Apparently sanity-control is on sabbatical at Slate. Check out this fool’s gold bit of Real Estate investment advice:

So, you probably can’t become the Levi Strauss of real estate by hanging out your broker shingle, no matter how high the housing prices climb where you live. If you want to make money off the housing bubble, you’ll have to do it the old-fashioned way: Buy a place with a no-money-down mortgage and then flip it.

That is the perfect way to end up with a $700,000 mortgage on a $250,000 house that you cannot even pay the interest for–forget about the principal. The only hope for such a situation is bankruptcy.

So this Professor is advocating a course of action that will make people risk huge amounts of capital they do not have resulting in the loss of their investments as well as what assets they DO have–their car, their home they LIVE in, and everything else worth anything.

I am flabbergasted to see such abysmal advice in print.

The future of America? Bad.

The United States is on the brink of disaster and catastrophe. America’s addiction to gross consumption without spending will be the cause. Our country has $34 trillion dollars of debt. We have no way of ever paying it back. We have exported our manufacturing business to China. We are exporting our technology businesses to India as fast as we can. The day that we exported oil is a distant memory. The only things we actually export are food (which we are converting into housing as fast as possible), gambling, pornography, hollywood and war. Short of a breakthrough innovation in the US as big as the information revolution, we have absolutely no chance of retaining our dominant economic position in the world.

The United States will go bankrupt as soon as the global mind recognizes that the US can never pay back their loans and is willing to accept the resulting losses. The only reason this has not yet happened is because we have forced the world to buy US treasury bonds with the profits from their US exports. By doing this, we agreed to give them huge amounts of money on the condition that they would use this money to buy into our economy and government. Foreign holdings comprise 40% of our debt. As soon as governments stop investing into and start withdrawing out of our country, the price of the US dollar will free fall creating a cascading domino effect that has the potential to bankrupt a large portion of the world’s governments including our own.

When the dollar collapses we will no longer be able to buy the energy and products–things we can no longer provide on our own–that fuel our economy and provide our way of life. We will no longer be able to import the foreign-built parts necessary to assemble our computers, cars and planes. We will no longer have enough fuel for trucks to deliver our food and equipment, the gas to go to work, nor even the energy to refrigerate our food. This is a global catastrophe approaching and visible on the horizon that few bother to see. If and when this happens, there will be global famine and wars that cause hundreds of millions of deaths as government and military powers take advantage of the instability to secure new and defend old sources of energy and power. We need take advantage of our unique ability in the world to print currency at will without repercussion and pour hundreds of billions of dollars into the research and development of alternate energy sources that minimize our vulnerability to the collapse of the global energy infrastructure necessary for our way of life. If we do not, half our population will perish after we no longer have the ability to consume hundreds of times the amount of energy an average human in Africa or China does.

No matter what happens, America’s free currency ride will end as the budding economies of India, China and the rest of the developing world meet and surpass our own. Once investors grow confident these economies will remain long-term, established economic superpowers, they will be ever more inclined to direct money away from the US and into those country. They will need more and more encouragement to continue pouring money into our economy and invest in our debt. This encouragement will be ever increasing interest rates. As interest rates increase, large percentages of the American population will default on their housing loans they can no longer afford. While most of the world saves over 20% of their earnings, the average American saves absolutely nothing–generally doing the opposite and going into deeper and deeper credit card debt. Those Americans that resist the urge to amass ever increasing piles of crap and unnecessarily large homes on interest-only loans and actually manage to achieve wealth save at a sickeningly low rate of only 2%. This nauseating cultural trait will have devastating consequences on our country. The housing market will crash and nearly every American will lose his assets in the only saving system we have. Those people who do not lose their homes will see their accumulated wealth vanish as housing prices plummet and inflation skyrockets. Prices will increase dramatically for everything we buy and we will no longer be able to consume half of the world’s energy and spend nearly half of the world’s money. The days of having 14 pairs of $15 jeans per person in every home and $3.00/gal gas at the pump will end and never return. Americans must resist our temptation to overspend. We must begin to save however much we can immediately. We can reduce consumption now or we will enter a depression and halt all consumption in the future.

You have been warned.

References:
Confessions of an Economic Hitman by John Perkins
China, Inc. by Ted C. Fishman
The Naked Hegemon –
http://www.atimes.com/atimes/Global_Economy/GA06Dj01.html

During the 19th and 20th centuries, millions of people flocked from their homelands to seek out new opportunities in a budding new economy. The United States soon emerged as the world’s preeminent power for the rest of the century. This century will not be the same. Just look at the ever rising price of gasoline. Look at the people who immigrated here.

Many of the Chinese men and women who risked their lives to immigrate to the USA are now returning back to their homeland because they recognize that opportunity has moved westward into China. Turn over anything you have bought recently and you will find the words Made in China. China has become the manufacturing center for the entire world, and will become even more powerful as we progress towards the future. China has the worlds largest buildings, fastest trains, most modern cities, tallest basketball players, and just about every other superlative you can imagine.

China is huge and it will only get bigger. It houses the world’s largest population at somewhere between 1.5 and 1.7 billion people. In other words, China is unable to account for the existence of as many people as live in England, France and Germany combined. China has over 100 cities that exceed a million people. The US has 9. Western and Eastern Europe combined have only 34. No one can compete with a country that has hundreds of millions of skilled workers willing to work for $1 a day.

With so many people, it will be impossible for every person in China to live a western-quality life, but it will become the super power anyway. If 10% of China’s population lives a life equivalent to an American or Germany, those 150,000,000 people will represent an economy that dwarfs the economy of any European country. As soon as 20% of China is living an American lifestyle, it will surpass the United States and become the richest, predominant economic power in the world.

Say hello to the future. Ni hao.

Look Ma, Fejta’s a famous bike rider.

Email makes us stupider. LOL! Teh Funnay

How amusing to hear that the Brits love the 4th of July.

I talked with Sean tonight. He is a big trumpeter of that woman in Texas exploiting her son’s death. Is her son’s death unfortunate? Yes. Are the casualties in Iraq worth so much heated discussion? Let us consult The New Republic:

[In 2000], 300,000 people died in combat or for war-related reasons (such as disease or malnutrition caused by war), while 1.2 million worldwide died in traffic accidents.

I am sad to hear that one of the Toy Story writers, Joe Ranft, was a passenger in a car that drove off a cliff and has perished. How do you drive off a cliff? I was thinking they might have been driving a Maserati and took a turn too aggressively, but they were driving 30 mph. Pursuing the matter further, it appears that Ranft’s friend, Elegba Earl, was driving his Honda Element. Were there debris in the road? Was there an argument or something else drawing Elegba’s attention from the road? Did a wheel burst? I would like to hear what Eric Frierson, who survived the crash, remembers about the crash. It seems that this is all an unfortunate case of bad driving and over correction.

Whatever the reasons for the deaths, it is a shame that these men have died and that a great writer and the voice of Heimlich in “Bugs” has finished his time on Earth.

correction: Elegba is not a she, as his cousin Ms. Simmons was helpful enough to point out.

I am sure that people placing advertising on their forehead will in fact create a lot of attention, almost all of it will be negative. I know I would laugh hysterically at the first person with an “Intel not inside…yet” label on their forehead. I bet you would too.