How I learned to stop worrying and love the bubble

I did it. I went out and took out a huge honkin' mortgage to buy an overpriced house.

Yep, me. W.C. Varones. Lifelong renter, perpetual doomsayer.

Why? Because there is no exit strategy. Ben Bernanke and Barack Obama have sworn to destroy the dollar in order to reinflate the housing bubble.

They will stop at nothing. They will bulldoze vacant houses to shrink the inventory. They will offer free citizenship to foreign buyers to stimulate demand. They will take more and more bad bank debt onto the Treasury's books. They will print infinite amounts of money to buy mortgages, Treasuries, Goldman Sachs CDOs, whatever it takes.

You can get a government cheese 30-year fixed-rate mortgage at 5%. Five percent!!! Have you seen the deficits Obama is running? Running deficits at 13% of GDP is not consistent with low long-term interest rates. Taking out a 30-year-fixed is the best way for individuals to short the Treasury. By the back half of your mortgage, you'll be paying it off with Monopoly money. Or Zimbabwe dollars. And if that's not enough, you get an $8000 tax credit just for taking the free money.

If Obama and Bernanke are going to destroy my country and my dollar, I'm at least going to get a free house out of it.

Oh, and I've changed teams.

Go Zimbabwe Ben!!!


Jr Deputy Accountant said...


I'm not sure what to say. No no wait, I know exactly what to say... please tell me this new house has a fortified basement perfect for storing gold bars and dry goods.

If you start talking about putting your pennies in TIPS, I will personally come down to San Diego and slap you. But this? Meh. Kind of genius. The scary part is that you are right.

GO ZB GO!!!!!

KnightHawk said...

Hey if you can't beat'em... get a free house of out it!

I can't even argue with this anymore.

reddog said...

I think it's a good strategy. I'm not convinced that residential real estate has reached its lows yet but I'm sure you had a good selection from which to choose.

Good luck with the new house. I hope you and your new buddy Ben will be very happy together. Can he cook?

Anonymous said...

Good luck with the house. Keep in mind there is only two times you are happy with a house. The day you buy it and the day you sell it.

zeke said...

@anon: that's a strange thing to say. I could see that about a boat or a child, sure, but owning a house can be deeply satisfying.

Anonymous said...

You're mistake is in thinking you'll be getting the house for "free". What you're actually doing is renting the house from the mortgage lender, since most likely you'll be underwater in a couple years, and end up walking away.

You're cavalier attitude shows a real lack of resolve in responsibly managing your finances.

Negocios Loucos said...

Zeke, you into buying and selling CHILDREN!?!?

Zeke said...

@anon: Thanks for the prognosis, doc. You obviously haven't been reading this blog very long.

@NL: I've got several Laotians and a handsome Slavic kid at a fair price, email me for a quote.

V. A. Clown said...

Zeke, I completely disagree. Boats can be quite satisfying to own. Also, is the Laotian housebroken yet?

Anonymous said...

Ah, they're never going to just give away a house. Depending upon the area and the price range and the sustainability of your employment, buying a shack to hang your hat in right now might not be too bad an idea. Enjoy your home (and the Obamabucks tax credit) and may you always own it - as opposed to your home owning you.


zeke said...

V.A. Clown...kindly identify yourself. A clue at least.

Then we can talk prices, warranty, etc.

W.C. Varones said...

Anonymous @ 9:29

When the FHA is giving out zero-down loans, the irresponsible thing to do would be not to take it.

It's a free option on housing. If housing goes up, you get rich. If housing goes down, you hand the house back to the stupid FHA.

Your cavalier attitude toward turning down a free option is shocking.

JenO said...

Wow, I have to admit I am shocked too. I thought you believed that all us homeowners were the devil. Good luck with the house, welcom to the world of never ending repairs!

V.A. Clown said...

Zeke: We played Gin at a rented CRE property on Lomas before. Met in 05 or 06 when I was playing 10/20 regularly. Need another clue?

Zeke said...

Ha! Two years of funny comments and I could never guess it. Glad to know you're still in contact, my friend.

Anonymous said...

as far as "an exit strategy" -

Well, it might not be the planned exit strategy but the last time we had these sorts of circumstances in the U.S.A. the exit strategy that came about was a nearly decade long stagnation followed by armed conflict on a large scale :>) happy thoughts


V.A. Clown said...

Zeke, as long as you and Varones keep up the excellent writing, I'll be in contact. Keep up the good fight.

Anonymous said...

"Keep in mind there is only two times you are happy with a house. The day you buy it and the day you sell it."

That is the famous saying for buying a boat, not a house. It would have to be a real money pit of a house in order for that saying to be true.

Anonymous said...


Congratulations on your new house! :)

Totally understand where you are coming from regarding the continuous threat to the dollar. We are worried about the same, and this is the only reason we're even considering buying right now.

Welcome to the dark side. ;)

Best regards,
CA renter

Ripped Chunk said...

I'm hip. Did the same in late 2008. I have credit card capacity left for stockpiling weapons and provisions.

See you on the other side

Happy Super Tuesday!