Mr. Pollock is guest author on Jim Sinclair’s Mineset and has been published in journals including the Journal of Homeland Security, CNBC, Prudent Bear, Safehaven and Howestreet.

We discussed the housing market and also what caused the mess we are in. He wrote and article back in August of 2003 and much of what he had predicted has come true. Here is an except from that article titled “The Hidden Risk of Mortgage Backed Securities“  This really hit home for me because I have also been saying this for quite some time:

“Safeguards present to protect against bank failures and loss of savings are entirely lacking in the highly leveraged real estate market. Therefore, the real estate market has the potential energy to destroy wealth on an unprecedented scale not seen since to the bank failures of the great depression.”

The facts ring oh so true. The middles class has a majority of their wealth tied up in real estate and with the advent housing boom, many homeowners leveraged most of their cash by purchasing additional “investment” properties. Instead of diversifying their investments, many gambled and threw it all in the real estate market.

Our economy today is driven mostly by the middle class. Please make no mistake there. It’s not driven by oil, gold, Google or any other stock or commodity. The middle class are what drives the markets based on their consumption of goods and services. These workers and businessmen keep this great country going by making those purchases in the retail service industries. When that money stops flowing into our economy is when we start to see indications that we are heading towards a recession. Like we are seeing now.

Now, the middle class are strapped to the hilt. In debt to their eyeballs with all their wealth tied up in the walls of their homes that is evaporating by the second.

In the past these same middle class homeowners could refinance, pay debts and pull cash out of their home for that new beemer or pool. Hell, that has been the American way for quite some time now. Now, these same people can’t get a new mortgage to pay off all that debt. Many are tapping into their 401k’s just to float their mortgage payments. Trying to preserve their 780 FICO scores and their stellar payment history. Many wear their high FICO scores like a badge of honor as they literally kill themselves to make their mortgage and credit card payments. Treading water as they slowly sink because their house is tied to their ankles.

I’m not just talking about subprime borrowers. They are not the only ones being affected by the mortgage meltdown. I am speaking of ALL BORROWERS that own homes. No one is immune to the crisis and chances are that every single middle class property owner in America will have a majority of their wealth and equity stripped away from them by the time this mess comes to and end.

What we are seeing now is just the tip of the iceberg. The economic conditions of our market are indicating what has been happening for years. I would like to call it “delayed reality” brought on by what Warren Pollock describes as “white noise in democracy and the markets“.

” Such background distortion can make the real picture seem unintelligible. Most people hear the noise and interpret it as truth, because it can be easily understood.

I am talking about noise “aimed at the broad masses.” Noise that “speaks the language of the people because it wants to be understood by the people. Its task is the highest creative art of putting sometimes complicated events and facts in a way simple enough to be understood by the man on the street. Its foundation is that there is nothing the people cannot understand, but rather things must be put in a way that they can understand. It is a question of making it clear to him by using the proper approach, evidence and language.”

You see, what is reality is clouded by the government, media, Wall Street and anyone who not only profits from what you buy, but also by what you think and what you sell. Their job is to pump confidence in your veins, so you don’t question reality.

This is what you are seeing now. They don’t want you to see the clear picture, because if American’s saw the “true” clear picture, then it would cause panic and instability in our markets. So, their job is to prevent that from happening and for good reasons because their reasons, their wealth and their future political agendas will be grossly affected by the true reality. They can’t let that happen. So they use background noise to distort reality. Delaying the inevitable.

The reality now is that we are heading into a major recession and the largest destruction of wealth that this nation as ever encountered. Much greater than the depression of 1929.

But at what cost.

It be at the cost of the middle class and the American homeowner. My thoughts are that this will further spread the gap and will this be the monumental divider between the rich and the poor.

Will the middle class, now merge with the lower class to form some high bred “Low Mid Class”? Time will tell and until then many will suffer silently.