I Told You So...

Getting my crash course in U.S. finance, real estate games, and so on while dealing with my Dad's things, the thing that dawned on me was that the house prices didn't make sense. For example it would seem reasonable that a house would cost more or less depending on the average incomes in an area, which of course get higher closer to economic centers, and would work out to...... however many years of income. Similarly house prices would correlate to rents and turn out to equate to X years of rent, again a percentage of incomes. You would buy if you had the down payment, felt secure and the numbers made sense. However what I saw was that these sensibilities had been abandoned and the name of the game was to buy a ridiculously priced house knowing you could sell it 5 years later for a doubly ridiculous price. This curve seemed upwards at about 20 degrees. The houses never get fully paid for but rather 'flipped' and shuffled with all sorts of people whose job it is to make this easier for you. Who cares about interest rates cause it's all coming back next shuffle. Well anyway, I just saw the clearest explanation I've seen so far of the crises and was reflecting on that summer and my first contact with how it all works in the US. If you care to take a look the link is below.

Warren Buffet on Charlie Rose 10/2/2008

Everywhere like such as

I personally believe that U.S. Americans are unable to do so because, um, some people out there in our nation don’t have maps and, uh, I believe that our, uh, education like such as, uh, South Africa and, uh, the Iraq and everywhere like such as, and I believe that they should, uh, our education over here in the U.S. should help the U.S., uh, should help South Africa and should help Iraq and the Asian countries, so we will be able to build up our future