Update: Much of what I have written about here has come to pass, increased saving, decreased spending, lower demand for loans and lifestyle changes. This website is an alert to middle class families to realize that house prices will not go up, or that commodities like houses will inflate without the increased earning power to buy them. Either way the current low interest rates could be a trap .

Until families are no longer  buffeted about by the weak dollar policy of the United States, you may be better off renting and saving the difference. Middle class families should be free of debt, and if you can walk away, or negotiate with credit card companies, or protect yourselves with bankruptcy, you need to deleverage in the face of massive government spending that is misplaced. The government is protecting the banking class while not helping the middle class, the engine of spending for the entire world. So you need to protect yourselves. A weak dollar could send gas prices up again, and all commodity prices up, but lack of loan demand will likely slow housing appreciation. Real estate is the commodity that is based upon credit, the rest are based upon world demand and a weak dollar.

Clearly, the economy of the world appears to be tethered to the spending habits of Americans. But the abuse of that very middle class by the Bush administration for eight years and by the banks during that same time, and by the Obama attempts to prop up house prices is very evident to all observers.

Truth is, the Obama housing bailout announced on February 18th is just a way to preserve the solvency of the banks but will not likely work. The folks who get the bailout help will lose equity when they take the loan bailouts. The folks who get the bailout help will have to most likely sell into much higher interest rates and the banks will take a piece of the equity.

I would not be adverse to helping these foreclosure victims except for the fact that this action by the Obama administration will slow down the decline in house prices, and will keep housing far too expensive compared to historical norms. In other words, the Obama administration is doing just like Paulson did, think about the banks first and the people second.

Yet I don't see the banks being responsible for this spending that keeps the world going. You can have all the lending supply in the world but if you have no demand for those loans because the potential customers are tapped out what good is the supply? Simple supply and demand factors are not being considered by the government, who would rather bail out their buddies than help the engine of recovery, us!

This is what is going to happen. The people who are suffering will start to save, which may someday (years from now) be a foundation for a stronger society. But they will not spend like they have done before, because they know what the outcome can be when government is manipulating the currency and money supply, essentially taking the value of things out of the hands of the buyers and sellers.

But had the government given 15 thousand dollars to every man, woman and child in the United States, and left the banks to crumble, this country would have had real savings of much of that money, put into real banks, new banks created by the federal reserve. Instead the middle class will no longer spend money, and they will destroy every plan that gives favor to the financial system in order to protect themselves. Read my lips, no more stupid loans.

I don't see any bailout of credit card holders who pay massive interest when banks are able to borrow the money at almost no interest. This is usurious behavior and people have had it with this usurious gouging of the very consumer who is needed for facilitating the recovery!

But hear this, government of the United States. What goes around comes around. And certainly when you want us to pick up demand just because you are giving a supply of stupid loans for overpriced cars, houses, and the like, we won't answer the bell. We have taken our boxing gloves and we have gone home.

As Crosby, Stills and Nash once sang, "We are leaving, you don't need us." So government, here is the thing you will be getting from the middle class as we walk off (compounding your failure), a very large middle finger pointed in your direction.

My fear is that the people who produce the assets, like the copper producers and the oil producers will stop production increases. If the middle class in the US is hit by higher prices, and yet have no additional income, they will retreat even further into their purchasing shell. Only time will tell.

Beyond that is the fear, and a very real fear, that FDIC will not be able to really cover a massive national run on the banks. Market Oracle Article. Sit Down Before You Read This.

Off balance sheet banking was a creation of international bankers. It is my view that this is why we simply cannot feed the banks from the treasury during this meltdown, because this feeds the corruption of the banking system.

The 1998 Basel II Accords allowed this off balance banking. The system was doomed to failure. The question is whether that was planned, or if the plan was to make money in a greedy fashion and hope it wouldn't fail. Guess we need to find out. Certainly Basel II has undermined the credit system of the United States. Shame on you, international bankers. Are you listening Congress? Are you going to quit let the banking system raid the treasury or are you going to keep allowing Citibank and their loser friends to continue to steal from taxpayers??? Check out this link to the Damn International Bankers.