I've been thinking about this new bill they're trying to pass, and considering the timing and effect it'll have on homeowners.
Right now there's a real estate bubble. Estimates vary (and markets differ) but the general consensus is that prices are very high because capital is easy to come by. With insanely low interest rates, many people have purchased second homes as a means of revenue generation on speculation of ever-growing land prices. Of course, we all know what happened the last time a market grew heavily using borrowed money on speculation of limitless growth... rightly so, the phrase 'new economy' should strike fear into the heart of anyone who was vested in the market at the time, and it looks like history is rhyming with real estate.
Which is why the timing of this bill is ominous. The short/long term yield curve has been flattening quite quickly of late, as greenspan pushes up interest rates in an attempt to ward off inflation (which hasn't been terribly successful, considering they just announced 3.6% for base inflation at the end of last week, and that doesn't include fuel price increases which would push REAL inflation to over 5%). When the yield curve inverts, it's a sure sign of an oncoming recession, and all the ills that go with it (stagflation, anyone?)
This would be absolutely brutal to anyone who bought in with money borrowed at floating rates... interest rates go up and suddenly they're servicing debt at much higher levels than when they bought in. It'll wipe out the people who're already marginal at the lower rates first, putting that land on the market at bargain prices to try to limit liability (or as part of foreclosure), and the people who have the cash to keep paying will see their property values erode as the market gets cooler and cooler. Speculative buyers will be particularly hard hit, as that 'constant march forward' is what they were banking on.
Now when you have a scenario like this, you're going to see a lot of debt. More out of control debt, in fact, as rates go up... and with debt comes bankruptcy, often with heavy CC debt as the people in debt try desperately to maintain lifestyle using whatever credit sources are available when they realize that they can't even sell their house(s) to cover the amounts they owe. This bill will ensure that they, basically, will not only end up with tantamount to nothing, but that people who got lured into the trap of easy credit will be the indentured servants of creditors for a number of years to come. They may never overcome the debt cycle, and I have a suspicion that is the situation the credit issuers actually anticipate and desire.
The cynical among you may want to seriously consider investing in companies that specialize in antidepression medication (pfizer) or funerary services. With crushing debt comes suicidal / homocidal thoughts in its wake.
Oh, and tell your friend that he's a jackass if he's actually TRYING to get into this cycle of woe intentionally. He'd be better off sawing off his legs and begging for coins on the street corner.