Charles Mills can barely afford to stay here. But he also can't afford to move.I have an ex-girlfriend in the same position. Last I talked to her, I think she was underwater on a house to the tune of $150,000. (Hey, don't blame me. I warned her.) She won't walk away from the property because just like the Las Vegas homeowners, she doesn't want her credit ruined.
That's why the 44-year-old heavy-equipment operator was preparing to leave his wife and young daughter here and go where he could find work — the Oklahoma oil fields. Mills has a mortgage to pay, even if its size pains him.
He purchased his house in 2006 for $308,500. Current value: $105,797.
"We talked about it: What can we do with the house?" Mills said. "Nobody's going to buy it. Nobody's going to rent it. If we walk away, my credit's shot. We're stuck."
In some parts of North Las Vegas, more than 80% of homeowners have plunged "underwater," meaning they owe more on their mortgages than their properties are worth — a stunning concentration of aborted plans and upended lives.
These are the people that do everything right. They don't lie, cheat or steal. They aren't Austrian economists, so they don't understand the business cycle. When house prices were going up, the conservative thing, in their eyes, was to buy a house, since houses "always go up in value." They didn't understand it was a Federal Reserve manipulated scam.
And now, when the mantra, "houses always go up in value", sounds like a bad scratchy record, played on an old Victrola, they are stuck because they don't want their credit ruined. They won't just walk away from an obligation they took on.
Thanks to the Federal Reserve and their mad manipulations of the money supply, it is very difficult to make long-term plans the way conservative people would like to do. They are the ones that get screwed.
Instead of long-term conservative planners ruling the roost, it is the Age of the Hustlers.
An acquaintance of mine, a lawyer, with some friends, doctors and such, put together some money during the boom and bought huge vacation properties on the coastline of South Carolina. The properties are mostly intended as investment properties that are rented out by the week. After the real estate market crashed, this lawyer, though all the investors in his group had plenty of cash, decided it was time to spin the banksters for a major reduction in the mortgage payment. So he called a meeting of the partners and advised them that they should stop making the mortgage payments. Some raised concerns about damage to their credit ratings but the lawyer explained how he would handle the negotiations and why it wouldn't damage their credit ratings and so the group stopped paying the mortgage. After some months of this, the bank finally agreed to a major reduction in the mortgage payment. The hustlers won. They pulled a mini-Goldman Sachs play, of a sort, and came out on top.
The world is becoming much more of this hustlers game. The conservative folk, who survive by playing it straight, see rules change and bend before their eyes. They are the ones that get stuck. It is almost impossible to make sound long-term plans when Fed Chairman Bernanke plays the long-term like a fiddle, sometimes hitting high notes by lowering interest rates and at other times low notes by raising interest rates.
But, there is one investment that is currently real tough for the Fed to manipulate, the good old nickel. The nickel has roughly 6.3 cents of metal, if it were to be melted down (25% nickel and 75% copper). If Bernanke continues to print dollars like a Zimbabwe's Robert Mugabe once did, the value of the nickel will keep pace with the inflation and possibly even exceed it. At some point, if the value of the metal climbs high enough the nickel will disappear from general circulation just like the old silver dimes and quarters have. The old 1946-1964 Roosevelt dime now has $2.77 worth of silver metal value, the 1932-1964 Washington quarter has $6.99 worth of silver value in it. Kitco offers a $100 bag of silver coins for $ 2,800.
Admittedly, because of the bulkiness of handling nickels you will need a strong back to accumulate a sizable investment, but it can be done. One investor is known to have purchased a million dollars worth of nickels.
When gold was trading around $250 an ounce, gold was my top investment recommendation, because I felt there was little downside. It's different at $1,500 an ounce. I still think it is a great investment, but there can from time-to-time be short-term downside, especially if Bernanke slams on the money printing brakes short-term, at some point. However, it is hard to find a better investment than nickles. Literally, if we somehow end up in a period of price deflation instead of inflation, your nickels will still be worth 5 cents, and, if there is deflation, your buying power will have increased. No downside! Go out and spend them at any time.
The one thing that those, who do everything right, do wrong is put their faith in government and all government's mad schemes. The right thing to do is bet that those schemes will go very wrong. Gold and silver are ways to make such a bet, but also nickels. And not because government says the nickel is worth five cents, but because the government is screwing this up already, with the value of the metal at six cents,and someday, likely a lot more, just like the old silver dimes and quarters.