From the gifted pen of Jim Kuntsler
Sooner or later, though, millions of shlubs dependent on pension checks, or annuities, or monthly payouts of one kind or another will notice that something has stopped landing in the mail box. Re-po men with bad haircuts and tattoos will be driving other peoples’ cars to the auction barn. Young people accustomed to thrilling paydays will discover that their services are no longer required in the mortgage origination business, and will instead have to memorize dozens of excruciating formulas for different sorts of beverages more or less based on coffee. Millions of realtors will enter second childhoods as they move back in with Mommy and Daddy, who themselves must now change their plans, since it is no longer possible to flip the 1956-vintage raised-ranch in Hempstead to buy that half-million condo in Maui.
On a more working class scale, this means layoffs will happen at huge nationwide chains like Home Depot, Target, and Wal-Mart. The businesses that serviceand supply them will suffer too. Those that have homes may lose them, or go deeply into credit card debt at usurious rates trying to keep the bills paid.
The Home Equity Line of Credit money spigot no longer exists and commercial credit is getting considerably more expensive. All that cheap money that has been floating around has vaporized.
Just within the past month in the well-off Connecticut town we live in, many more homes are for sale. I wonder, are some of these due to adjustable rate mortgages resetting to much higher levels? The real estate bubble here was modest, certainly not like Los Angeles, where we moved from in Feb. But is seems odd that so many homes here are suddenly for sale.
So imagine what it must be like in a Detroit, where property values are already plunging and the median price is something like $75,000. Where will they be in a year?