Machiavellians believe that governments manipulate their national economies to create illusion of economic well-being. The governments' goal is to ensure political stability. As with any set of perceptions, reality changes public illusion. Unfortunately, Americans have hit two reality bumps on their yellow brick road to illusion of global well-being.

The Home Real Estate Perception is Changing

For middle class Americans, residential real estate has proven to be only effective conservation hedge against inflation. Mortgage rates are at or below U.S. inflation rate. Mortgage interest payments are tax deductible. American homebuyers can avoid paying taxes on their profits from sale of private homes. In past year, U.S. Residential Real Estate prices have risen an average of 15%. Everyone feels secure and content under this hard asset security blanket.

In short run, debt is good for economy, It creates buying which in turn creates jobs. Because interest payments on personal loans aren't tax deductible, American homeowners have tended to finance their debt by taking out second and third mortgages on their homes. Because single family residences are seen as excellent investments, Americans are buying second homes and going into massive debt to do so. Everyone's betting that real estate boom will continue to appreciate and hard asset house is an effective security blanket against personal excessive debt.

In past couple of months, there has been a deluge of media articles arguing that Real Estate Bubble is about to burst. These articles are telling Emperor that he is naked. The media drumbeat is having its affect on public's real estate perception. Real estate investors are less numerous. Homeowners are more inclined to put their houses on market. The Demand/Supply equation is slowly moving toward over supply. This will force home prices down. Debt ridden homeowners will be under pressure to sell and residential market will fall faster. Once an economic move starts, it tends to gain momentum until forces that create it dissipate.

What happens when a real estate bubble bursts? The last time it happened in States was Commercial Real Estate collapse in late 1970s and early 1980s in Texas and Oklahoma. The market failed because of an over supply of office space. Investors lost fortunes. The Savings and Loan Industry went into a crisis that required a trillion-dollar taxpayer bailout. It was primary cause of 1981-82 sixteen-month severe recession. In 1990s, real estate bubble burst in Japan. The result was 1997-2001 Japanese recession.

Exploding real estate bubbles create illiquid markets. There is less money being spent on buying things. With fewer sales, businesses layoff employees. The result is a recession.

Fifty Dollar Per Barrel Oil

Credit and debt issues are critical life altering realities for almost everyone. The daily decisions we make in handling balance between two determines our credit worthiness in eyes of financial institutions. As we all know, if you have a bad credit rating, then borrowing funds or purchasing many items will become difficult or impossible. But what happens when you get so far in debt that you have no clear way to pay it all off? Many people resort to a debt management plan (DMP). These are payment plans structured in a way so that borrower is better able to pay off their debts, and is agreed to by borrower and creditors. The benefits can include lower interest rates and fee waivers.

Once you and creditors have accepted DMP, it is important to:

• make regular and timely payments • always read your monthly statements to make sure your creditors are getting paid according to your plan • contact organization responsible for your DMP if you will be unable to make a scheduled payment, or if you discover that creditors are not being paid

If payments are not made to your DMP and creditors on time, you could lose progress you’ve made on paying down your debt, or benefits of being in a DMP, including lower interest rates and fee waivers. The creditors may not forgive any more late payments and you will incur more 'late' marks on your credit report as well as more late fees, increased debt and a longer pay off period. So, once you are on a debt management plan, make sure that you are never late on any payments.