U.S. Real Estate Agents Pinched by Housing Market Crash – How About Some Gold Instead?

The great mill of life grinds away… exceedingly slowly sometimes, but always fine.

Now, it is grinding down the realtors and the sub-prime lenders in the United States. The poor lenders are having to take back the mortgages they wrote. And we are really shocked. Shocked! Imagine… you’re nice enough to lend to people… you’d think they’d be nice enough to pay you back.

But the borrowers don’t have any money. Poor saps. They probably do want to pay the money back. But how can they?

And now, their Neg. Am., I.O. Limited Doc, ARMs are being reset – upward. As much as USD $1 trillion worth of mortgages are set to be adjusted to higher payments over the next 12 months. And where are those nice lenders now? They’re putting away their wallets; folding up their files; or, where they are still lending, they’re asking customers for income tax returns!

What are the homeowners to do? If they can’t pay? And they can’t refinance?

We don’t know… but the millwheel still has a few turns left. It will be interesting to see who finally gets crushed… and how.

Right now, the realtors seem to be getting pinched. Sale prices have not fallen very much – at least, not in most areas. But the volume of transactions has dropped so much that the realtors are having a hard time making ends meet. Many are said to be thinking about waiting on tables, parking cars, or starting a hedge fund.

By the way, last week we ran into an old friend. Actually, he is a young man who saw where the money was and decided to go after it. He started up his own investment business – with practically no resources, no contacts, no investors, no training… no nothing.

“How’s it going?” we wanted to know.

“Well… little by little, it’s coming along. The key thing is just to keep your expenses very low and get good returns. Last year, my little fund showed a 40% return. So now when I go to people to ask them to invest some money, they are actually interested. Besides, I don’t charge a percentage of capital, just a percentage of performance. If they don’t make anything, I don’t make anything.”

“How did you get a 40% gain last year?”

“Simple, I invested in gold stocks.”

Surely, the realtors must be looking at the money business. And maybe even gold. The yellow metal rose almost USD $10 last Friday… to USD $672. Oil is near USD $60 again. All of which suggests to us that whatever is bugging the economy isn’t going away anytime soon.

Bill Bonner

Bill Bonner

Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America’s most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind Markets and Money.

Bill Bonner

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Mr T

Don’t you touch my gold, fool.

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