Step Three....Make a Decision to Turn Your Life Over to Bernanke...

If that doesn't work...

Then Make the Decision to Turn Your Life and Will Over to the Bankruptcy Courts.


When Warren Buffet talks... most people listen.

"The U.S. real estate market is clearly slowing, especially in areas that used to be the hottest, while speculation in commodity markets is rife, Berkshire Hathaway Chairman Warren Buffett said Saturday."

"Buffett said at the annual meeting that "significant downward adjustments" in house prices are possible, especially at the high end of the real-estate market and in situations where homes were purchased as investments."

"We've had a bubble to some degree," he said, noting that Berkshire has a good view of the market through the thousands of real estate agencies it owns. "We see a slowdown every place."

"What the wise man does at the beginning the fool does at the end," Buffett quipped. "Once a price history develops enough for other people to see it and get envious, that takes over markets. We're seeing that some areas of the commodity markets."

"At the start of the party, the punch is flowing and everything's going well, but you know at midnight it's all going to turn into pumpkins and mice," he said. "People think they'll be able to get out just before midnight, but everyone else thinks that too."

"Buffett: ‘Dumb lending always has its consequences. It’s like a disease that doesn’t manifest itself for a few weeks, like an epidemic that doesn’t show up until it’s too late to stop it Any developer will build anything he can borrow against. If you look at the 10Ks that are getting filed [by banks] and compare them just against last year’s 10Ks, and look at their balances of ‘interest accrued but not paid,’ you’ll see some very interesting statistics [implying that many homeowners are no longer able to service their current debt]."

Meanwhile...

"Mortgage rates have drifted upward for the sixth week running, which is consistent with Freddie Mac's economic forecast," says Freddie Mac chief economist Frank Nothaft."

"We expect that the mortgages rates will continue to trend upward over the coming year, but that upward trend will be modest at best."

"While home prices and sales may be moderating, home owners continue to tap their home equity. A separate report showed 88 percent of refinanced mortgages in the first quarter were for more money than the mortgages they replaced, the highest cash out level in almost 16 years."


Sacramento Bee.

“Last year Janice Pierini fell in love with a two-bedroom condominium in Natomas and rushed into an adjustable-rate mortgage. She said it was the only way she could get into a place that cost her more than $200,000.”

“Now she’s struggling, like a growing number of homebuyers who face the risks that come with the loan that has become the leading way for Californians to buy a residence.”

“Experts say adjustable rate loans generally work well in markets where values are rising and best when they’re rising quickly. That’s no longer the case in Sacramento and much of California."

"Yet buyers still get swept up in emotion while buying a house and often don’t adequately think through their loan decisions, said Pam Canada, executive director of a nonprofit homeownership center in Sacramento.”

“‘My guess is there’s a large percentage of people going in blind,’ Canada said. First-time buyers are especially vulnerable, she said, to a hurry-up atmosphere in which loan officers often say "just get this loan now and in a couple of years you can refinance.’”

NY Times

"As a rule, when Americans feel financially pinched, the causes are clear: high unemployment, soaring interest rates, depressed home values and a wilting stock market."

"But many Americans now say they are feeling squeezed in the absence of these factors. Their concerns are instead centered on a combination of high gasoline prices, creeping insurance costs and the pressure of a large number of adjustable-rate mortgages, now jumping to market rates, that helped to fuel one of the largest housing booms in American history."

"Though they may not fear for their jobs or worry about long-range financial health — national polls show a general satisfaction with the economy — their kitchen-counter economy is an increasing source of everyday anxiety."

"Further, millions of Americans who have financed their homes with adjustable-rate short-term mortgages — some of which require interest-only payments — are starting to see their monthly payments rise as low introductory rates expire and market rates kick in."

"I just cringe every time I get that bill," said Mindi Davis, 35, who took out an adjustable-rate second mortgage two years ago for the home she shares with her husband and two children. "I anticipated an increase," Mrs. Davis said, "just not this much that quickly."

"Brian Wrage, who lives in Tampa, said he had begun to unload his investment properties in part because of the adjustable-rate mortgages attached to them. "My second mortgage on one property started at 5.7, and by the time we sold it three years later it was 9.9," Mr. Wrage said.

"It was eye-opening: adjustable rate means up."

"Foreclosure rates have been at historic lows since 2002 because of low interest rates and high housing demand. But soaring home prices and flat wages are now causing trouble for many families, especially those who took out below-market introductory mortgages a few years ago and are now paying the piper."

"Normally, nothing is a better predictor of foreclosures than high unemployment and credit card delinquencies," said Rick Sharga, a vice president of RealtyTrac Inc., an online foreclosure marketplace, which tracked the foreclosure data."

"But what most people are talking about isn't any of that now. We think adjustable-rate increases coupled with a slowdown in the price appreciation and the demand of houses is why we are starting to see a fairly significant increase in the foreclosure rates generally now."

"The rising costs have contributed to a 38 percent increase nationally in home foreclosures in the first quarter of this year over the same period in 2005."

"People who are living beyond their means are going to have a harder time making ends meet than ever in history," Mr. Sharga said."