Dr. Housing Bubble 08/01/08

[Crewleader]

The All Hat and No Cattle Nation: Lessons from the Great Depression Part XVII:
When Economic Times Cause and Economic Tipping Point.

“Americans, while occasionally willing to be serfs, have always been obstinate about being peasantry.”
- F. Scott Fitzgerald, The Great Gatsby

The Great Gatsby was published in 1925 and chronicles the Jazz Age and captures some of the excess of the roaring 20s. F. Scott Fitzgerald wrote the novel during a time in which there was booming economic prosperity and to a certain extent the novel idolizes riches and glamour yet throughout the book there is a slight discomfort of the unchecked materialism. Even though it is now largely read by most Americans, this book was not popular during its initial publication or subsequent years. A few years later, the Great Depression took hold and many of the themes in the novel simply did not apply to the large majority of Americans. To talk about unrestrained prosperity during the 1930s was absurd. After the Great Depression America had its mind preoccupied with World War II. Only after these major events did this novel garner any large readership.

The idea of the nouveau riche is something that has always been a part of the American spirit. Horatio Alger captured this by his popular rags to riches stories during the 19th century. So this current era of economic boom is nothing new. One of my real estate mentors once told me that, “you Californians have all hat and no cattle. Everyone goes around pretending to own things with money they don’t make.” This was a few years ago and those words ring loud and clear in what is going on today in our current economic collapse.

The idea of “ownership” has morphed in the last few decades. Owning something became more about appearances rather than actually having complete possession of material objects. There is one thing that highlights this point to perfection. The auto lease. Chrysler recently announced that through its financing arm that they will not be offering any additional leases:

http://www.doctorhousingbubble.com/the-all-hat-and-no-cattle-nation-lessons-from-the-great-depression-part-xvii-when-economic-times-cause-and-economic-tipping-point/

[Warpy]

1. I remember one of those deplorable made for TV

"Movies of the Weak" way back in the early 80s covering the all hat, no cattle phenomenon in California, following somebody who got a dream job at a studio paying megabucks and being introduced to the southern California lifestyle of the newly rich where everything was rented or on tick, including clothing and furniture.

Well, it turned into quite a morality tale when the job went tits up and the lead started adding up what had been spent renting mansion and furniture picked out by a designer and Rodeo Drive clothing that could have been picked up at Sears for a fiftieth of the price and realizing that he'd gone through hundreds of thousands of dollars and had absolutely nothing to show for it but the clothes on his back and the car he'd driven in from Podunk as he watched the lot get repo'd.

It seems the movie was awful enough that the lesson went unlearned, and people kept going on a charging spree, accumulating the lifestyle of the rich and famous with absolutely no way to pay for it when the bills finally came due.

I'm afraid the Doctor is right again, and we're going to be in for a very interesting ride.