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It’s finally warmed up enough that I can see most of my driveway. The bad news is that the there’s freezing rain on the way this weekend. Should be interesting if it turns into an ice storm. The chickens haven’t left the coop in 3 weeks, so they’ll never even notice it, but I’m swamped at work and should probably try and show up.

I’m more worried about a different kind of storm, though. A financial one. I don’t normally post about macro issues – I’m too busy figuring how the cows got into the front yard. Still, if you’ve been following the slow motion trainwreck that is the U.S. housing market you can’t help but worry that there will be some severe repercussions. For those of you not familiar, let me give you the 1 minute recap.

Since the late 90’s Real Estate has undergone the most amazing boom in history. World history, not just U.S. history. In 2003-2004 the boom started to slow down, so banks created “exotic” mortgages. Interest Only, negative amortization, 100% financing, etc. In addition, all the folks who already owned homes discovered they could tap into there new “wealth” using Home Equity Loans. Others bought multiple condos using exotic loans with the intention of flipping them quickly for a big profit. The national savings rate went negative for the first time since the Great Depression.
As with any bubble, this one finally burst (or ran out of steam if you want to mix metaphors). Starting in February 2006 (roughly) prices topped out and sales times rose, as did builders’ inventories.  Prices were/are so high that most people who aren’t clinically insane decided to stay away. Frankly, everyone who could spell real estate already owned some anyway. One year later, things are finally turning ugly. This year, $1 trillion in Adjustable Rate Mortgages are due to reset at the new higher rates. Moody’s is preparing to start downgrading lenders who are exposed. In truth, with the huge expansion in the derivatives market, no one is quite sure who is indirectly exposed or by how much. Take a quick spin over to thehousingbubbleblog.com if you want to see some collected news on the subject.

What does this mean to you? It means that everything that has depended on housing is going to get smacked. Everything from banks to Bed, Bath, and Beyond. Including Apple  Computer. Including Bennigan’s and GM. Everyone who benefited from all that increased consumer spending is going to be affected. Let’s assume that you won’t lose your job and are able to make all your payments. Credit is going to get tight for you, too, anyway. Also, your house will lose value since your neighbors might have to sell at any price to get out from under.

Here in Michigan, we’ve avoided most of the bubble that has affected real estate elsewhere – Ann Arbor excepted. Given that the state’s financial woes are already legion, however, a national recession hangover will reach us here, too. The Big 3 can’t make money when the economy is theoretically good. Imagine if there’s a real downturn.
Why do I point all this out? I thought you might want to know that maybe now is not the time to spend all that money on a big screen plasma TV or finance a new SUV. Or, god forbid, buy a house.

I’ve written before about the importance of planning and being prepared – batteries for flashlights, parts for mowers and construction projects, etc – and about the idea of living simply. Both apply to big picture things, too. A financial downturn is a big “preparedness” issue. Hopefully, your debts are manageable and you’re able to save some money every paycheck.  If not…then you’re probably an average American.

After weeks of sub-normal temperature, we’re finally above freezing. I can almost see the bed of my truck again now that the snow is melting. The chickens haven’t left their coop in over a week (who could blame them?) and I’ve been working non-stop with the International Toy Fair in New York and a never ending struggle to have enough wood on hand for the furnace. I could use a break myself.

After my Dad and I plowed through a cord and half of wood a couple weeks ago, I thought I was fine. Not so much. Cath ran out of wood while I was in NY and I spent my weekend afterwards shoveling off logs and cutting them up. I’m fast becoming the worst neighbor in the world. Every weekend I’m out there with a chainsaw. I hope no one wanted to take a nap.

Still, these are the things I’m learning. This is why we moved here. When people told me I’d need 8 cords for the winter, I thought 6 would be fine. I was wrong. Next winter, I’ll know and plan accordingly.

I finally got my tractor! Yeeha! A Kubota 3130 HST with a big ‘quick attach’ front end loader. Good thing, too. We’ve gotten over 14″ of snow in the last week with another 8″ on the way this weekend. I’m cutting my teeth on how to use the thing clearing the driveway. I’m not too bad with it, but I’m not ready to hire out yet.
Of course, my neighbor is completely jealous. Total object lust. His little John Deere lawn tractor can’t hold a candle to the real deal. Cath wasn’t as enthused until the snow started coming down hard. I’ve been in love with it since I used it to move split firewood around from where I was cutting and splitting to the woodpile. I let my father drive it a bunch, too. I think he was secretly tickled pink.
Now of course, I need to get all the implements. I started small – ordering a Kubota hat from the online store. Next up is a PTO log splitter or a brush hog. Then a rototiller…and whatever other cool gizmo I can glom onto it. Bale spears, posthole diggers, etc. The pocketbook is the limit!

Of course, right now I don’t want to go outside at all. Its 12 degrees out with a -1 wind chill. Winter was late in getting here, but it has arrived with a vengeance. Either because of the cold or because I’m now using split wood, the wood furnace is going through wood a ton faster than I’d hoped. I split about a cord or so last weekend and thought it would last me until the end of winter. I may have another weekend of splitting to go…
I’ll probably run out of hay at the beginning of March, so I got that mostly right. I think I’ll need another 30 bales to get me into grass growing season….we’ll see. I have enough store credit at Philly’s Feed (thanks, Mom!) to buy that and more, but I would’ve preferred to get it right last fall when I stocked up.

Of course, now that I have the Kubota, I can think about round bales, which are cheaper than the squares and don’t require daily trips out to the pasture for the cattle. Thorndale seems to be doing well, as is Blossom, his mom. After finding out that Blossom’s sister, Buttercup became prolapsed after giving birth, I’m intensely relieved about Blossom. The Whites, at least, know what they’re doing. I’ve just been lucky.