I'm sitting at the office waiting to hear about a Seller's response to my Buyer client's offer. It's a low offer, but in the market we are in currently, it is an Offer! Which is something!
It's really quite amazing to me how the "market" dropped off a cliff...suddenly. Our overall housing market had been already slowing/moderating, primarily due to the onerous new City of Toronto Land Transfer Tax! YIKES. Talk about suck all the sales out of a marketplace. The day that took effect, Feb. 1, 2008, sales ground to a halt. Then it was summer and then...Lehman Brothers & Bear Stearns collapsed. And the end was nigh!
What is funny to me is that the "writing was on the wall" about the US market for some time. Housing had been plummetting for nearly 2-years. Job losses were mounting. Credit was tightening. Demand for imports was dropping. Everything was pointing to a US slow down/recession...but nobody paid any heed! That is until these two banks were allowed to go under!
In retrospect, it's curious why the US government let these two banks go down but they bailed out AIG...and now they are spending 100's of billions of dollars (and probably soon trillions) to bail out their economy. What a blunder. Where was the wisdom of all those market mavens and economists and politicians then...when it counted?
The truth (small 't') of the matter is, we are talking about CONFIDENCE. About a national and now international conversation about wealth, money, abundance and enough! For the majority of the planet's population, nothing has changed. For the billions of impoverished, malnourished, uneducated and disenfranchised, they have not necessarily noticed any difference in their living standards. When you are at the very bottom of the food chain...what does a recession/depression/market correction/reset...whatever you want to call it...mean? NOTHING!!!!
Likewise, other than the fact that post September 16, 2008, we are now living in the post-credit age and a world conversation call recession/depression. So what really, fundamentally happened...at least on the micro-level...to you and me? We stopped believing in the fairy-tale of consumption without limits!
I just read a startling factoid in the Economists 2009 preview issue. They make a comment that US citizens save approximately 0.5% of their GDP on a per capita basis. In other words, Americans (and Canadians not too far behind) have been spending 99.5% of their income...and many much more than they earn or own. This article goes on to say, that if Americans begin to save again at a higher percentage point - which they suggest will be the inevitable result of this recession/depression -say 5%, then this act alone could throw the entire planet into a prolonged depression. In other words, US citizens must continue to consume at the levels they had in order to get the world out of the situation were are currently in...all the while slowly (emphasis on slowly) increasing their saving %!
What a funny world. We are in this mess because the citizens of one powerful country have consumed at ridiculous and unsustainable levels for so long that all of our country's economies and our very own life-styles have become addicted and dependent on it...no matter the long-term cost to markets, the ecosphere, human rights, poverty, resources...you name it! We are an addicted world feeding on fear and desperation.
So my question is: WHAT IS ENOUGH?