Real Estate Failure and the Domino Effect On The United States Economy

For years I've been concerned with the direction our country is headed. With the recent mortgage industry problems my concerns have increased. I read an article about The Coming Financial Collapse of America where the author outlines the future collapse of America largely as a result of the domino effect the real estate industry is creating. In the article, Mike Adams makes a prediction for 2008-2012:

"My prediction for 2008 - 2012 is a massive wave of municipal bankruptcies, state bankruptcies and escalating national debt. We are going to see cities and states go belly up, pension programs terminated (or watered down), and financial institutions teetering on the brink of disaster."

Mike Adams isn't too far off in his assessment of our economy. His track record isn't bad. In December 2005, he stated:

"I'm going on the record as saying this bubble is going to pop, folks, and you can call me a pessimist or a doomsayer if you want. The fact is, if you understand math, you know I'm right. If you want to protect your own finances, you'd better take a good, hard look at this and make some decisions about what you're going to do. Do not leave yourself over-leveraged in speculative real estate. You thought you were going to retire on the beach, and it ends up you're flipping burgers as a second job to pay off what you owe the bank, and they garnish your wages on top of that. That's what happens to people who don't get out in time."

Mike Adams' article is a long read but well worth the time. The point I am headed towards is the same Mike Adams draws, and that we must not assume the income will be there for us, nor the real estate careers we work at will be there for us in the years ahead. Colleen and I have positioned ourselves for the worst. We have no debt whatsoever. So, if our economy rebounds then great, if it doesn't, Colleen and I will need very little to live on.

Real Estate Collapse in America

Can the U.S. economy sustain the current crisis?

You say, "It won't happen to our beloved America." You would be a fool to think so. All one needs to do is look at world history. There are about 10 tell-tale signs of a failing society. Here are some of the reasons the Roman empire fell. Not unlike any other failed society, the indicators will sound oddly familiar:

• Spread Too Thin (Iraq and other foreign domestic economic drains)
• Financial Problems (high taxation, inflation, etc.)
• Broadening Welfare System (too many folks with their hands out)
• Weak Military (without the draft, how many young men are willing to fight our wars these days)
• Division (Republican vs Democrats vs Independents, and on and on)
• Government Corruption (Gov. Spitzer, do I need say more)
• The Break Down of the Family Unit (what is a family these days in America?)
• Economic Hoarding and Deficit (the rich get richer, the poor get poorer, middle class disappears)

Fast forward a couple thousand years to this astute observation of current affairs. 10 signs the United States (and Canada) are failing states:

1. Crushing debts and trade deficits
2. Poor government services
3. Lineups ('Queues')
4. Zero 'value-added' production
5. Soaring inequality of wealth
6. An economy dominated by (in)security
7. Crumbling infrastructure
8. Spending beyond the means of repayment
9. Hugely unpopular governments and cynicism about the value of government
10. Rampant corruption

Ok, enough of the doom and gloom. Seriously, consider your spending habits, your debt service, and do not assume your income will be there in the future.  Have a great weekend and sell a lot of homes! 

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