How does your local economy feel?

[pslamont]

We came from California around 5 years ago. Our little tract house, which we bought in around 1984 for $95,000 sold in 2003 for $540,000. Real Estate went STUPID in San Diego for a year or two and we bailed out at the right time. That same house today would sell for around $375,000 and that is too high! People let themselves be caught up in the ridiculous false economy of paper money... over inflated values with no real asset value to back it up. House prices went up because people could borrow more and more money to buy so just offered more.

Here in Puna we experienced this same phenomenon but to a lesser degree. All those California types who sold like I did came over here with $$ and were willing to pay more than the assessed value because it seemed like such a bargain... and it was a bargain compared with what we left. The ones hurting the worst from what I see are those who bought for investment, built intending to rent out the new house for 5 or 10 years until they retired. They discovered a flooded market and not enough renters. Flooded market = lower prices.... and when they panicked and tried to sell these last two years prices plummeted.

Those of us who actually live here will be fine. We will have to do a little belt tightening, maybe some work when we expected to live off investments but we will be fine.

I know I was darned lucky to get out of California when I did and get to this lovely land of opportunity. I see opportunity around every corner for those who want to make effort.

In the bigger natioanl picure, our son worked for Lehman Bros. as a Vice President for Corporate Philanthropy (yeah, like his mom, he loves giving it away). He saw this coming and got his resume out there, began networking... he got a decent severance package BUT has no faith it will be honored. He is looking at an offer from the University of Chicago plus two in New York. One is with AMFAR (American Foundation for Aids Research - hey have a 28 million dollar budget that is solid). He will land on his feet but there are many that will fall flat from the banking crisis.

I have no degree in economics but my thoughts are that this is a VERY BAD crash for our economy. No Way the government should bail out the banks. It will be a short crisis if they don't. People will get hurt. That is all going to happen anyway, but the government doesn't bail out the mom and pop that goes belly up because the kids were raiding the till for drug money. They suffer the consequences and start over. Lehman executives were pulling down 4 million dollar salaries (No, not my son!!) and the top 20 execs walk away financially clear. It is a sin. They grabbed their salaries by clearing out all corporate accounts the weekend before they declared bankruptcy. I could go on.... but I still have no love for insurance companies, investment banking or the like. I believe in the little guy.

That is why I believe Puna will survive better than most. Here we will have the intellectual advantage of many fairly educated folk with a good work ethic and the rural advantage of being able to PRODUCE at different levels. We will trade and barter and help one another and will come through.

Oh how I do love Puna!