The mainstream media, the banks, and the politicians have been spending a lot of time lately assuring us that housing has bottomed out, or close to it.  Now it appears “they” will look to blame what’s going on in the Mideast for any reversal in this so called housing recovery.

The problem is, they have it backwards:  there has been no housing recovery, and the reason there’s so much unrest over yonder right now is because there is high unemployment and rising inflation, especially in food prices – symptoms of an ONGOING problem.   The worldwide recession/depression (whatever you want to call it), has not bottomed out in the areas that effect real people and their families – jobs,  housing, food and fuel.  About the only place that a recovery could be claimed is with the big banks and Wall Street.  It has not trickled down to middle class America, let alone to  many places in the rest of the world that are in worse shape than we are.  The current news is concentrated on the overthrowing of dictators.  While that is what’s happening, the protests began by people simply trying to put food on their tables!   When those at the top have too much, and those on the street have too little, this is what’s going to eventually happen (did you know that the protests that started in Algeria began with chants of “Bring us sugar!”).  In this “chicken or the egg” scenario, (1) the protests overseas are something that we’ve been predicting for almost a year now at the Financial Revival Group – it’s the logical next step in the economic evolution we’re living through, AND (2) housing was not recovering – only to be derailed now by the overseas unrest.  It’s all intertwined and ongoing.

By the way, the only reason we aren’t feeling the pressure from food inflation at the level of the rest of the world is because the U.S. dollar is still the world’s reserve currency.  We don’t expect that to last much longer.   Right now Americans spend on average about 13% of their income on food.  In comparison, Egyptians spend 40%.  Last year food prices in Egypt went up 20%.  If that happened here in the U.S, we’d move to about 15% of our income going to food.  If another 20% hike occurs in Eypyt this year, 48% of their income will be spent on food.   The U.S. dollar is weakening and we believe that at some point in the next few years it most likely won’t be the world’s reserve currency any longer.  If that happens, we won’t be immune to massive food inflation.  When Americans have to start spending 30% of their income on food, do you think we’ll see some protests on our own streets?  And what would THAT mean for housing?  Food for thought.