Amnesia

I wrote this blog last August 2, 2007. It’s coming truer as we approach the fall of 2008.

Amnesia

The world spins so fast these days that I really don’t know if I’m coming or going, don’t know what side of the moon or sun we’re on. I know the moon was full two days ago but I’ve been too busy to worry about the cycle of the sun.

            GM and Ford announced profitable quarters which made us temporarily forget that both companies and their suppliers have been hurting for the last few years. We can’t forget the housing market has been awful in Michigan which has spread throughout the United States and that fear for the credit markets after the subprime debacle has intensified. The stock market has taken a beating in the last few weeks after rising consistently but when American Home Mortgage, “the Internet’s leading mortgage lender, announced that lenders cut off their credit line, panic took over Wall Street.

            Credit problems, large home builders losing millions, and financial institutions watching their stocks plummeting: it’s enough to bring back memories of the 1987 crash and the Nasdaq bubble bursting in 2000 and 2001. We had begun to have amnesia in the last four years as the Dow rose to record levels and the S&P reached new highs, far from the lows of 2002. We forgot that this happened even with billions that we have mortgaged on the wars in Iraq and Afghanistan, even though the U.S. government continues to pile on record debt while the U.S. dollar has plummeted to a multi-year low.   

            Maybe it’s fitting that the Bourne Ultimatum, the 3^rd movie in the series of spy thrillers, is being released this weekend. In the frenetic pace of the last two movies, we learned that Bourne was an assassin working for the CIA who was trained to be a lethal killing machine, whether he remembered his past or not. Now is the time for him to learn who he really is and why everyone wants to kill him. The days of amnesia may finally be over.

            It’s not over for us.

            We forget about the wars and overwhelming debt levels and the hurricanes of the last years, hoping like hell it’s all behind us. We forgot about bubbles of the past as people mortgaged and refinanced and bought and sold houses and condos as the prices continued to escalate. Now, I wonder if Rock Financial, the biggest lender in Michigan and the primary sponsor of the Detroit Pistons, will make it in one piece. Will it suffer the fate of American Home Mortgage?

            My wife and I have bought three homes in 22 years and refinanced countless times. We had an adjustable mortgage years ago when our payments were smaller and when it went up a full 2% in a year, we refinanced again and fixed it. We were lucky to refinance two years ago when rates were at an all time low and locked it for 15 years.

            So many others are not so fortunate, caught into exploding adjustable mortgages or large fixed loans on expensive homes that are falling in value while their property taxes continue to rise.

            Fear is rising, the high levels of the stock market may be over, while the war is still going strong with 160,000 American soldiers far from home, fearful that their lives may end with the next IED bombing.

            An election is coming next year and a change may be coming. But by then, it may be too late. Like Bourne, we may begin to remember our past but unlike him, we might be much happier, waiting for the unknown to come, lost in the pleasant fog of amnesia.