It was there all along, waiting on the horizon years ago. I’m talking of course of the housing bust. I casually mentioned the artificially inflated housing problem to a group of friends in the Summer of 2005, and how the housing boom was going to adjust in the coming years and come back and haunt us. What I didn’t foresee was how hard and how far it was going to spread.

What I still see as a problem that no one is talking about is the 0% interest financing that has to come to an end. Automotive manufacturers make their dividends, the real bulk of any profits in the financing arm, not from the manufacturing. Auto makers have been giving away their product for years, all while biting their own tails.

Two, low and non-existent interest on passbook savings accounts does no one any good. Savings accounts should not be necessarily tied to the current federal lending rates. Savings accounts should be used to insulate both the banks and the consumers by encouraging healthy saving habits.

Three, spending the bulk of the stimulus monies on programs simply results in budget crises down the road. “Projects, have a begin and end date, programs usually don’t”. I guarantee that in 2-3 years we will be at one of those periods when the U.S. Senate can’t pass a budget because of party bickering and forces our government to a temporary standstill.

This entry was posted on Tuesday, March 17th, 2009 at 4:25 pm and is filed under The Economy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.