Debt Rattle May 21 2014: Drowning in the American Dream


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    Toni Frissell Fashion model in dolphin tank, Marineland, Florida 1939 According to a new Zillow report, 40% of all US mortgage holders can’t afford to
    [See the full post at: Debt Rattle May 21 2014: Drowning in the American Dream]


    Ilargi – pulling forward the discussion of the other day:

    “Ilargi said…Everything we said, including the timing, would have already come to fruition if not for the absolute insanity unleashed by the Fed and its peers, and the propaganda that accompanied it. We have said multiple times in the intervening years that we did not see that coming. But what could we be accused of in that regard, that we didn’t accurately predict insane behavior? I think unpredictability tends to be an inherent trait in that sort of behavior.”

    To be fair, one of the reasons that the insanity was not predicted on TAE was that alternative scenarios were not worthy of consideration because they were largely deemed impossible (metaphors of “pushing on a string” and “laws of thermodynamics come to mind”) for example 5 years ago when some anon @12:26 asks the question why dont we consider alternatives, the response:

    “Stoneleigh said…
    Anon @12:26,

    Why do you insist that your point of view on what is happening and what will happen will not be de-railed by some new, never before seen method to ‘keep the dream alive’.

    However much we may want to keep the dream alive, some things are simply not possible. Can you stop a ponzi scheme from hitting a brick wall at some point, where most people lose everything? Ponzi schemes can only grow so far before the entire world is involved and no more buy-in is possible. Remember that each generation of a ponzi scheme has to be significantly larger than the last. Eventually we run out of people to fleece, and at that point the whole structure collapses, albeit not all in one go.

    This rally is giving us a temporary respite from something that is inevitable. It is making people hopeful that something can be done if only the powers-that-be do this or that, but that is just grasping at straws.

    ‘Solutions’ like printing money or handing out money that must be spent or lost are not real solutions. They postpone rather than prevent, and for a very short time at great cost. They do nothing whatsoever to address the essence of our predicament. They are desperate gambles that a day of reckoning can be postponed for long enough that our descendants will suffer rather than ourselves. Is this eally what we want – to make the mess worse by digging humanity into an even deeper hole, so long as we aren’t the ones who suffer personally? IMO the is the essence of the kind of short term thinking that got us into this mess in the first place.

    We have known for decades that our way of life was not sustainable, and we are about to find out what that actually means. The opposite of sustainable is terminal.

    JULY 10, 2009 AT 1:53 PM

    Then 2 posts later, you address him too:

    Ilargi said…
    “The reason this keeps coming up, is because you never seem to want to address this real possibility that there will be some very real, extreme measures taken to prevent what you say will happen, from actually happening.”

    No, the reason it keeps coming up is not our failure to talk about them, it’s that there’s an endless reservoir of “ideas” that people fail to think through and then call “real possibilities”. There is neither reason nor need for us to address them all, there’ll always be a next one and we’ve so far covered all of them without the need to go into specifics, even if that doesn’t satisfy the minds of those who think up the “real possibilities”.

    The origin of most of these grandiose yet superficial theories lies in people’s ideas about the power of the Fed or government, which many seem to view as unlimited. And no matter how many times we say it is not, there’s always a new bright light that comes-a-shinin’.

    From my point of view, the more extreme the theory, the more desperate its proponents. As you may have noticed, we’ve so far also failed to discuss the consequences of a meteor hit.”

    JULY 10, 2009 AT 2:03 PM

    The sad part is, among all the trolls like Cheryl, there really were people with sincere questions, yet I too bristled when these things were asked – my strength in the inevitibility of it happening soon was your strength in the inevitibility of it happening soon. One of the reasons I am still here – a full 5 years later…


    But Cory, what is really important in all this, in what you quote, in where we are, in where we think this will lead us? Do you yourself see a way available to our ‘leaders’ to lead ‘us’ out of the gutter? Assuming even that they would want to? And if you don’t, then what are the options? In what fashion can we, given that we don’t have a crystal ball, do anything else than to tell our readers to get out because the risk is so high? Do you feel that risk has gotten smaller, on anything but a temporary basis? I sure don’t.


    Maybe someone can explain the modern obsession of ” moving up” when it comes to houses. it wasn’t too long ago when families lived in a 1200 sq.ft bungalow for 30 years and then retired in that same home for another 10-15 years. Am I missing something or had the culture gone that far off the rails?

    Diogenes Shrugged

    With the title, the photograph, and all the talk in the first paragraph about being underwater, I was sure this article must be about global warming. But then I realized it was referring to mortgages (huge sigh of relief).

    Nobody renting an apartment for thirty years expects to be awarded with full title to the place. An underwater mortgage is akin to a rental agreement if the buyer assumes he’ll never pay it off, and expects to be walking away someday. If the house provides a much better lifestyle than an apartment would, and if apartment rental payments are roughly comparable to full-in house payments, then why not “rent” from the bank? After all, the chances of hitting the lottery so you can pay the mortgage off are probably about the same as the chances that inflated home prices will come roaring back, so there’s still an itty-bitty, teensy-weensy reason for optimism.

    Ilargi, in your response to Cory you wrote, “Do you yourself see a way available to our ‘leaders’ to lead ‘us’ out of the gutter? Assuming even that they would want to?”

    An alarmingly large number of pundits have been warning for a long time now that our ‘leaders’ intend to wage a world war. They’re also accused of laying plans for radical reductions in our populations via vaccines, GMOs, plagues, and surreptitious geo-engineering that promises to extend polar ice sheets to the equator in places. There is also talk about guillotines, FEMA camps, fields of stacked coffins, billions of hollow-point cartridges, armies of foreign soldiers on American military bases, gun confiscation and genocide. No way to predict with certainty what all this means, but it suggests that our ‘leaders’ MIGHT already have longstanding, well-developed plans to lead ‘themselves’ out of the gutter. To whatever extent that’s true, ‘we’ probably don’t figure into the outcome of those plans. Not something TAE should address, but just sayin’.


    @dkopriva – Sometimes, one has to ‘move up’, because the house is running out of room to hold all the stuff that people buy and collect nowadays.Guess that indicates one has too much stuff.

    Diogenes Shrugged

    dkopriva, you wrote, “Maybe someone can explain the modern obsession of ” moving up” when it comes to houses. it wasn’t too long ago when families lived in a 1200 sq.ft bungalow for 30 years and then retired in that same home for another 10-15 years. Am I missing something or had the culture gone that far off the rails?”

    Might you have been forgetting ‘wives?’

    Indirectly related:
    I purchased and watched a DVD recently that pretty much blew my mind in spite of my extensive, first-hand familiarity with the subject.


    So many imminent disasters, so little time, so little awareness. Add that to the growing list.


    O.K. Diogenes, the response about the wives is just funny.


    “Ilargi said…But Cory, what is really important in all this, in what you quote, in where we are, in where we think this will lead us? Do you yourself see a way available to our ‘leaders’ to lead ‘us’ out of the gutter? Assuming even that they would want to? And if you don’t, then what are the options? In what fashion can we, given that we don’t have a crystal ball, do anything else than to tell our readers to get out because the risk is so high? Do you feel that risk has gotten smaller, on anything but a temporary basis? I sure don’t.”

    I dont either, not at all. However, I have been known to have a bit of an alarmist streak. For the last few years, my spouse has been listening to someone who fully agrees it will all collapse because its unsustainable. However, his favorite saying is just because it is “inevitable” does not mean it is “imminent”.

    For years I railed against him too, thinking he was delusional, and that no way this lasted more than a few months. Well “a few months” became “a few more months” became a year, and well, you know the rest.

    It was thus that in the middle of one of our shouting matches and why we should wait just a bit more, my spouse wisely noted “how do I know we wont be having this EXACT same conversation in 3 years”, hence I came up with an absolute outside date of 2015.

    At the end of the day, here is what I know…in 2008, I was 4 years into a mortgage with another 21 years until freedom. I found TAE, became terrified, and sold, rented, because it was IMPOSSIBLE that it would all hold together another 21 years – let alone 2.

    It is now 6 years later, I am now paying MORE in rent than i did to buy, and prices have moved up such that I couldnt afford to buy back even if I want to. If nothing changes, I have become a perpetual rent slave, with another 50 years of ever increasing payments ahead of me.

    So here I am, with another 6 years of waiting under my belt, I now realize, had I done nothing to prepare, I would now be coming up on year 11 of my mortgage, with another 14 years til freedom. Who is to say it cannot last that long?


    Cory, I have seen your story on here, and I feel for you. It’s so hard to know what is correct and what is just conjecture on the web. Everyone and his brother gets the chance to lay out their ideas and after a while you don’t know who to believe. Checking all of them out to the nth degree is hard too. There is only so many hours in the day. But I would tell you to BUY a house. Buy it and own it. Pay it off. The safest way to live. Sorry Raul I like your website, but I would buy over rent any day!

    #1 – buy the neighborhood. Go the best location and buy the smallest house. A condo in the best neighborhood is better than a big house in the ghetto. My neighborhood is one of the best in our county, and houses here did not drop all that much. Not like NV or CA. A stable older neighborhood that doesn’t change. The best schools. It will still be worth something. Make it a place you want to live for 30 years and you’re fine even if it does drop. It will come back up! Just be aware they are making it harder these days credit-wise to get a mortgage. Get a 30-year FIXED rate. Nothing else!

    If you are staying in it, and you have the income to afford it, so what if it drops in value? The only problem is if your job causes you to move frequently, in that situation I would not buy. Otherwise I cannot begin to imagine why you would rent.

    If you have cash there are foreclosures out there. It takes patience but I know regular people who buy them so it is possible. You don’t have to be Black Stone. You need to read Zillow religiously, and KNOW the value of property in your area. LEARN IT. You also need a list of the top 10 things you and your wife want in a house, 5 each. You will NOT find a house that has everything, It’s best to decide beforehand what you can give up and what is Paramount to each of you.

    Last but not least, be prepared to walk away when they won’t meet your price.
    Good luck and happy house hunting! 🙂



    Who is to say it cannot last that long?

    And at the same time who is to say it can? It would seem to be a good idea to get the guessing part out of this as much as possible. Risk assessment.

    All US asset markets are seriously bubbling right now due to QE, a situation that cannot last because public debt would get too high. It already is. That means either we will achieve escape velocity and a real recovery in the real economy, or asset prices must fall. Since all that seems to go up does so to a large extent on the back of QE, I have no idea where a real recovery could possibly come from. There’s simply nothing there.

    The articles on the Zillow report that I referenced in my article above show that 20 million American mortgage holders can’t sell their homes, because they have too little or even negative equity. At 3 persons per household, that means 60 million, or 20% of the population, are stuck. They cannot move. Had they rented, they wouldn’t have had that problem. When asset prices begin to fall again, which I think is inevitable given that QE is the sole factor out there that has pushed them upward, the number of people stuck will rise, and not by a little bit.

    Mortgages are already a noose around the necks of 60 million Americans, according to Zillow, and with new home sales and mortgage originations falling as much as they are, which means markets are shrinking because there are far fewer buyers, how can prices not fall and hang more nooses around more necks? There is no functioning real economy out there, in the sense that it exhibits a “healthy” growth rate, and without such a rate things can only get worse, there’s no such thing as a stable economy without growth in our system.

    It all makes having a large mortgage debt, or any other kind of debt, a big risk. If you rent, you pay someone to take that risk for you. You don’t get the profit of rising home prices either, but how can prices rise when sales are plummeting (new homes -14.5%) and the economy is artificially kept alive through borrowing from our children?


    Buying a house if you can pay it off without getting into debt is fine, but a 30-year mortgage is a huge gamble. It’s not unlike getting into a casino betting you can beat the house. If people think this is really a recovering economy, it might make sense to them, but since Q1 GDP growth was negative, and that is with an ongoing QE, I wonder where they would see that recovery. China is struggling, Japan is worse, Europe is an increasingly divided experiment gone awry.

    And the US has bad numbers everywhere but in stock markets and assets available only to the rich – who are getting richer -. This means your “if you have the income” is also an added risk factor. What is you lose – part of – it? If for instance a substantial drop in the S&P drains a few trillion out of the market, or China sells a good chunk of its US Treasuries, events that are not at all unlikely, volatility and risk will surge. Running an economy on borrowed virtual money is inherently unstable. But it’s all we got right now, and I can’t see myself recommending people dive into debt in that situation. There’s too much out there that is entirely fake, not grounded in people working with their hands so to speak, and too much that can go ‘poof’ in an instant. But if you think central banks will keep this up for years to come, or even if you think they’re able to, I guess your risk assessment might be different.


    Raul, Now don’t get mad at me, but buying property should not be a hugely risky gamble. It is quite a normal part of life. It takes education and good planning. The photos which grace your site are historic mementos, but not indicative of America today by a long shot. I love Zillow, however the numbers sound far worse than they are in reality. Was all that constant “moving up” that was taking place necessary? NO!

    Several coworkers bought in the run up, just because it was the right time (marriage, young family, moved into the area, etc.). They are as you say “under water”. None have lost their job, none want to move, and no one is bothered by it. These are not starter homes, rather permanent ones. You do not want an adjustable rate mortgage, but a fixed one. It can always be changed to a 15 year, when you get further ahead, as we did. 3 years and mine is paid off, and we have not been in it 30 years.

    America is BIG and varied. In my neighborhood only 3 foreclosures from ’09, 2 of which I knew well. One couple quit good jobs in law in the city (tired of rat race), then put savings and equity into an art shop and a coffee shop! Crash, all lost. Had they kept ONE job, and bought ONE shop, their house probably could have been saved. Poor planning. Lack of prudence.

    Another was self employed and his business partner sadly died suddenly. HOWEVER, when his wife [close friend] told me of the profligate spending of all their income, plus savings, plus taking out a huge second mortgage, all on trips to EU, fancy dinners, etc. I was stunned. Literally dinner in Paris and worse it went on. No, we are not in the 1%, which is WHY these people were so foolish. Grasshoppers get slaughtered, ants rule.

    In ’09 4 in my family lost jobs, husband, son, BIL, nephew. All are now employed. Both men found good replacement jobs, albeit longer commutes. Husband saw it coming and through hard networking and luck managed to transition literally in the last week! It took 3 of us 6 months of pounding on hundreds of doors to get my son a job. Both young men have since moved on to 2nd jobs, better ones. We were never in danger of losing our house though because ONE salary can carry it. Planning and frugality. I’ve never had dinner in Paris but I’m solvent.


    Life is a gamble. Do what makes you happy. Because, in the end, we are all dead anyway.



    “Life is a gamble. Do what makes you happy. Because, in the end, we are all dead anyway.”


    I might also add that, as a rule of thumb, people should do what they believe in. Those who come here every day to read TAE, agree with what it has to say only to then turn around and take on a 30-year mortgage (deeply entrenching themselves in debt) are incredibly hypocritical as that seems to fly in the face of the message of sustainability TAE tries to promote.


    You sound like my friend’s wife when we all sat down over a bottle of wine and talked collapse. She was adamant that no matter what, she and her husband (my friend) would always find work because they weren’t quitters and they were winners, not losers. No matter what I said she couldn’t comprehend the idea that there could be a time that no matter how hard she tried and no matter what she did there wouldn’t be a job (or at least a job that pays anything substantial) for her or her husband to get.

    Don’t get me wrong – it’s not an insult, but a compliment in so much that I do appreciate her strong spirit and belief in herself and her husband. It’s the kind of attitude we need more of to be sure. That being said, she was also naive to think that no matter what happens she’ll always be in control of her life – that kind of thinking suggests she has the blinders on and isn’t at all prepared for the future and how much worse it could be.

    Some of your arguments may be true about buying homes with cash, living frugally, etc. But at the end of the day you’re basically arguing that you’re solvent now, so you will continue to be solvent. Your prudence and planning may all be for naught if you’re not looking to the horizon and seeing that changes for the worse could be heading your way.

    Lastly, even if you and your family do hold onto jobs, consider all those you had to step over to secure those jobs. People will be going hungry while you get whatever little you can. I think part of the message at TAE is to disconnect from our current “rat race” social system and to start living a sustainable existence in sustainable communities… which I’m not sure is compatible with a hyper-competitive fight to the bottom of who can live the most frugally while trying to maintain our unsustainable system.


    What are you actually looking for here at TAE?

    Nobody knows exactly how the future will play out, but we’re all accountable for our own decisions. Nobody forced you to do anything, though I would recommend you read bluebird’s post above and follow that advice.

    Basically, do what you *believe* is right and take ownership of the choices you make. Nobody can help you otherwise.




    What are you actually looking for here at TAE?”

    Variable – its a great question. What I am really looking for (deep breath here as I spill my guts) is answers on how so many of the things that Stoneleigh predicted were so wrong. Please understand, in 08/09 I came across TAE and was stunned by what Nicole was saying. In the early days, her track record was impeccable and she responded directly to posters with specifics on timing and everything. Morover, she was so incredibly certain of everything she said, like nothing I had ever seen before or since. I am not the only one who saw this either, witness the “Stoneleigh Effect”

    After the event where we saw her in person, a few of us who took her advice seriously wondered when the time came, if things arent working out as planned, will she “own up” to it. The general summary was, yes, of course she will. She knows many of us are making absolutely life altering choices based on what she was saying – so if any of that goes wrong, she will very quickly change course, tell us what happened/why it didnt happen, and (perhaps) even apologize. In sum, we all assumed she would be willing to held accountable for what she said.

    Thus, in the 2011-2012 timeperiod as things were starting to look like they werent going to happen as she said, I would log on expecting to see something like:

    In 2008-2009 I told many of you XYZ would happen. Well, it now turns out that XYZ is looking increasingly unlikely, largely because I did not anticipate ABC could do DEF…Therefore, I now think that…

    You get the general idea here. Unfortunately, this did not happen. To be honest, I was afraid to say something before now because I was afraid of Ilargi. I was fearful of being banned or censored as others were for questioning her. I still am.

    So with that in mind, I come here now, a broken and battered person, asking for some measure of accoutability from the one person who has affected me like few others have, and that person is Stoneleigh. Unfortunately, I now come and ask her the hard questions (as I did in that other thread) and her answer was…silence…

    Look, the long and short of it is that I did this to myself. I didnt have to listen to her, but my god, seeing as you were so willing to help people make life altering decisions, why do you suddenly clam up when they (understandably) come back asking for some rationale for why things went nowhere near what you expected?

    Stoneleigh, I very much want you to see this, and if you can find it in your heart, I want an honest and sincere answer. And what I mean on that is nothing like your generalized almost robotic responses where you talk in absractions – if that is all you are going to do, please make me feel better by staying silent. However, if you so happen to find it in your heart to give an honest act of contrition and answer along the lines of:

    I was wrong because…
    At the time I was thinking…
    What I totally did not consider was…
    When they did _____ I was shocked because _____

    You get the general idea here. You know you have the capacity to do this – the question is, do you have the courage to do so? At the end of the day, it would do nothing to help my fate. However, it would help me go to my grave with a better sense of peace for how so many of my choices 2008-2014 went so horribly wrong…



    “Horribly wrong”? Isn’t that perhaps a bit much? Where is the horror?

    Nicole directed several comments directly at you in the Atamai thread, still you say her answer was silence. I don’t quite follow that.

    As for your continuing questions, I think I tried to respond to them at some length.


    Folks, This level of frustration shouldn’t be directed at Nicole Foss or her supporters. Nicole takes a macro view on this subject and has also stated several times that she is not timing these events she is bringing understanding to the state of affairs in the big picture which many believe has crested. if anyone has made life changes due to the finding of Nicole Fox, that’s good. She has advocated a simpler more independent lifestyle. I think that if the economy was booming it is still fantastic advise. Buyers remorse is not uncommon and we need to go back to the original intent of why we make life changing decisions. it is based on a conviction of doing something right. We often have to be reminded that we are not following the crowd which means we will be constantly scrutinized for our perspective. This does not mean your decision to move or live a sustainable lifestyle is wrong. Living a sustainable lifestyle takes hard work, discipline and `courage. Based on what I hav experienced these past few years in city living is mind bending. The risk taking is incredibly high and the rewards are fleeting. This will continue and to be at the cutting edge of sustainable, slower lifestyle is simply a great experience. I am preaching to myself and giving myself a boost as I am going through the transition to sustainable living.



    I had the privilege of seeing Nicole speak at Georgian College in Barrie, I believe in 2011. I was a big TAE follower going into that session, so I knew what I would likely hear, but was blown away by the manner in which Nicole presented the material (and have since bought the World of Change download, though it is not nearly as moving as an in-person Nicole lecture).

    While I can understand your frustration that things haven’t “fallen apart” yet, I don’t recall Nicole ever putting a fast and hard date on any of this. In fact, I believe she’s maintained that collapse is imminent but will likely take place over a long period of time in a period of stops and starts. See here:

    This is very much in alignment with The Long Descent by John Michael Greer of The Archdruid Report fame. Other great writers also touch on collapse, whether societal or from an energy perspective, such as Richard Heinberg, James Kunstler and Dmitri Orlov. Nicole was a great “jumping off” point or “inoculation” of what is to come – an incredible overview of the system in which I exist, how it functions, and where it is starting to fail – but there are a lot of others out there with similar narratives that are worth looking at as no one person is an oracle and see the future completely.

    None of these individuals, Nicole in particular, promised anyone they would wake up one morning and find houses for cents on the dollar for their disciples to buy up (particularly without huge ramifications to the system/society in which we live). Nor did they promise anyone could live a lavish lifestyle of luxury for their financial prudence and/or delaying gratification of owning a home. All they have said is that collapse is imminent (or underway), and that those who don’t prepare will be far worse off than those that do. By taking this time now to make ourselves more sustainable, we can proactively address problems that are on their way and can no longer be avoided (a few more can kicks here and there may happen, as they likely have since 2009, but each kick has cost society something and those costs are mounting).

    You seem to be waiting for something that quite frankly isn’t going to happen. Worse, you sound like you have people who you care about also waiting for something you have promised them. I’m not sure if there is any solution to your predicament, as the way you’ve managed those loved ones (and perhaps your own?) expectations has pushed you into a corner where something has to happen *NOW* or else you have to change the path on which you are on.

    We all likely suffer from something similar to what you are going through. Even now I find myself struggling to hold onto the job I have that allows me to continue to be a “functioning” member of society and afford its extreme costs. I’ve put off major milestones in my life – relationships and marriage are particularly difficult when all you can promise a perspective spouse is 20 years of less, not more – and I’ve foregone the profits I’ve seen friends make off their homes, rental homes and the stock market because in the long term I believe what TAE has presented and I know these are all short-term solutions and will not be sustainable.

    Nobody gets anything for free in life. Either you accept that you can enjoy life now and pay up in the future, or you can sacrifice now to hopefully offset future hardships.

    As stated before, do what you believe. Regardless if Nicole promised anything or not, she can’t help you at this point. You have to help yourself.



    @ Cory….
    I haven’t posted here in a while, but felt the need to respond to your posts about your dilemma after “doing what Nicole told you to do”
    . Other than selling your house, what other things did you do in the list of things that were put forth? Did you downsize/modify your lifestyle and expenses [even modestly] … have a store of cash built up and handy…have additional sources of income or barter.. look at the larger employment/unemployment situation in your area and the country as a whole…enlarge your skill set ….extrapolate costs going up down the road????
    I ask this as someone who lives in a very modest 1950’s house on an extremely modest 1950’s income in the North East…not a cheap area to live….I am also a landlord. I have downsized, consolidated expenses to a minimum, built extensive local contacts
    Although my mortgage is paid for, since the year that you have sold your house and the beginning of the economic slide my RE taxes will be 35% higher next quarter, house insurance was rising steadily them jumped to 40% more after the hurricanes, floods in this area and other disasters across the country.
    So, where would you be now if you were still paying your mortgage and these things occurred??? Did you sell and then rent for much less than your mortgage and related house expenses? Did you downsize your life along with shedding the house? did you take what ever you made from the house and keep it in cash and easily accessed?
    Your rent has gone up.. yes I understand this. As landlord,. I was able to keep my tenant in place with a minimal increase due to my lifestyle and the skills and value my tenant brings to the table. People who bought to let on high mortgages and without other resources and skills have have to raise their rents…just as you would have had to shell out more cash if you still had your mortgaged house.
    Heating, electric and water bills have risen 30 to 40% despite the fact that I have curtailed my usage BY THE SAME PERCENT! This winter was noted for it’s harshness, ice and prolonged cold. My roof, which needed to be replaced before the winter and for which I had already received a quote from a local roofer cost much more due to the fact that not only did the cost roofing material go up in general but the hugh amount of end of winter repairs in the area caused a shortage of supplies and drove the price up even further. I was still able to negotiate a good discount due to the fact that I used a local person with whom I had a working and community relationship and I paid in cash from my ready and easily reachable stash…… but it was still thousands $$$.
    Why do I tell you this? Because if I still lived an “average” 2014 lifestyle and had a mortgage to pay as well as these extra bills I would be in straightened circumstances right now…just like a number of my neighbors…. just like you would be if you too were still paying a mortgage with no other lifestyle changes.

    Additionally I might add that it took me several years to effect my descent, starting way before the TAE came onto my horizon. You cannot read the words “sell Your House” and jump ship without any further planning and adjustments and you very never told to do so here….read the primer section again….in full….with an eye to the big picture it presents.


    Horror as in the degree of “wrongness” of what you expect versus what actually happened. For example, expecting it to become so bad that Obama wont be able to finish his term:

    Or perhaps (one month after we had hit a bottom), remarking:

    “If I had to say when we might see a bottom that could last a few years instead of days weeks, or months, I wouldn’t suggest such a thing would be possible before the middle of the next decade at the earliest. This does not preclude largish rallies within that timeframe though.

    I terms of what the world might look like by then, Denninger and Weiss and other purely finance types seem to think that recovery is possible to something at least vaguely resembling business as usual. That isn’t our position. We would say that the combination of capital and energy scarcity will preclude a return to anything most of us would recognize (with the possible exception of those almost a hundred years old or who grew up in a war-torn third world country).”

    In any event, Ilargi, while I appreciate your responses, I found very little of what you ever said terrified me the way Nicole did. You always were a bit more cautious in what you said, wisely hedging your bet here and there. No one ever coined “the Ilargi Effect” Thus, you cannot be held responsible for things you never said, nor ever thought.

    Nicole however can. Thus, the one question which I asked (twice) which she refused to answer was what happened to make this statement so wrong:

    “Stoneleigh said…

    Housing starts are not making, nor will they make, a new bottom. Your 90% price decline in real estate will not pan out Ilargi.

    Housing is not even close to a bottom, ergo it has much further to fall. I think it’ll be down 90% on average within 5 years. Watch this space.

    JULY 19, 2009 AT 9:41 AM”

    And again, what I was hoping for was some sort of honest and sincere accounting of what (in her words) caused this statement above not to be true. Not her more standard mecnanistic answer, or some semantic parsing – just some true and honest heartfelt account which includes an answer along the lines of:

    What I missed was…
    I was wrong because…
    At the time I was thinking…
    What I totally did not consider was…
    When they did _____ I was shocked because _____

    In any event, dont worry Ilargi about me sticking around here and bothering her much longer. For me the die is cast and my fate sealed. I just hope to see one human act of contrition from Nicole before I log off for good.



    From that same thread in the comments section:


    Stoneleigh said…
    Anon @5:46,

    “You and Stoneleigh started TAE with some interesting ideas. It’s now become dogma. Your minds and your breadth of intellect are as closed and shallow as the powers-that-be you continually rant against.”

    The ideas have not changed because our predicament has not changed. We are still trying to warn people as we have always done. Are the ideas less interesting than they used to be? They certainly conflict with received wisdom at the moment, which some people interpret as us being impervious to evidence. Actually it’s us not swinging with the herd in its endless tug-of-war between fear and greed, panic and complacency

    “And you wonder why TAE is an also-ran in the financial blogosphere?”

    If we are also-rans it would be because we don’t pick out investment suggestions for people. We tell people to get out of the markets and stay on the sidelines in cash unless they’re aggressive speculators. That doesn’t make commissions for anyone and it doesn’t provide an outlet for predatory greed. Rather than being structured as an investment site, we are a public service trying to help ordinary people to hang on to what they have, in order to minimize suffering as much as we can.

    “You are not prophets. You are not psychics. You are doing what all of us in this space do: projecting your best guess as to what lies before us.”

    We have never claimed to be prophets. We are simply sharing what we know as a result of years and years of reading and analysis. Feel free to disregard our worldview if you think it too dogmatic. There are many sites that will offer contrasting views, along with specific investment advice. Bear in mind that every one of those sites is trying to sell financial services of some kind.

    We do make our arguments again and again, but that is because the same questions come up multiple times and the answers have not change despite the fluctuations of the market and the counter-productive government interventions.


    Wake up and smell what you’re shoveling, friend.



    I still don’t see why you say you are ‘horribly’ wrong. You got rid of the risk of ow(n)ing a long term mortgage on a home, and that risk is high. That has little to do with a few years left or right. Nothing that brings words like ‘horrible’ or horror’ to mind. And I’m not sure if this is you speaking or people around you, who you are obviously letting you put under a lot of pressure. You seem to seek for Nicole to take the blame for your ‘horror’ onto herself and away from you, in order to relieve that pressure, without recognizing that Nicole doesn’t see it as a horror. Taking choice bits from what we have said through the years without acknowledging the big picture is of course never either a good nor a fair approach. And perhaps Nicole could have been more careful, or more vague, in her choice of words, but in the big picture that makes no difference: you still got rid of a big risk. Unless perhaps people think the US is actually recovering and they’ll have the time to pay off another 15 years on their loans.


    @Cory – I think it is Chris Martenson that says that it is always better to be a year or more early, than a day late. The extra years gives more time for preparations and learning new skills. No one that I know has even read the Lifeboat primer. I want to think that what I have read at TAE and other forums, has increased my knowledge that will be able to help others when the time comes.

    Unfortunately, people have different priorities. I can’t change anyone else to be what I would like, I can only change how I relate to them. If that is so difficult now, what’s it going to be like in the future when we will need strong relationships to survive.


    “I still don’t see why you say you are ‘horribly’ wrong. You got rid of the risk of ow(n)ing a long term mortgage on a home, and that risk is high. That has little to do with a few years left or right. Nothing that brings words like ‘horrible’ or horror’ to mind.”

    Its all a matter of expectations versus results. If someone makes a very high impact prediction, X will experience a meteoric rise from 1000 to 4000 by 2014 and instead it rises “only” to 3500, while they are technically “wrong” its not a big deal. If it rises only to 2000 then its pretty badly off the mark. If it doesnt rise at all but instead falls to 850, that is majorly wrong. If it makes a difference, strike the word “horribly” and substitute “very” or whatever similar adjective if you prefer.

    In my case, I was told (and I likewise told those around me) to see massive changes – 90% down pricing, obama forced from office, a landscape recognizable only to those 100 years old from war torn third world countries. I see none of those things, and neither do they, so the question is asked “where is all the massive upheaval you told us to expect? Why did you uproot the family and put us in a rental only to make us pay more and be priced out of ever buying again? You told me time, and time again, the upheaval is starting in 2009, 2010, 2014… and you were wrong, wrong, wrong. I never believed in any of this I was patient enough to give you SIX YEARS for what you said to pan out and none of it did – ENOUGH IS ENOUGH.”

    So yeah, plenty of pressure on me – so much so, my life is effectively over. And yes, while I do blame Nicole a bit, I recognize fully that I did this to myself, and I will bear those consequences. But what I am asking for now is a bit of humanity, a bit of closure, (and not from you Ilargi or any of the other posters whom I generally appreciate) why she cannot do this and answer for some things that went nowhere near what was expected, for the life of me, I simply cannot understand.



    “So yeah, plenty of pressure on me – so much so, my life is effectively over.”

    Well now… that seems overly dramatic. I’m sure your life is still continuing along, and likely better off than many people living in Greece, Ukraine, Thailand or very poor places like parts of China, India, the Philippines or all over the African continent. Even if your life was effectively over, well, consider the opportunity you have in front of you – the chance to build a new life rather than be trapped as a wage slave for whatever time left you do have remaining.

    My parents have been renting the last 3 years based on the information/warnings I’ve provided, much of which as been from the Automatic Earth. They pine for home ownership and regret not holding on to their property (it had a hot tub – so relaxing!) an extra year or two, but they also realize their bank balance has been growing since they downsized from a granite counter-top / stainless steel / vaulted ceiling monstrosity (complete with insane mortgage) to a simple townhouse closer to where they work. It also gave them the freedom to travel more, to pursue educational degrees they hadn’t finished, start to focus on health & wellness, and spend more time with family members – something I’m incredibly grateful for.

    “…why she cannot do this and answer for some things that went nowhere near what was expected, for the life of me, I simply cannot understand.”

    Yes, this has become abundantly apparent.

    For someone who claims they recognize they made their own decisions and will assume responsibility for their actions, you’re certainly very adamant to have someone other than yourself apologize for those actions.



    Hello again.
    Gravity has been an absent algorithm. As internet access permits I’ll visit more often. Still need to read up on two months of postings.

    The writing here is solid as ever, with due gravity concerning important topics. I appreciate the substantial volume of economic data and analyses illustrating the dire economic and financial sitiuation from complementary perspectives.I also find it encouraging how you’ve taken a strong political stance against the nasty business happening in Ukraine right now.
    The comment section is mostly populated by informed opinions too, allowing for proper discourse and exchange of equitable ideas.

    I managed to sleep right through the EUlection. Had intended to vote for whatever eurosceptic party with a coherent antifinancial program I could find, but I overslept and couldn’t make it to the voting office in time.
    Making an informed choice for any party would have required researching party programs, of all electable parties ideally, for effective comparison, which I also hadn’t bothered with.
    Such political party programs, although invariably dishonored by the elected, remain the most reasonable way of discerning the value of ideological arguments motivating party platforms. For the EUlection these programs are available on the internet but not disseminated by mass media at all, leaving the majority of voters who are only passively informed via mass media induction hopelessly ignorant and unable to make an informed choice for any party. If they did vote for any particular party it was for the wrong reasons, derived by comparing misleading media caricatures of various platforms, whether pro- or anti-EU.

    Those voters who did actively inform themselves about the available choices by seeking out sufficient information concerning electable parties and the EU’s governing bodies, naturally arriving at various eurosceptic positions, were preemptively disenfranchised by the media machinery’s derogatory rhetoric, portraying eurosceptic dissent as irrational and nationalistic.
    A little eurosceptic discourse had reached televised and printed media, allowing serious arguments exposing the unions disfunctionalities to be heard, but always lower in volume than the europhile side, which got preferential treatment again.

    I hadn’t heard about those criminal interferences by the union’s leading technocrats to displace eurosceptic sovereign goverments, if true, this offense would likely be a defined state crime against democracy perpetrated by a particular governing EU body, or a novel form of multinational sedition committed by particular officials within said body.

    For your consideration, I have prepared analytic and dialectic proofs that the human will is a gravitational potential. These utilise incontrovertible arguments by inductive and deductive forms to establish proper premise, followed by a unique recursive function wherein Gravity is a supervenient algorithm to enable practical experimentation and admission of transfinite empirical observables on this matter.
    Ill see you later.



    So, if instead of saying “in 5 years” Nichole had said “In 10 years,” you would have stayed in the house that “you owned” instead of going into a rental? And made no changes to your life? Really?

    I guess I’m the opposite of you — every year that the catastrophe is delayed for me, I’m happy. One more year to pay down debt, build my business, learn new skills and expand on old one, collect useful items, plant more fruit-trees, and expand my social network. And a bit more time to enjoy the finer things of life, like flying across the country to meet with friends, take a long weekend in the mountains, visit a museum, or dream about a European vacation.

    I’m sorry you’re unhappy with your life. But my guess is that if you had stayed in your house and ignored TAE, you would have an equal amount of stress and unhappiness.

    Nicole Foss


    I have given you several answers fleshing out the scenario with regard to real estate prices. I am sorry if you consider these to be robotic. You ask me to repudiate my position on where we are headed, as if everything we have presented here is entirely wrong. It is not. The big picture worsens every day at the fundamental level. The desperate optimism is merely illusory window dressing attempting to lure people back into the market. It’s a giant pump and dump. Falling for that would be tragic. So many people are though. They’re becoming complacent again, just in time to lose whatever they didn’t already lose in 2008/09. So many people have learned nothing about their over-exposure to risk and desire for a free-lunch by participating in a ponzi scheme in which they will be the empty bag holders again.

    Real estate prices are going to collapse again. Just look at what’s happening already in the places on the leading edge of the curve, like Spain for instance. You are far better off on the sidelines in cash, provided you look after that cash. The cost of ownership has been skyrocketing, and when the market goes illiquid, people will be stuck with those costs, unable to extract themselves. Watch the property tax rates rise as local governments hit a wall over the next few years.

    Look at the unemployment rates in the places on the leading edge, where whole extended families are forced into tiny apartments because it’s all they can collectively afford. Where they walk today, many others will follow. This is not theoretical. It is already happening, just not at the same pace everywhere. The interventions by central bankers have done nothing but make the situation worse, so that the collapse will be worse when it occurs.

    I can understand the pressure you are under, but you did make the right decision to sell. You were at the very beginning of a mortgage, with many years to go. The freedom you speak of would have been unattainable, and you would have drastically overpaid for a depreciating asset in the meantime. Even if your home had been paid for, the cost of ownership could still have become an unsupportable burden under a situation of high unemployment, sharply rising taxes and rising interest rates on any other debts. What we try to do here is to help people extract themselves from unsustainable predicaments, so they are much less exposed to very large risks looming on the horizon. We stand by our record and continue to warn people, since the risks have only got worse in the intervening years.

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