The Aspirational Consumer And True Believer Are Unwinding
Remember when everyone classified this crisis as a subprime U.S. housing problem? It actually wasn't that long ago. Now the entire world is burning and U.S. subprime housing is the after dinner mint. Of course, throughout all of this we have said this is not a housing crisis, not a subprime crisis and not a debt crisis. And the perpetrators of this bulloney, like Hank Paulson were buffoons. It has morphed into both a housing and debt crisis but the world is still barking up the wrong tree. If these are just symptoms, then with the right economic medicine, these symptoms will go away. But instead the carnival barkers from every corner of society keep recommending strategies to treat the symptoms. So, what happens when the doctor treats the symptoms and not the problem? Well, it's obvious. The symptoms don't go away and neither does the problem. Guess what? After throwing trillions of dollars of other people's money at this crisis, global bureaucrats are now faced with larger problems than ever. Nothing has been fixed.
In the overall scheme of the U.S. housing crisis, subprime mortgages have almost become irrelevant. Corelogic's assumptions that the well-to-do are defaulting for grins and giggles is a dubious conclusion not backed up by substantially more rigorous data analysis. Corelogic's data point ties in directly with the squawking that insider selling through this stock market rally were because smart money knew the rally was a sham. That's also preposterous as we have noted countless times. The stock market roared over the past year yet insiders sold very early on into the rally and continued to sell as it unfolded. The same insiders (dumb money) who were buying before the 2008 crash.
The actuality of what both of these data points is telling us is what we have written on here numerous times. That is, those who benefited most from this economic model are unwinding. Are some upper middle class and wealthy people defaulting even though they aren't forced to? Sure. But most are defaulting because they bought into the fantasy that good times were here forever and are now being severely impacted financially. These are the aspirational consumers we long ago said were doomed. This whole mainstream perspective that frugal is now in vogue is really rather preposterous. The 40 million people on food stamps and the 30 million people who are chronically under-employed have been living a frugal life for the last thirty years. This isn't some new dynamic for them. What is really happening is the upper-middle class aspirational consumer is now being forced to join those who have been economically underprivileged for decades. The uber rich will always be rich. They may no longer have, say $500 million of net worth. Maybe it's $300 million. But they aren't going to sell their house because they lost two hundred million in net worth. It's the people who are marginally well off or marginal millionaires on paper who have generally overextended themselves by believing in this fantasy that good times were here forever. And the aspirational consumer is substantially invested in stocks while the more financially conservative uber rich are substantially invested in bonds. Or as the uber rich typically understand, gentlemen prefer bonds.
Unlike the neoliberal trickle down bulloney that defined the global economy over the last handful of decades, this economic virus trickles up as more and more in society are economically punished for their belief in an absolutely asinine economic ideology and the political apparatus that created it.
In the overall scheme of the U.S. housing crisis, subprime mortgages have almost become irrelevant. Corelogic's assumptions that the well-to-do are defaulting for grins and giggles is a dubious conclusion not backed up by substantially more rigorous data analysis. Corelogic's data point ties in directly with the squawking that insider selling through this stock market rally were because smart money knew the rally was a sham. That's also preposterous as we have noted countless times. The stock market roared over the past year yet insiders sold very early on into the rally and continued to sell as it unfolded. The same insiders (dumb money) who were buying before the 2008 crash.
The actuality of what both of these data points is telling us is what we have written on here numerous times. That is, those who benefited most from this economic model are unwinding. Are some upper middle class and wealthy people defaulting even though they aren't forced to? Sure. But most are defaulting because they bought into the fantasy that good times were here forever and are now being severely impacted financially. These are the aspirational consumers we long ago said were doomed. This whole mainstream perspective that frugal is now in vogue is really rather preposterous. The 40 million people on food stamps and the 30 million people who are chronically under-employed have been living a frugal life for the last thirty years. This isn't some new dynamic for them. What is really happening is the upper-middle class aspirational consumer is now being forced to join those who have been economically underprivileged for decades. The uber rich will always be rich. They may no longer have, say $500 million of net worth. Maybe it's $300 million. But they aren't going to sell their house because they lost two hundred million in net worth. It's the people who are marginally well off or marginal millionaires on paper who have generally overextended themselves by believing in this fantasy that good times were here forever. And the aspirational consumer is substantially invested in stocks while the more financially conservative uber rich are substantially invested in bonds. Or as the uber rich typically understand, gentlemen prefer bonds.
Unlike the neoliberal trickle down bulloney that defined the global economy over the last handful of decades, this economic virus trickles up as more and more in society are economically punished for their belief in an absolutely asinine economic ideology and the political apparatus that created it.
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