That's Alice of Wonderland I am referring to, in case you're wondering. I think she is alive and well, watching bemusedly as the Mad Hatter runs things world-wide, sort of a global Minister of Everything. He gets governments and their puppet central banks (or is it the other way around?) to run the printing presses day and night, inflating the money supply. He coaxes many of us to spend more than we earn. He convinces us that the party will never end, and that we will be prosperous forever. Buy, buy, buy. Get home equity loans to buy a sailboat, a cottage, and his and hers Rolexes. Things will keep on going up forever, and we'll all be rich, rich, rich.
That's not how things work though, folks. The worst time to be buying is when everyone else is buying. Have you looked at real estate prices lately? Unless you're living in Hog's Hollow or Podunk, prices for even the most modest homes are sky high.
The worst time to be selling is when everyone else is selling. And that is going to happen with real estate sooner than many of us might think. I have been through a number of real estate cycles in my life. At the end of each cycle, there has been a downturn. Each time, people who rushed in to buy near the end of the cycle got burned.
We are looking for a lot to build a home. Because we have limited time available before our home sale closes in early November, we may be forced to buy a home if a builder can't guarantee our required completion date. While we are looking for either a lot or a home we could comfortably live in, we are astounded at the prices. Because we are looking to move from a large home to a smaller one, the difference is relative, of course. We will be pocketing some cash, hopefully. But anyone purchasing homes these days is, in my opinion, taking a big risk. There are some areas of Canada and the United States that will continue to boom for a while longer, but eventually everything is going to grind to a halt.
That is my humble opinion. I have bought and sold a lot of real estate in my time, and have never been caught in a squeeze when the value of a property declined to less than what I paid for it. I shopped for real estate when no-one else did, and sold when everyone else was buying. It is better to leave the party a bit early and miss out on a few dollars of possible profits, than to be at the mercy of the mortgage holders.
After the inevitable shakeout, there will be a lot of real estate bargains available everywhere. Sit on your cash and wait it out. Maybe buy some physical gold, on price dips. The next five or ten years or so are going to be very interesting, maybe even dangerous. National debts are unsustainable. Where is the money going to come from to pay down the national debt, or even to pay the ever-increasing interest costs? People are getting tired of paying high taxes and getting nothing useful in return. Where is the money going to come from to pay for Social Security, as baby boomers and other old-timers like me retire? It is a mathematical impossibility to sustain all of this nonsense. Someone is going to pay the price, and the currency won't be in dollars. It will be extracted from us in hardship, sacrifice, lifestyle. Even when that happens, we will still be lucky, at least in relative terms, because people elsewhere are still dying from hunger, disease, bullets and bombs.
The world is an insane place, run by insane people.
Why do we put up with it?
Postscript: After I wrote the above post, I was reading the news and came across this article: US 'could be going bankrupt'.