Although I certainly didn't originate the term "Peak Dollars", it seemed a fitting name and concept for what I see as a long - perhaps decades-long decline in the economy - not just here in the US but in other countries as well. Even if one doesn't watch TV, read newspapers, listen to the news on the radio or otherwise keep up with the sad state of affairs of the past two years, it is almost impossible to avoid seeing what's happening
to individuals, families and small businesses, even if one has not been affected directly by the downturn.
If one is lucky, still working, still solvent, still able to pay their bills on time, there is still a growing sense of unease, tension and worry that is permeating everyday life. Things are not getting any better in many if not most parts of the country, and in many areas, getting decidedly worse. By now, chances are fairly high that even if you haven't (yet) been affected, you know someone who has. Whether a friend, family member, neighbor or co-worker, chances are you know someone who was doing well in, say, 2007, but has now
either or lost their job and/or home, might now be on unemployment, getting food stamps, and renting a much smaller place than they used to own. Or perhaps they sort-of-almost landed on their feet, took a lower paying job, and lost their medical coverage.
Using 2007 as a benchmark for the height of the housing bubble - when everything still seemed sunny and bright, when life still felt full of promise for most, and optimism that "real estate prices ALWAYS keep going up", fueled a national spending orgy as folks capitalizing on their new-found (and apparently, "free") "equity" used their homes as ATMs and bought expensive toys and granite counter tops, et al, thinking this party would never end. Few saw clouds on the horizon, but eventually, the music did finally stop - and many suddenly couldn't find a chair. It is this lofty period prior to the crash, I refer to as "Peak Dollars".
It was a time when it seemed everyone had plenty of money, and almost anyone who wanted to, could find work. It was all an illusion, of course. Most of the new found "wealth" homeowners and others were enjoying, was not real wealth at all, but 'on-paper" wealth at best, and "on-credit", at worst. Perhaps I should have named this blog "Peak Credit" or "Post-Peak Dollars" instead, but I digress.
Oh, what a difference a year makes! Lehman Bros implodes, and the ensuing series of events thereafter, has us, by 2009, ringing in the darkest New Year most of us have ever seen. Bank failures, mass layoffs, store closings, skyrocketing unemployment, home-foreclosures, bankruptcies, pay and hours cuts, and credit tightened to the extreme.
And here we are a year and a half later - all those billions in bailouts and stimulus spending have only kicked the can down the road, and bought us a little time, while largely failing to achieve any lasting benefit save perhaps ensuring that bank and insurance CEOs won't have to suffer along with the "little people", even if they helped cause the crisis to begin with. And this, at the cost of adding to our already ginormous national debt - now at nearly $75 Trillion dollars, if you count those pesky unfunded obligations.
In short the US gov't is broke and deep in debt. Over 15 million Americans are now unemployed - and that's counting only the "official" unemployed - the real number is far higher. 40 million Americans are now on food stamps. Millions are close to exhausting their unemployment benefits. Millions of formerly middle class Americans are no longer middle class, and millions of former homeowners (or should that be "homeowers"?) are now either renting or squatting until the banks actually act to repossess their homes.
Those who have managed to find work, are now working for less, and sometimes more hours to do so.
In short, the era of easy credit, zero-down mortgages, liar's loans, house-flipping, mortgage and appraisal fraud - all fueled by rising RE prices (with corresponding HELOCs) and low unemployment is OVER. The era of harsh reality and hard times has only just begun, is likely to get worse before it gets better, and likely to turn into a Lost Decade. Or two. The party is over, and the hangover is just beginning.
At least, that's the way I see it. I'm not a finance guy, a stock guru, a trader, an investor, a banker, a hedge fund manager, and know little or nothing about bonds, treasuries, or mutual funds. Heck, I never even went to college. But I DO have a PHD from The School of Hard Knocks. And, being one of the "little guys" on the front lines and trenches, shoveling against an economic shit storm with my teaspoon on a daily basis, treading water every day just to remain solvent and keep from drowning, I know a little bit about economic survival. And that is largely the point of this blog.
This will NOT be a "Doom Blog" - there are plenty of such sites already out there. In fact, I am a member of one that I visit quite often when I need a doom-fix. Lord knows there is no shortage of bad news these days. From time to time, I may post doom articles, but my main focus will be on posting helpful, interesting, informative and relevant articles - some written be me, some by others. The idea is not to bask in doom or marinate onseself in it, but rather to see a way out, a way to mitigate it, or avoid it entirely if at all possible.
For me, writing is like therapy - beneficial, therapeutic and even cathartic at times - it helps me hash out my own thoughts, ideas and plans, clear my head, get crap out of my system, and vent. It's all good. So I thought, why not start blogging and share my insights (warped, jaded and cynical as they may sometimes be) and ideas with like-minded folks like yourself?