporting, the "we believe in you," banker-bunk, to sell high risk mortgages, we aren't so far off in this country, as we have been guilty of affording many folks with money they can't possibly afford to pay back……when, as it must be, interest rates have no where to go but up! Banks etc. have given money to customers who should have been given advice instead. Go and save some more money. A lot more! Then come and see us. Instead, what happens, is the "bend over backwards," "we're on your side," approach, that initially makes the customer believe the bank is a good friend……would a good friend yank your family home away when mortgage payments fall behind? Of course they would, and there would be nothing friendly about it! As they would say, "It's business, that's all! It's nothing personal!" Very few wide-eyed new home owners give thought to the very real potential, that at some time in the decades it will take to pay off the mortgage….if ever, something will happen to stress your personal, family economy. A lot of trusting folks, painfully naive to start with, aren't aware of the wolf in sheep's clothing. The "we can make this work," attitude looks and feels wonderful, but then that's just good business. Telling you to go away, because you don't have enough money, with the real potential you will go to another bank, is most certainly done, and it may be done frequently with new government mortgage regulations, such as down payments, but it is not done enough to prevent a pending disaster……a melt-down of foreclosures yet to come.

A real estate bubble? Realtors cringe. How is this possible? It's just market demand, you say! Investment money from overseas, taking up major real estate holdings in Canada's major cities…..driving the prices for residential real estate through the roof. This is true. It is happening. But regionally, in Muskoka, for example, no, it's just greedy intention. Everyday homeowners trying to cash in on the folly of real estate fluctuations before it goes bust. What I see, like it appeared in melt-down form, in the late 1980's and early 90's, is that inflated values have reached the point of the ridiculous, and like paying twelve dollars for a three dollar loaf of bread at the supermarket, the end of this present speculation is at hand. Whether they will admit it's a buyer's market or not, well, it is, and for those who made a killing…..selling before the glut of unsold properties on the market, bully, bully! Some win but most lose.

It used to be that a home was a place to live and raise a family. Now if you live in the same house for more than five years, oops, you missed the peak but just a tad, and have had to sit on it for a few years longer. Speculation is rampant. It has its significance. I speculate on art and antiques. My boys speculate on vintage instruments. Buying with the intent of making a profit. But we're business owners. What you find out there on the real estate hustings, are inexperienced folks buying and selling real estate as if they are chairs or guitars, stocks and bonds, gold and silver. The reality…..that few like to discuss because it seems so nasty to dampen enthusiasm at its peak, is the time tested rule……"what goes up, eventually comes down." Unless wages and job opportunities increase by leaps and bounds in this country, we are not going to be able to support ridiculous increase in property evaluations…..either for sale purposes or for the taxes based on these grossly inflated properties. There has been a lot of glad-handing around, to get to this place, where young people will simply not be able to afford to buy a garden shed let alone a family home.

Like the melt-down of nuclear reactors, denied by the big mucky-mucks, it shouldn't take anything more than astute awareness to reveal fiction for what it is. The government of this country would love you to believe that everything is fine out there, and you should carry on as if nothing could ever knock over the economy, under their administration's care and control of our welfare. If I didn't believe the b.s. in Japan, I certainly won't believe it in our own country, when government, obviously missing the meat and potatoes of the economic issue (like the slow recover in the U.S.), encourage us to look forward, and build that picket fence around that cherished, over-priced bungalow you just bought. If we thought we'd sneak by, and not be grazed by the economic chagrin south of the border, it would be the same propaganda being heralded, as God's honest truth, that Vancouver would polish off the Bruins in four straight games. You want to believe it! It's great news! Seems more like fact than speculation. Just like nuclear reactors that won't melt-down because willpower insists that it can't happen.

I don't have a business degree and I haven't been anything more, in my life, than a run-of-the-mill editorialist, who has been in the middle of economic turmoil, a real estate disaster, and earned the status of "survivor." I look at my writing accomplishments, over a lifetime, and it pleases me. I look back at the perils we survived, as a family, and I'm ecstatic. We were living the Canadian dream, just like many now are embarking, and when we bought into the "sound investment" propaganda, we had no compunction whatsoever, of buying a property we couldn't really afford. And before I could nail together the first board of that picket fence, our home was worth a lot less than we had paid only months earlier. If we could have sold it for any price! As time went by, in those less than halcyon days of the early nineties, I had no idea how we were going to make ends meet. I thought a lot, those days, about a kindly senior bank manager, who told us to go home, save more money, and come back later. We nodded, had some obvious blushing to show for our conversation, and did a right turn out of the bank door,……took a two minute hike down the street, and found a bank official who thought we were the perfect couple to get a big, big mortgage. Rather than face the truth that we couldn't afford more than a garden shed on a small lot, we got what we wanted……a debt load that would beat us down for the next decade.

Now consider this. We borrowed $105,000 in 1998. We're done now, in terms of cash reserve to meet what we owe, but we'll finish the term with accelerated payments in just over two years. Now consider the property owner who borrowed $200,000 or $300,000 recently, to purchase the same type of home that we did, back in 1989. What you should also know is that with the decline in values, our house went down as low as $120,000 from the $142,000 we paid…..in only two years. The problem we faced, and dreaded any correspondence from the bank, was the very real possibility the lenders would seek a new evaluation, and demand we put more money onto the downpayment…..as it had declined in the same way as the valuation of the property generally. That would have meant giving the house back and losing a substantial deposit.

We were young and inexperienced speculators who nearly lost it all. We had sold two previous small homes, and had made a nice profit, to put as a downpayment on a better home in a nicer neighborhood. But for our mental health, and financial well being, we should have waited to tap into a buyer's market, where we could have saved much more cash, on a better home.

I lost years of my life during this period. There was no way of avoiding depression. You went to bed worried and you woke up worried. And your dreams were nightmares, and some of them were pretty ugly! When I hear about real estate speculation today, it drives me nuts. It's like playing Russian roulette. Yes, there may only be one bullet in the chamber, but one is too much. Those who speculate by profession, know how to ride the market fluctuations. Most don't. They will go down with the market like a stone.

Don't believe everything you read. Read abundant material on the same subject, not just material you find that supports your theories. Purposely find editorial content etc., that goes against the grain, and provokes you to think more critically, before committing to something that is very, very horrible. I played a part in what could have been a life-changing financial decision…..when in fact, we were living in a nice, however small bungalow, with a lake view, in a nice neighborhood. But it wasn't fancy enough. We were like many folks today, who don't have a clue what lurks behind the credit your are afforded. You need to know this. It's a decision you should never take lightly, or simply on the advice of those with a vested interest. I have none. Just a worry about the melt-down coming our way. Prices are too high, wages not high enough!