June 07, 2005
Countdown to Meltdown: Doomsday scenarios for "Hallucinating Homebuyers"
This doomsday scenario is worth scanning, not just because the author -- a former editor of Rolling Stone magazine and author of three books on suburban sprawl -- calls the real estate bubble the “last act in the sorry drama of the hallucinated economy” but because it's the second economic doomsday scenario we've heard in 36 hours and offers some potential decision-making criteria for home buyers. Writing about James Howard Kunstler's new book The Long Emergency,the Santa Cruz Sentinel says:
"Understanding the deep changes the United States and the rest of the world will experience as early as this decade, he said, could be the deciding factor in which thriving communities of today become the ghost towns of tomorrow."
"The middle class will become distressed, the construction industry flat, interstate hauling will disappear, airlines will become toast and our daily lives will be defined by what’s within walking distance."
"Suburbs, large cities and McMansions will become slums."
The good news is that “Some communities will fair better than others during the “Long Emergency.” So how do you find one if you are planning on buying a home this year despite repeated warnings of the real estate bubble?
"Commuting will be out of the question, of course, and those 'with the forethought to trade in their suburban McHouses for property in the towns and small cities, and prepare for a vocational life doing something useful and practical on the small scale' will fare better than those who live on the outskirts of town and work for a national corporation..."
"Although individual wealth may very well be predicated on land, Kunstler predicts that true well-being during the “Long Emergency” will be in the individual’s worth to his community."
The Long Emergency seems tame by comparison to the "repossession riots" that James Fallows speculates about in his upcoming article, "Countdown to a Meltdown: America's coming economic crisis. A look back from the election of 2016," which will be published in the July / August issue of The Atlantic Monthly. Watch for an audio file from tonight's interview on NPR's nationally syndicated program,
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With all of the doomsday predictions to the side, do you think the babyboomers that are about to start retiring in the next 5 yrs. will have a large effect on prolonging the boom?
Posted by: hilton | Jun 13, 2005 9:29:18 PM
I must say: While I believe the real estate bubble is going to burst--and have sold my condo, right around the corner from you, in preparation--I personally find the more histrionic doomsday scenarios kind of counterproductive.
The investment industry learned long ago that if you told people how woefully inadequate their retirement savings really were, they would just stop saving. Why deny yourself when your sacrifice won't help you anyway? Panic simply paralyzes people.
The same lesson could be applied here. This book and several articles you mention paint a future so bleak, violent and downtrodden that I want to drive to Montreal while I can, and quaff a fine French rose in a summery courtyard while they are still available. The sense of doom is paralyzing. And frankly, it evokes the natural response that the truth must be "somewhere in the middle"-an idea that isn't always correct, but is an understandable reaction to shrieking hysteria.
Face it. If these prediction is true, what are we to do? It's absurd to think we can accurately predict which communities would survive an economic apocalypse. "Local water sources" could end up poisoned with the end of modern sewage treatment; "nearby agriculture" could wither with the loss of factory farming techniques.
So, while I believe something unpleasant will happen to the economy, I refuse to buy a cabin in the woods and stock up on armaments. Instead, I'd prefer to understand why the pundits are so polarized--why all predictions seem either ditsily optimistic or horrifically bearish.
Posted by: Steve | Jul 13, 2005 5:53:25 PM
There is an ever growing thought that the Fed may have to start cutting rates in 07. This should keep the mortgage rates calm and prevent a crash.
Posted by: arthur mcbeth | Jan 16, 2007 12:40:26 AM
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