Credit Crunch

I read and hear a lot about the credit crunch these days. It seems like people want easy credit, forgiveness for not paying up, higher interest rate on their deposits, 20% yearly appreciation on their houses so that they can continue to tap it as an ATM - sounds a lot like my desire to get my paycheck for the rest of my life without having to work :).

Everyone loves easy money and better if it free - why not? I would take it if there are no consequences. I believe the phenomenon (asking for easy money) we are seeing is a consequence of some of the evils of modern day society - essentially living to satisfy someone else rather than your inner self, buying a house because you want to look good in front of others, thinking owning a home is a status symbol, driving expensive cars is a self confidence thing, the list goes on. I believe that this is all going to end soon in a bad way OR the other possibility is that United States becomes a poor country over the next 20 years or so. Where is the reward and value of savings - savings is for losers :), right?

My prediction is for the following sequence of events
- Bernanke will cut rates by 0.25 basis pts in Sept 07. May be another cut before the end of the year
- Markets recover a bit and hit 14K again by the end of the year
- Inflation starts heating up early 2008 forcing rate hikes
- Housing declines further, ATM resets are higher in 2008 causing foreclosures to soike up
- Benrnanke is a silent spectator to the mayhem as inflation forces him to keep rates steady
- Dollar appreciates, stock market tanks to 8K
- Democrats win the election, blame President Bush for the problem
- Markets continue to decline/steady for the next couple of years before starting to come back up in 2011/2012
- Housing back to the old days of 2.5% appreciation. Real estate agent is an old fashioned job and not a hot commodity anymore
- Zillow.com goes out of business in 2010
- Refin becomes the way to buy and sell homes
- Renting becomes the smart thing