Rolled in Parts

I don't think high energy prices are here to stay, the fundamentals don't support them.

I said the same thing in 2003 -- when the popular belief held that homes were going to continue to rise 20% each year ad infinitium (my favorite Latin phrase of late). But, I was three years early. Man, did I miss out on lost growth! Between '03 and '06, I didn't flip a house, didn't do any cash out refis, or take on a 'dream' no down, 125% LTV, 1% ARM loan -- on that beautiful, new 4,000 sq ft house in the Elk Grovian Hamptons. Did I miss out? Man, Did I Ever!

My rule -- never take on a mortgage more than 2*household gross. Median Elk Grove income in '06 was $77,064. So with 20% down (with a national negative savings rate...yeah, right) -- go get yourself that 185k house. That's what the median should be. It ain't. Median income should afford the median house. I can't imagine a sustainable economic pattern without this fundamental.

Speculation and the falling dollar are driving energy prices. Another unsustainable system. Not, as Bush said, "it should be obvious to you that demand is outstripping supply, causing prices to go up." Is that so? The facts get in the way of his statements. Refined domestic reserves are at their highest levels. Domestic demand has fallen 3-4% from last year (the source of all the new faces on the bus).

The economy has been dipped in oil and rolled in parts. I am a big fan of doom but I don't think it will crash. Gas will stabilize at $3.20 (the short-term, that is). A few truckers will get squeezed out, buried alongside the fresh graves of all those florists-turned-real estate agents.