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America's Two Roads to Recession Finance Articles | June 4 Cheap Air Max Shoes , 2005

Machiavellians believe that governments manipulate their national economies to create the illusion of economic well-being. The governments' goal is to ensure political stability. As with any set of perceptions, reality changes the public illusion. Unfortunately, the Americans have hit two reality bumps on their yellow brick road to the illusion of global well-being.



The Home Real Estate Perception is Changing


For middle class Americans Cheap Air Max , residential real estate has proven to be the only effective conservation hedge against inflation. Mortgage rates are at or below the U.S. inflation rate. Mortgage interest payments are tax deductible. American homebuyers can avoid paying taxes on their profits from the sale of private homes. In the past year, U.S. Residential Real Estate prices have risen an average of 15%. Everyone feels secure and content under this hard asset security blanket.


In the short run, debt is good for the economy Cheap Nike Air Max Mens , It creates buying which in turn creates jobs. Because interest payments on personal loans aren't tax deductible, American homeowners have tended to finance their debt by taking out second and third mortgages on their homes. Because single family residences are seen as excellent investments, Americans are buying second homes and going into massive debt to do so. Everyone's betting that the real estate boom will continue to appreciate and the hard asset house is an effective security blanket against personal excessive debt.


In the past couple of months Cheap Nike Air Max Online , there has been a deluge of media articles arguing that the Real Estate Bubble is about to burst. These articles are telling the Emperor that he is naked. The media drumbeat is having its affect on the public's real estate perception. Real estate investors are less numerous. Homeowners are more inclined to put their houses on the market. The DemandSupply equation is slowly moving toward over supply. This will force home prices down. Debt