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  • From: "Don Bowen" <don.bowen AT earthlink.net>
  • To: <homestead AT lists.ibiblio.org>
  • Subject: Re: [Homestead] Dow could close below 8000
  • Date: Fri, 10 Oct 2008 15:06:17 -0400

Buying and selling. There are no guarantees in any investment. Until the
passage of several banking laws of the thirties, banks were some of the
least secure places to put money. Now they are secure with the government
saying up to $250,000 is safe but at the same time returns are very low.

A house used to be a safe low return investment in most areas. People
bought houses and usually lived in them for about seven years average. They
could sell the house with enough profit to pay fees and add to the down
payment of a larger house that was paid for with a greater income.

A 20% down with interest rates around 6% kept the market moving and stable.
Then the massive amounts of money dumped on the market by Greenspan coupled
with huge foreign exchange lead to the need to find new ways to keep money
moving and American's huge housing market provided one way. Lax supervision
lead to all sorts of easy loans, an explosion of credit, a mania ("you have
to buy a house just to keep up") now a panic (I can't afford the new payment
so I have to sell"), and now the crash.

Don Bowen KI6DIU
http://www.braingarage.com/Dons/Travels/journal/Journal.html






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