What if they gave a recession and nobody came?

Consumers continue spending despite running out of money. One major difference between this recession and previous serious recessions is the availability of easy credit. In the past we didn't all have a wallet full of credit cards and home equity lines of credit like we do now, and I suspect this is what is keeping spending going despite declining real wages, increased property taxes and insurance costs, inflated food, energy and housing costs and a negative savings rate in the US.

If we continue purchasing and borrowing, how long can we keep the economic balls in the air? Obviously at least this long and probably for a while longer.

With newly available 50 year mortgages, perhaps we can push our debt beyond the grave. In that case we all win, sort of. The way money is created by being loaned into existance, I suspect the lenders, having none of their own money at risk are happy collecting interest payments, and don't even have the slightest expectation that the principal will ever be repaid. Why should they?

Only a few years ago many home buyers were able to get a 15 year fixed rate mortgage instead of the more traditional 30 year. Going with the 15 was a little more expensive monthly, but knocked off 15 years of payments, a much better deal for the borrower.

There is absolutely no reason anyone should enslave themselves to a bank for 50 years. If your only way to get into a house is a 50 year debt, get an apartment, a tent or a hollow log, but don't get a 50 year mortgage.

So what happened to the affordable 15 year?
The same thing that happened to tech stocks in the late '90s. Irrational exuberance. Home prices are as overpriced as were the dot comms. Add rising interest rates and the result is unaffordable housing.

Just for fun, let's pretend we want to buy a $200,000 house. If we use a 6% fixed interest rate the house will cost a total of $304,000 with a 15 year loan, $432,000 with a 30 year or $632,000 with a 50 year!

So save your pennies. and when sellers realize that to sell they will have to give up some of that "paper wealth" they thought they had eared, prices will come back to earth. That's when you buy with a good 'ol 15 year note.