Friday, August 5, 2011

Remember The Oil Bust! A Whole Bunch of Lessons Texas Learned From, and Washington Still Wants To Deny

Another post I never got around to putting up:

 Video News Report From 1986:

One reason Texas has done better than the general country , specifically in the housing and mortgage and banking mess, is because Texas went through some of this in the 1980s.

Darned near everyone in the state from suits to nuts went bankrupt and foreclosed in the Oil Bust. Unemployment went through the roof and the insane housing prices of the Boom fell through the floor.

Geologists hired on as janitors. Iowa filled back up when all its welders went home. Odessa looked like "The Day After" in large swaths for years, as empty apartment buildings and half-finished condos sat abandoned.. So many newcomers to the boom turned right around and left the state in the bust that it took decades before demand finally began catch up with the housing supply.

And good hardworking frugal people who had lost their jobs, also lost their homes and their cars and everything except all the things that matter.

What did the rest of the country do? Instead of supporting the need to free America from the tyranny of the Arab oil price manipulations, Congress levied Windfall Profits Taxes (actually Excise taxes - taxing not profit but production) on American oil producers, effectively making it impossible for them to compete with OPEC.

People think their mortgages are underwater now? Try that same mortgage with a 12% interest rate. All people could do, who wanted to keep their homes, was stay put and pay it down. And that took decades, because values were allowed to settle back to legitimate supply/demand pricing.

The govenment didn't come in and artificially prop up values, and taxing entities had no choice but to reduce their expenses and deal with it.

So those who could still pay their mortgage, because they were buying a home to live their life in - not an "investment" - paid it, and paid extra on the principle, and refinanced as soon as they could, and waited and waited and waited it out.

Those who couldn't pay their bills moved into rental housing, declared bankruptcy, wept, then wiped their tears and carried on their lives.

Then when things were better again, in 2000, Enron happened, and its retirees and employees, most of whom had their 401k's invested heavily in Enron stock, lost it all. Those still working lost their jobs along with all their retirement savings, of course.

They had to pick up and go on.

And they did.

And it was hard, but they never gave up.

That's what Texans do. That's what Americans do.

And that's what Americans are going to do now.


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