Irvine, CA (PressExposure) January 06, 2009 -- Irvine, CA, January 03, 2009 -- Lawrence Roberts, author of âThe Great Housing Bubble,â illuminates some of the key beliefs of participants in the massive housing Ponzi Scheme that caused the deep economic recession of 2008 and 2009. He refers to these beliefs as a cultural pathology. According to Roberts, âThere are certain beliefs if widely held and acted upon by a group of people leads inevitably to collective suffering and personal destruction. This is pathology.â
Roberts describes the idea of âappreciation is incomeâ by comparing the actions of the rich versus the poor: âThe rich view home price appreciation as adding to their net worth. Poor people view home price appreciation as income; free money for them to spend.â He notes that the rich did not spend their appreciation and did not lose their houses when prices fell; however, the poor did spend the appreciation and most often lost their houses in foreclosure.
Roberts illustrates the difference between rich and poor in their beliefs about savings and credit, âThe rich will use credit sparingly and most often pay off any credit balances each month as the bill comes due. In contrast, the poor carry as much consumer debt as they can afford to service. Whenever they receive an increase in a credit line, they believe they have more money to spend, just like it was savings.â He contends this debt-service mindset fueled by artificially low interest rate offers created buyer demand that inflated the housing bubble.
Roberts opines, âThere are a great many homeowners who live in big houses, and they believe that makes them rich. To them, the possession and use of an expensive house makes them wealthy even if they have no equity in the property. â He further notes, âThe rich buy less home than they can afford and work to pay off the debt in order to maximize their net worth. The poor stretch their finances to possess more home than they can afford with loan terms which never retire the debt, or in the case of negative amortization loans, actually increases their debt held against the property. â Roberts contends this false illusion of wealth prompted many buyers to overextend themselves to buy properties they could not afford which ultimately lead to foreclosure.
About the Author, Publisher and Book
Lawrence Roberts, author of âThe Great Housing Bubble,â is known as the Housing Bubble Cassandra. He publicly predicted the housing price crash as the primary writer for the Irvine Housing Blog (http://www.irvinehousingblog.com/). From his unique vantage point in Irvine, Calif. â the center of the subprime universe â Roberts carefully documents in his book the conditions and practices that inflated the largest real estate bubble in history. He holds a Master of Science in Land Development from Texas A&M University, and he consultants to the land development industry.
Monterey Cypress Publishing is a small press specializing in real estate and personal finance related books, audio books, and video presentations.
Purchase âThe Great Housing Bubble,â at Amazon.com. Obtain free ebook here: [http://www.thegreathousingbubble.com/]