CNBC did an entire 3 hour expose on Buffett and I.O.U.USA. Well I don’t agree with everything. Two of his points that stuck with me are as follows:
- When the tide goes out you will see who is swimming naked, and it seems Wallstreet was a nudist beach.
- If you apply for a mortgage using the old yardsticks then you can get a mortgage.
These two points stuck in my mind because I have talked to quite a few people around this planet and asked, "is it that bad?" The answer is no, it is not that bad. BUT there is a caveat. If the person was conservative and did not buy two or three houses then all is ok. If however the people lived beyond their means then things are not great. Quite a few of those asked, including my wife and I are actually grateful for this downdraft because we could buy homes without paying an outrageous fee. One friend who lives in San Francisco said, "you know it is good that this happened since now we can a house." Meaning they were on the sidelines until now. This information re-affirms my thinking that it is the rich and leveraged that are having lots of problems.
The second issue and it ties into the first is that the creative financing of the past is done for. People will need to save and live within their means. Though this is less of a problem outside of North America, then inside North America.
I am a bullish on the future! Of course I am not buying caviar, and salmon. I am still buying my hotdog’s on special with sauerkraut.