President Obama is meeting with the leaders of the credit card industry to talk about fees and interest charges that critics call abusive. Both houses of Congress are trying to figure out how to limit those kinds of practices and require greater disclosure.
But here's the one thing the government and media are missing: The other shoe is about to drop.
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I'll explain exactly what that means in a second, but first I want to give you some background on me, because even if you tune in every day, you still might think I'm a kook and if you're Stephen Colbert then you are sure I'm on the fast track to crazy town.
On September 18, 2007, I said this:
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"We are absolutely headed for a recession… I don't think that there's any way out of the recession. It is coming. Now, how deep it goes is anybody's guess. I tend to be — but this is just me. I tend to be somebody who says, batten down the hatches, man, because here it comes."
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On that day, the Dow went up over 300 points and finished at 13,739.
Nuts? Well, economists decided that the recession officially hit in December 2007 and as you know the Dow is now trading around 8,000.
Then on December 13, 2007, I said:
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"We have this problem of nobody has any money to lend and all of these banks keep saying no, no, no, we've already done our write-downs; the problem's behind us now. No, it's not. No, it is not. They are saying that so people don't panic and go on a run on the bank."
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As you may have noticed, bailouts have grown larger and larger in the time since it was supposedly "fixed," adding up to a total of $12.8 trillion.
Look, I'm not the new, extra-pasty, non-Jamaican Miss Cleo. I've just been trying to apply the common sense that this country used to pay attention to and tell you the truth as I see it.
Now, let me show you what I think is the next phase. The other shoe that I think is about to drop relates to commercial real estate and credit cards.
First, commercial real estate: It's worth close to $7 trillion or about half the amount that our entire economy churns out in a year. It's a huge industry, with huge problems.
There are $1.3 trillion in malls and other commercial property loans coming due between now and 2013. And, in a report released Thursday, Deutsche Bank estimates that at least half the loans and two out of three of those packaged and resold as securities, will not qualify for refinancing.
Meanwhile, nearly $1 trillion in debt is tied up in the credit card industry.
Barack Obama is getting ready to ask those companies to take on even riskier loans, which I'm pretty sure is what caused the housing bubble in the first place.
Because of the way our economy is structured, Obama needs you to borrow more now, so that you'll spend more now. He's trying to prop up this economy just one more time on our Visa cards — and I guess then we can worry about being fiscally responsible.
While we're supposedly clinging to our God and our guns, Obama is clinging to the idea that new debt is the cure for old debt.
Some people will call me un-American or crazy for suggesting this, but now isn't the time to spend like an heiress.
We all must be careful and spend our money wisely. Don't worry about buying something from every catalogue; invest in piece of mind. If you're able, put some money away. If this economic storm passes quickly, you'll be in a better position. If not, you're prepared for the worst.
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