Image via WikipediaWhat do Obama and McCain know that you don't? They knoow our way of life is about to change forever.
The next seven years are going to see home prices drop like a stone. In a depression the dollar becomes harder to get, so it buys more. But it is a double edge sword, because what you make goes down. The problem with our situation is that the dollar is losing value and home prices are going to drop radically. You are losing equity in your home every day. The resale value is tanking. At the same time, there are more dollars in the economy, but banks won't lend them. Imagine a damn when water pours into the river like mad. The damn gives way at some point and the result is devastation. We have banks acting like the damn and dollars acting like the water. When all those dollars hit the economy the result will be run away inflation and devastation.
Let me explain how this hurts you. When your home value is low and money is flooding the market your house will be dirt cheap. Unless you hold it for decades you will never get your money back. Home prices do not rise as fast as other prices. This makes them a good long term investment over a life time. The same properties that make your home a good investment can be devastating. Here's why. When you buy when home prices are artificially high, the value of your house drops substantially when the home market stabilizes at it's real value. In this case, millions of houses are on the market and they can't be sold, because they are overpriced. At some time the force of the market will cause these houses to drop dramatically in price, becaus as they get run down there value decreases. Bank's know this, so they don't put money into the houses, they dump them all at once and cut their losses. When millions of houses become available on the market dirt cheap, you and everyone else sees the value of their house drop below market value. The result is that your morgage becomes a liability to you, because your house is not increasing in value. This is the case because you owe two or three times more than you'll ever get back. Think of it like a car. A car loses value every year, but if everyone suddenly needs to sell their cars the value drops like a stone until cars become less available.
What Obama and McCain know is that home values have not even begun to drop at the rate it is going to when those banks cut their losses and sell at fire sale prices. They also know that there will be too many dollars in the economy, so anyone who comes to buy your house will be paying less than you can make back, even if they give you more dollars, because the dollar is going to be worth so much less. Inflation will cause the price of everything to go up, but your dollar will be worth less, so if they pay 1000 dollars for a tv then, it will be the same as you paying 500 now. Imagine now that these people have twice as many dolllars as today and your house value hasn't gone up at the same rate. If you paid 200,000 for your house and they buy it at two hundred thousand, they will be paying the equivilent in dollars of 100,000 dollars. The result is that you will lose 100,000 dollars to inflation.
I know this is very complex, but do the math inflation makes the price of everything double, but the price of your house stays the same. What happens? you lose lots of money. This is why so many people are walking away from their houses. They know they will never get their money back. Since your home is your largest investment you take a bath. Combine this with your losses in the stock market and you have lost your retirment.
These are the things that Obama and McCaine are avoiding revealing at all cost, because they don't want to lose your vote. Did you notice that the bailout will not start until after the election? Guess what> That is not an accident. They want to get elected before the real trouble starts and so does Congress.
It's really too late to avoid this calamity. The people in the stock market understand that this is going to happen. They know when it happens the economy is going to have a fatal heart attack. They are selling like mad, because they have no idea which companies will survive. You see companies have been investing their money too and then borrowing at a lower cost to pay their bills. Companies that lose their investments and can't borrow will drop faster than the banks did. People who watch the market, and whose life is the market, are getting out faster than rats from The Titanic. It's no accident that gold is 900 dollars an ounce. Gold holds it's value.
Perhaps you have no idea how little an ounce of Gold is. I suggest you weigh an ouce of lead and see how small it is. Lead weighs less than gold.
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