- GOP hopes taking shutdown off the table with budget deal will pay dividends
- Chinese Death Star: The moon cited as the perfect launch pad for ballistic missiles
- Help wanted: Homeland Security plagued by vacancies at the top
- We are not amused: Queen’s protection officers warned to keep ‘sticky fingers’ off the royal cashews
- Unleash the crossbows: Gov. Scott Walker creates new hunting season
- Bubonic plague kills 20 in Madagascar
- G-20 diplomats fell for hacker attack promising nude photos of former French first lady Carla Bruni
- Minnesota guardsman charged with stealing private soldier data for fake IDs
- Florida appeals court rules universities can’t regulate guns
- Vladimir Putin defends Russian conservative values
WILLIAMS: The slow collapse of America’s economic might
One of the foundations of the American Dream has always been the hope of someday purchasing one’s own home. In the past, however, it took nearly a lifetime of sacrifice before most people could afford to do so.
The aftermath of the collapse of the 1990s tech bubble was a troubling time in America. After a prolonged, losing battle to win back manufacturing jobs from overseas, America’s corporate and government leaders were looking for a way out. Technology seemed to fit the bill. Beginning in the mid-1990s, the U.S. economy banked on the Internet, telecommunications and biotechnology. Virtually any startup company with “.com” in its name attracted obscene amounts of venture capital and institutional investments. All sound business decisions were thrown out the door, and the capital market’s cognitive dissonance made everyone think that sending the stock market through the stratosphere was indeed “good business.”
The world media were more than happy to make these people and their businesses appear untouchable and mythical. At one point in the late 1990s, companies with no revenue, no products, no service capacity - just a few high school kids with an idea - were able to have an initial public offering, or IPO, and become overnight multimillionaires. It was the information superhighway to the riches. Stock options replaced paychecks, and anyone with an idea was starting a company. In appearance and with the mainstream-media public relations machine in overdrive, it certainly looked as if America had found the solution to its long-term growth challenges.
But in the fall of 2000, the bubble began to leak serious air. In 2001, a plethora of unexpected and devastating events changed the economic dynamics of America and the rest of the world. Sept. 11, Enron, WorldCom and other corporate scandals increased these slow leaks and eventually turned them into gushing holes of air. As the bubble collapsed, trillions of dollars of market capitalization were erased from the U.S. economy and the net worth of its citizens. We can, with little effort, pinpoint a few events that triggered our fate, but Sept. 11, Enron and WorldCom are among dozens of disasters that compounded the crisis we still face.
The federal government reacted by enacting a draconian set of regulations - most notably the Sarbanes-Oxley reforms - designed to reduce the conflicts of interest that had beset corporate leadership. The once promising bubble of unlimited wealth, promised by the pursuit of the technology era, deflated. Our nation was so shocked by the sudden turn of fortunes that it seriously sputtered into a state of uncertainty.
Everyone began to look for a financial safe haven. No one truly understood what any of those technology firms produced anyway, and the equity markets looked like perilous places to speculate. People had come back down to earth and were looking for a traditional method to accumulate wealth. They wanted something tangible, something that was understandable and most familiar to them. They wanted something that was simply understood and easily remedied if we miscalculated.
Real estate seemed perfect and became the new bankable industry that would turn around the drastic miscalculations and once again set this country on firm financial ground. It was among the most tangible of all assets and historically one of the safest investments. Or so it seemed.
The first decade of the millennium bore witness to a viral explosion in real estate investment, fueled by a seemingly perfect and lucrative storm of events: low mortgage rates and an abandonment of the equity markets. The nation created a market overnight to continue the necessary growth in the U.S. and all with one key component: home mortgage debt.
In the blink of an eye, the American consumers, companies and investment markets shifted from an investment practice and equity-oriented philosophy that had characterized the dot-com era to a debt-fueled runaway train with no end in sight.
• Armstrong Williams, author of the 2010 book “Reawakening Virtues,” is on Sirius Power 128, 7-8 p.m. and 4-5 a.m. Mondays through Fridays. Become a fan on Facebook at www.facebook.com/arightside, and follow him on Twitter at www.twitter.com/arightside. Read his content on RightSideWire.com.
© Copyright 2013 The Washington Times, LLC. Click here for reprint permission.
About the Author
By Matt Kibbe
The short-term deal will assure long-term overspending
- Obama's Afghanistan experts stumped on U.S. death toll, war costs during hearing
- NAPOLITANO: A conspiracy so vast
- House pushes through two-year Ryan-Murray budget deal
- Comma on!: Twitter erupts over Obama-Castro 'marriage'
- Jane Fonda Foundation fails to make single contribution in 5 years: report
- All-out war breaks out in GOP over budget pact
- White House improvises again on patchy Obamacare rollout
- U.S. pilot scares off Iranians with 'Top Gun'-worthy stunt: 'You really ought to go home'
- Obama takes 'selfie' at Mandela's funeral service
- CARSON: Why did the founders give us the Second Amendment?
Independent voices from the The Washington Times Communities
Born in 1930 in rural Missouri, Charles Vandegriffe, Sr., brings his time and place to the Communities.
Columns from Voices around the World talking about the events, people, politics and social issues that concern us wherever, and whoever, we are.
Chef Mary Moran discusses the food we eat, where it comes from and what it does for us.
An informed and often humorous take on the world of advertising, public relations and social media. 100% Pure. Not from concentrate.
Extraordinary day at Redskins Park
White House pets gone wild!
Let it snow