“There’s a sucker born every minute”, was a phrase supposedly coined by P.T. Barnum, the American circus mogul.  In reality it was originally uttered by Barnum’s competitor, David Hannum, a New York banker turned showman.  Hannum made the prophetic statement after Barnum had successfully convinced the media that a ‘giant human fossil’ Hannum had previously unveiled to the public was a fake and that Barnum’s newly found ‘giant human fossil’ was the real deal.  Barnum’s newest sensation captured the media’s attention and the public soon flocked by the thousands to pay for and see the latest Barnum attraction.  Hannum was discredited and left with a public believing his ‘giant’ was a fake.  It was then he uttered the now famous words in the context of Barnum’s ability to dupe the public and the media simultaneously.  http://www.historybuff.com/library/refbarnum.html

Ironically, as proven in subsequent court proceedings Hannum’s and Barnum’s ‘giant human fossils’ were both revealed as fakes.  That’s a pretty funny story in my book.  One liar getting the best of the other.  Both of them capitalizing on public stupidity and making a mockery of the masses in the process.  In my opinion anyone who paid to see either ‘giant’ should have had their money taken from them.  It was their desire to believe the unbelievable that made the transaction legitimate.  The same holds true for those who bought dot com stocks.  Or maybe a Yugo - remember those?  Or how about all the late night infommercials touting ‘get rich quick without hard work or education’ home based businesses?  Or how about overpriced homes with exploding debt instruments?  I say deregulate all restraints on responsible advertising and business practices and let the buyer beware.  Caveat Emptor!  That’s the spirit!

Wait a second.  I spoke too soon.  The Fed has already beaten me to the punch.  By design they created the means for suckers to buy into the greatest ‘giant’ of all time.  This giant however came in the form of massive debt.  Damn.  We should have known.  When somebody offers something that sounds too good to be true, like home ownership for underqualified buyers, or the perpetual ability to access equity with cheap financing, or economic growth through the never-ending expansion of debt maybe it is too good to be true and maybe it’s my responsibility as an adult to be held accountable for my own financial decisions.  Damn.  Damn, damn, damn…  I hate being responsible.

Who do I blame, who do I blame?  How about stupidity?  How about I blame the guy on Maui who just paid $1.25 million in November of ‘06 for a fifty year old unimproved four unit place over there with only 5% down then turned around and borrowed $50k from a private party only to refi that loan with a hard money loan for $75k in the face of a declining US housing market.  He’s now upside down on the property - no matter what he thinks, and the rents don’t pencil.  He’s also upside down on his residence back on the mainland - which he bought for $1.3 million with 100% financing in July ‘06.  How about I blame that guy?  Believe it or not, I actually hope it works out for him - meaning that he’s able to support the debt.  Although I do hope his value crashes.

How about I blame another couple on Maui who paid about $400k for their home 7 years ago and now owe twice what they originally paid for the home and more than its present value for that matter - with no material improvements to show for it?  How about I blame them?  How about I blame the developers on Maui who are now holding land that they bought years ago and can’t sell it for any price?  That’s a whole post in and of itself.  Which by the way I’m waiting to pounce on those suckers.  How about I blame the Fed?  How about I blame the mortgage industry?  How about I blame the guy who paid $1.4 million for my home in Belmont?  How about I blame everybody for everything?  The government for taxes.  Big oil for gas prices.  Private equity for driving the stock market into the stratosphere.  The Fed for monetary policy.  My neighbor for their barking dog. 

You know what?  I don’t blame anybody but myself.  I could run for local office and ultimately state or federal office if I don’t like what’s happening governmentally.  I could start a lobbying group to combat the oil industry.  I can produce and distribute biodiesel (see RebelDiesel.com).  I could educate myself on how to capitalize on the unwinding of the credit bubble.  I can simply not buy a thing I can’t afford.  I can choose to not be a sucker.

My point is this - as consumers we are responsible for our own actions.  There are  some conumer groups out there that offer a basis by which to make better buying decisions but as a whole, our country remains at the whim of the P.T. Barnum’s of the world.  Don’t trust the Fed.  Don’t trust the NAR.  Don’t trust anybody but yourself.  Do your homework.  Don’t believe the hype.  Read.  Educate yourself.  For every article you read supporting your view, find another that debuncts it.  Be a rebel.

I’m going to continue posting on this site and on RebelDiesel.com.  My next post on this site will focus on observations made while on my recent vacation on Maui - during which I spoke with numerous business proprietors and looked at tons of real estate and real estate sales data.  All of it confirmed what I still believe is our trend toward recession.