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Dread Disease Shelterus Bubbleria Sweeps the Nation! (April 24, 2006) 
It is my sad duty to convey the ravages of the dreaded disease Shelterus Bubbleria
across our fair land.
As you can see from the accompanying maps, this subtle but debilitating disease has spread in a classic pattern. The first outbreak occurred 15 years ago in geographically isolated Hawaii. Scientists have definitively linked Hawaiiana Shelterus Bubbleria to Japanicus Bubbleria, which exploded across Japan in the late 1980s and was carried to Hawaii by exuberant Japanese investors. The disease seemed to die out by the mid-1990s, but as with many other insidious pathogens, its seeming disappearance only set up a far more devastating outbreak in the San Francisco Bay Area in 1998. Genetic testing suggests that this new virulent strain "jumped" from either the then out-of-control infection Nasdaqus Bubbleria or its local stubbornly resistant variant, Siliconvallus Bubbleria. 
As in other outbreaks of Bubbleria, euphoric investors provided the perfect
disease-carrying vector.
As symptomatic greed invaded the hosts, they quickly carried the pathogen to other urban centers--Los Angeles, Miami, and of course the site of previous outbreaks of Bubbleria, New York. Ironically, the horrifyingly costly die-off of Nasdaqus Bubbleria in 2000-01 only seemed to hasten the spread of its infectious cousin, Shelterus Bubbleria, from urban centers to smaller cities and suburbs. 
All too soon, residents in these once-pristine areas began noticing the unmistakable symptoms in their friends and
neighbors: shortness of breath when viewing the Sunday Real Estate section, sweaty,
rapt attention focused on tales of rapidly rising home values, an overpowering urge to join
the rush to "easy, guaranteed riches," and a sudden, distressingly habitual drive to re-calculate
property values, mortgage refinance packages and home equity lines of credit offers.
As we now know in chilling detail, the disease soon drove its victims to the depths of fiscal insanity, prompting them to buy multiple properties with no money down, signing frighteningly risky interest-only adjustable mortgages with abandon. 
The crueler aspects of the disease can be observed in its final, culminating phase.
Victims feel an overpowering urge to become realtors or mortgage brokers, and their initial
success in flipping properties balloons into a godlike faith in their own genius and/or the
inevitability of a permanent, never-ending real estate boom.
Now that the disease has spread its tenacles into every community in America save New Orleans, the true costs of this epidemic are finally becoming clear. The appallingly subtle march of the disease continues, even as it has begun burning out in "hot spots" like South Florida. Banks are offering "tranches" of interest-only and principle-only bond derivatives to disease-afflicted investors, raising the risks from mere foreclosures to potentially system-wide financial collapse. As victims awaken, as if from a wild, nonsensical nightmare, they are stunned to find that they own six houses they've never seen in places ranging from Kansas to Phoenix, AZ, and that as their "investments" sit unrented and unsold, they are facing huge negative cash-flows each and every month. Just as they are grasping the depths of their brief but debilitating insanity, they get notification that their interest-only adjustable loans are due to reset to much higher payments. Sadly, the most pernicious manifestation of Shelterus Bubbleria only appears at the very end of the disease's run. The hapless victims, still deprived of common sense by the illness, put all their hopes on "waiting out this flat spot in the market," thereby guaranteeing their eventual financial destruction. Though various inoculations have been tried, there seems to be no cure for Shelterus Bubbleria. It must run its course, leaving millions distraught and bankrupted in its wake. Are you a skeptic of the housing bubble? Good! Skepticism is always warranted. But please read the following entries before making up your mind that it's balderhash: Charting Unaffordability A Monster of a Housing Bubble A Coup de Grace to the Economy Housing Market Demographics Housing: Catching the Falling Knife Five Stages of the Housing Bubble Derailing the Property Tax Gravy Train Bubbling Property Taxes Have You Checked Your Property Taxes Recently? For more on the housing bubble and a wide array of other topics, please visit my weblog. 
copyright © 2006 Charles Hugh Smith. All rights reserved in all media. I would be honored if you linked this wEssay to your site, or printed a copy for your own use.
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