Deja Vu... All Over Again

I'm sorry. I can't drop the whole buyout situation going on right now. And while I realize this is a business-oriented blog, I teach Macroeconomics to very impressionable 19-20 year-olds. It's my job to ensure that they understand the gravity of this current situation we're in.

Consider the following quote:

"Everything predicted by the enemies of banks, in the beginning, is now coming to pass. We are to be ruined now by the deluge of bank paper. It is cruel that such revolutions in private fortunes should be at the mercy of avaricious adventurers, who, instead of employing their capital, if any they have, in manufactures, commerce, and other useful pursuits, make it an instrument to burden all the interchanges of property with their swindling profits, profits which are the price of no useful industry of theirs."

Whoever said that seems to have their finger right on the pulse of our current dilemma, don't they?

Is it Fed Chairman Bernake? Maybe Hank Paulson, or former Chairman Greenspan?

Nope.

Try Thomas Jefferson. Yes, THE Thomas Jefferson, and he said this in 1814 when addressing Thomas Cooper.

It's good to see that nothing has changed in the past 200 or so years now, isn't it?

And what a burden it is going to be, my friends. Early estimates put this little project at $700 billion, but we know that our estimates always come in short. If you have any doubt, ask any good home builder or remodeler and they'll tell you to throw an extra 10-20% on top. That puts this project at about a Trillion bucks. Now we're talking real money, not little 'chump change' in billions.

Why do we do it?

Economists (I don't consider myself one even though I teach it) say it's necessary to avoid financial calamity. For whom, though?

My house, while probably worth less today than a year ago, still has a solid roof over it and I'm not behind on my payment. Same goes with my cars, although I don't drive a Bentley.

I didn't speculate on an investment condo in Miami or Vegas, so I didn't get to participate in the great real estate land grab during the past five years. Oh well. My loss.

Again, review my previous post with mind boggling phrases such as "risk equals reward." My reward now is for not taking on huge financial risk. My reward is sleeping each night. My families reward is enjoying meals at home instead of a restaurant (Suzy Q's is exempted from this since they've got the best grilled cheese in America.) Our reward is (hopefully) a stable environment that is fairly consistent in its approach to living, working and worshipping.

Now, the speculator in me is taking hold, however. Everyone is running for the door, exclaiming financial armegeddon. Sell, sell sell! Head for the doors and don't let them hit you in the rear on the way out.

Hmmmm.... aren't these the same folks that told me to BUY BUY BUY four year ago?

I wonder if they're selling? Because to be honest, I'm in a buying mood right now.

Call it contrarian, unorthodox or crazy, but I think the time to buy is soon. Not right now, but very, very soon. So soon, in fact, that I'm storing up money for down payment and might go shopping for an itty-bitty condo in SC or FL sometime around Christmas. Don't worry. It's one I can afford without a renter and one that will likely double in value in about 15 years. That's only a 5% annual return if you're keeping score at home. I don't think my 401k will do that well anytime soon, quite frankly, and it will leave me with two homes I own free and clear 15 years from now. Just about the time I'm ready to retire...

Email me your thoughts on this, folks. I really do value your judgment and opinions, and if I get out of line with my economic preaching, smack me in the head and tell me to stick with writing about business.

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