Irrational exuberance – personal edition

I find myself seeing a flashback of good times in wall street and some in main street.  Market is continuing to hit new highs, and people are seeing a small increase in their wages (approx. 2%).  The Obama administration is considering relaxing FHA/Fannie Mae/Freddie Mac mortgage requirements.  Gas is cheap and people are buying gas guzzlers again.  Hmm….  Does this remind anyone of a previous period in recent history?  How so many have forgotten so fast…

Yes, home prices in CERTAIN areas have increased to where they’ve become a bit unaffordable.  While I understand it can be hard to qualify for a mortgage these days, there is a reason for this.  People, with little or no money down, were “buying” homes they just could not afford.  What about these interest only mortgages.  Remember these?  If people do not have enough money to pay something towards principle, then are really able to afford the home?  It just seems we’re heading back to the go-go home and spend era of 2001 +.  The government is not helping by relaxing mortgage requirements.

How is the economy really that much better than a few short years ago?  In 2007, many people were earning around 5% on their savings.  Now?  How about around 0.10%.  If you hunt around, you can get around 1% online.  Doesn’t really matter.  You’re still losing to the “1.9%” inflation the government states we are currently experiencing.  Of course, this does not count consumer staples such as food and utilities.  Nonetheless, we really need to take care of ourselves as I foresee a zigzag side-winding economic growth period for near future.  Will the U.S. turn into Europe?  Probably not.  However, as of right now, it seems the U.S. stock market is the only place to be if one wants to see any growth on their money…

I just would like to suggest that for everyone who reads my posts to take everything the see, hear and read with a grain of salt.  Reason being, there is no one who knows what will work or what won’t.  The powers that be are just hoping they throw enough stuff at the wall something has to stick.

Stay in budget and save a little for the future anyway you can.  That would be my recommendation.

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