The nearly five-year-old global economic boom, sparked by an unprecedented expansion of credit to even the most questionable of debtors, is getting very tired and extremely long in the tooth.

The housing market peaked in late-2005, as even the most marginal of buyers could get massive amounts of leverage to buy-in and bid up prices and speculators joined the fray full-boat. Since that time, the market has gone through a process of varied collapse. Some areas and neighborhoods still show strength. Some areas and neighborhoods are becoming ghost towns. The first article in our six-pack highlights the problems over-leveraging and declining housing values are creating in small towns throughout the country. With an eroded middle-class industrial base, many neighborhoods already struggling with the transition are now being hit hard by classic effects of the unwind of excess leverage.

With the economy rebounding from the late-90s Dotcom boom and bust cycle - which itself was created by excess credit and leverage - by leveraging into real estate, tapping home equity for cash, and generally ramping up borrowing from the future to spend in the present, the economy more or less surged. Spending money out of future earnings (taking on debt) is a great way to feel good now, but is not good for the future. Our fiat system and the massive credit bubble of the past 20 years has ensured larger booms and busts as credit cycles are magnified. Article two in our latest six-pack highlights the hole now faced by the average consumer-at-large and the increased likelihood that we will see an adjustment in spending habits, again associated with de-leveraging. Click here for the read.

Third, the commercial real estate market, which flew high as financial services companies multiplied to administer, track, broker and trade the rapidly-expanding credit throughout the boom, is now beginning to show signs of pulling back sharply. Commercial real estate has been behind the real estate curve, and there is a high likelihood that its reversal could be nigh. Click here for the article.

And with the fall out created originally by government incursions into the marketplace (as an example, the creation of Government Sponsored Enterprises Fannie Mae and Freddie Mac, which expanded the credit bubble to a huge degree), the government, predictably, is already becoming highly involved in the process of “trying to do something” to clean up the mess. The problem these people fail to understand is that the mess is created in the first place by bubbles of confidence associated with government incursions in the marketplace to begin with. Without the huge state apparatus messing around in the market and trying to encourage non-stop credit creation and expansion, as well as showing a history of unnatural bail outs of excess risk takers, the extreme risk taking we have seen would not be where it is today. And now the mortgage mess echoes in congress. Sweet.

Fortunately, amidst the madness of many in the crowd, some individuals stand tall with well-articulated reason, and common sense on their side. Dr. Ron Paul, a legitimate presidential candidate in 2008 in spite of what the mainstream media wants you to believe, is striking a major chord with a growing segment of American society as he preaches individual liberty, personal responsibility, limited and open government, anti-intervention, and general freedom, peace and prosperity. Six-pack highlight number five refers you to a succinct speech made by the good doctor responding to the hawkish rhetoric of ever-war-mongering neo-cons. Click here for the quick read.

Finally, while stress can be good in moderation and is a natural part of life, it is never a good thing to have to deal with on an acute or chronic basis. For those facing the outcomes associated with excess leverage, the boom-bust credit cycle, the fallout from long-term government shenanigans in the economic sphere, and generally spending beyond ones means, stress appears to be increasing to a point of causing further problems and hurting individuals’ abilities to bounce back from mistakes made in the past. This USA Today article highlights some of the effects associated with increases in stress level. Friends, this is simply another reason why I continuously advocate living within your means, avoiding undue risk, remaining prudent with your finances and avoiding consumer debt wherever possible - it is very stressful having to deal with being in a hole. For anyone out there facing potential financial strain, I would say remain calm, contact responsible professionals, learn from your mistakes and do not let a tough financial situation break your will. There are answers to difficult situations, and maintaining perspective amidst the hard times will allow for more rapid solutions to the problems.

Filed under: Politics, Social Mood, Economics, Six Packs