The other day I ran into a journalist friend in the grocery store. “How is the ‘Save-the-Word’ Business?” he asks. That solicited a flash of a smile and a giggle from me. He had delivered the question in a half-serious, half-joking manner, so when I laughed he responded with a Cheshire cat smile. Upon later reflection, I realized the question was not only funny, but had merit.

In order to advance funds for something as dangerously speculative as a new business venture, the lender needs to have solid evidence of financial strength. Skin in the game in the form of substantial home equity at risk by the borrower is just what the lender needs. Without it there can be no loan. Now we will see the biggest reason why housing is crucial to the economy, along with a key reason why banks are not lending despite massive excess reserves. Home equity has been wiped out!

The concept of “sustainable development,” as coined by the World Commission on Environment and Development and with it, the term “sustainability” itself, have been gaining increasing recognition in recent years all around the world. Wide-spread use, however, has been followed by growing ambiguity so that today both terms are employed within a very broad spectrum of meaning often, to the point of trivialization.

There are two toxic notions that are bandied about that need to be killed before they do any more damage to well meaning, but woefully uninformed people from all walks of life. The first is that prices have come down so much that housing is a true bargain. The second is the grotesque idea that there is an ethical and moral dimension to paying your mortgage. The latter significantly impacts the former.

In the U.S. we see the results of consumerism as a lifestyle: the break-down of family structures, the rampant drug and alcohol use, the lack of support for quality education for our youth, the rise in violence in schools, the pressures for young people to ‘look’ adult at younger and younger ages, the reliance on prescription drugs for numbing the emptiness of lives, and the growing prevalence of obesity, even among the youth. Is this in store for the Chinese consumer?

Author argues that the current debate about the state of the economy is for entertainment purposes only. He believes this is because they assume we have seen the bottom of the cycle. A more relevant debate is whether we are in for serious inflation or deflation.