Seven Uncomfortable Predictions for the Economy 83 comments
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Feverish speculators were ripped in half. Intoxicated investors are still nursing healthy scars. It’s like the movie Jaws. As you slowly start dipping your toe in after the last brutal market attack and you get ready for the spring swimming season here are seven clear and present dangers you need to watch out for:
ONE: Commercial Real Estate
It won’t be long now until major REITS (real estate investment trusts) come unglued adding further shock waves to American banks. Wells Fargo (WFC) is one of many that have commercial real estate loan exposure. The SRS (an ETF based on the Dow Jones real estate index) fell back down on Friday to $52.90 not far from its 52 week low of $48. Although this ETF does NOT deliver as promised and it is packed with some of the strongest REITS it is the easiest way to short commercial real estate. Simon Properties (SPG), one of its largest holdings, is on the trouble list. As the sector gets hit, the cards will fall. Don’t be lured by REITs' juicy yields. Get out before the masses head for the exits.
TWO: Insurance Companies
Guess what large insurance companies invested in? That’s right, commercial real estate. Now, if you lost your job and your house is getting foreclosed on, chances are you’ll look to either borrow from your IRA or cash in early on any life insurance benefits. Expect these unprecedented withdrawals to cause swift changes to your policy and the amount and ease you can access your cash. Just as the commercial real estate assets on these insurance companies' balance sheets are being hit, people will start pulling their money out en masse. I expect a run on insurance companies next. If you are a shareholder or bondholder of a weak insurance company cut your losses as the market rallies.
THREE: A wave of Corporate Bankruptcies
Despite recent credit improvements and bear market rallies, the carnage of big business is not over. What can we expect this year? A lot more banks, clothing companies, factories, homebuilders and smaller companies unable to secure financing will be forced to close their doors. General Electric (GE) is all that remains of the original 12 Dow Jones companies. Everyone else merged or went under. These bankruptcies will send millions more to the unemployment lines and leave banks reeling again as they take the brunt of the corporate loans gone bad. What happens when the bailout band-aid factory itself runs out of money? If you answered “it will just print more”, you are today’s winner. What if the projected and expected bank failures eat up the FDIC insurance money? No problem, Benjamin has an unlimited supply of fiat brothers and sisters.
FOUR: The Almighty Dollar
The dollar is a moving target. On one hand it strengthens as other economies' problems prove worse than America’s and the world scrambles to buy our currency to pay off dollar denominated debts. On the other hand, the reckless debasement of the US dollar as the fed buys billions in treasuries and Freddie and Fannie backed securities puts our status as the world’s reserve currency in jeopardy. Already Russia and China are asking that a new global currency be part of the G20 discussions. Countries including Iran and Venezuela have refused to accept dollars for their oil. Since 1973 when Henry Kissinger persuaded OPEC nations to accept only US dollars in payment for oil, the greenback has had major strategic advantages as the reserve currency. If this tradition ceases we not only lose a tremendous strategic advantage, but a sudden dive in the dollar would cause financial panic, crashing stock markets and oil (priced in US$) would fly above $100/barrel and gold and silver would go into the stratosphere. If this trend continues the dollar could suffer the same fate as Zimbabwe.
FIVE: Thrift
One creative newsletter writer referred to it as a frugalista fiesta. I’m talking about heaven forbid, millions of fashion divas bred to consume, wearing last year’s designer wardrobes again today. As horrified consumers watch hard-earned money disappear they will shop less, save more and in an attempt to lure them back prices will continue to fall. Christmas sales were the worst in four decades. With 70% of Americans living paycheck to paycheck and 72% of GDP making up consumer spending, that rainy day is here. As the unemployed use up the years of contributions made to unemployment insurance, the clouds are about to deliver with gale force winds a torrential downpour. For the growing middle class forced to take jobs way beneath them to feed their family, just about everything except food, clothing and shelter will now be considered an unnecessary luxury. The first tier of casualties will be ski holidays and high-end vacations. Private schools are already noticing attrition in applications. On the flip side as things deteriorate, those with cash will be able to negotiate once in a lifetime deals on houses, boats, jewelry, furniture and other luxury items. 2009 will be the year of the dramatic reduction in value in two to ten million dollar homes.
SIX: Crime
States and counties with looming tax deficits will be forced to further cut funds for fire, police and other community services. Good citizens, having followed the rules, now out of work for an extended period are required to go to extraordinary lengths to feed their families. Should this trend continue, muggings, household thefts, kidnappings, bank holdups and identity theft will sky rocket. Gun and ammunition sales have already increased dramatically. This will make it easier for folks to get food on the table when the cupboards run dry. Watch for an escalation of crime not only in the cities but also in quiet, safe suburbia. Hold on tight to your sense of humor and your “don’t worry, be happy” spiritual attitude. These will be useful tools to navigate the next decade.
SEVEN: Baby Boomerang
Years of conspicuous consumption, excessive waste and depleting natural resources will come home to roost along with their kids and grandchildren who’ve lost jobs and need a roof over their heads. So, dust off the guest room. As boomers retire en masse over the next several decades they will be net sellers, not buyers to fund their retirement and to afford the new extended family back underfoot. Just as the administration puts a floor under real estate, the baby boomers will be down sizing. Only a great re-inflation of our currency will send housing prices higher.
As the beaches open for the upcoming swimming season, be vigilant as you step into the water.
Stock position: None.
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This article has 83 comments:
However, unfortunately this entire article is spot on .
The bear market rally was a selling opportunity..Only, suckers bought in ..Fools like Cramer and his "nation of sheep" audience.
The G-20 summit will be a huge flop. The USA is hated because we exported toxic scuritizations all over the world.
The commercial real estate collapse is a train wreck waiting to happen, and it will !
Look out below !!
As for what I didn't like in particular, it was the expression "bailout boogie", or something on that order. BETTER TO BAIL OUT U.S. BANKS AND BUSINESSES THAN IRAQ AND AFGHANISTAN.
Keep in mind that many commerical loans were made by brokers and lenders who when the first sign of a decling residential real estate market began to crack, they jumped into the commercial loan arena. Ironically and sadly many of the same predatory prgrams (by originators) were being introduced to "No Doc's, Stated Income (Liar loans) etc. On top of those poor originations, many borrowers were fleeced by firms who took their money with no abilty to fund. A real mess and I predict this segment of borrowers will unravel soon. Not trying to add to the doom and gloom beleive me. I saw it close and upfront and it wasn't pretty. I also wrote about way back in early 2007 but not many wanted to hear it.
P.S. I happen to agree with your analysis as well (unfortunately).
Talk about nailing the situation. It might be time to renew that passport, sell that house (if you can), and think about moving to a place with a little less corruption. The way this country is going how long will it be before the government puts restrictions on leaving the country with gold, silver, or other hard assets? I know they trample our constitution on a daily basis. Anyone who thinks for a second that our rights are safe in America is delusional or blind. The clock is ticking and Ms. Bawden's comments are on the money. If you really want to protect your family it might be prudent to consider an escape plan. It may seem absurd to some but considering the average American's apathetic nature I just don't see much hope.
Canada?, Costa Rica?, here I come!
While most of these points can be found throughout media, the last regarding the demographics of the Baby Boom is the most overlooked. It was overlooked as the housing bubble was engineered and it is being overlooked as the correction of Real Estate is being fought.
Flying in the face of profound demographics does not make for sound economics. The retirement of the Baby Boom would have weighed heavily on Residential Real Estate even in the best of times.
With more light being shone in the area of wall street crime will almost certainly go down, it will take a lot of petty thieves to make up for one Bernie Madoff or Alan Greenspan.
As far as moving to place with less corruption, good luck on that search, there is no place that is less corrupt and that will be the ultimate salvation of the dollar.
The G20 will talk about replacing it as a reserve currency, another cost of the misguided policies and corruption of the last 25 years.
What can be expected of a country that locks up people for 20 years for smoking pot and 3 years for rape, hopefully Obama can turn this ship before it hits the Conservative iceberg we have been sailing towards for years.
"In the middle of difficulty lies opportunity, Albert Einstein"
We need to fundamentally change our energy efficiency and re-establish the sense of self-reliance. In three critical areas we need to repeat the success of communications infrastructure re-tooling by changing from central planning to distributed self-reliance:
1. Food distribution. Get everyone involved by calling on everyone to plant a Victory Garden and try to grow 1/3rd of their own food. "Many hands make light work." Self-reliance starts with the self and is an attitude.
2. Power generation. Feed-in Tariffs are needed to allow anyone to create and sell electricity.
3. Transportation. Set Performance Standards for transportation efficiency and allow innovators to fill that standard. Cars, buses, trains and planes all use about 1,000 watt-hours per passenger mile (32 mpg). Personal Rapid Transit (PRT), PodCars, JPods use about 130. Converting 85 cents of every dollar spent on oil to jobs and profits is a way to stabilize and rebuild the economy.
The sheeple have no idea as to the pain that is heading our way.
One added point to Commercial Real Estate. The banks are yanking their funding from paying customers based on the fact that our business is down thanks to their playing in the sandbox.
They screwed up our economy and now are bankrupting paying customers and somehow Geitner thinks this will fix our economy.
The scariest bankruptcies aren't the big guys, they will survive in one form or another. It is the big guys suppliers and distributors that will bear the brunt of the fallout. And after a decade of competing with China, we can't hold on if we have to eat our debt and our customers invoices too.
Say goodbye to your customers, they are being bankrupted in droves to pay Wall Street.
Of course, with municipal and state pension disasters looming, property taxes will be hard to cut. That will combine with the usual government sense of entitlement to make large-ticket items much more risky.
When we move out there I will put up my Galt's Gulch plackard.
This is gonna get very bad and this nation does not have the character it did in the 30's . The "crime" part is one I've been focusing on since 2007.
On Mar 30 08:53 AM epeon wrote:
> Buy your guns, run for the hills, plant a garden, start hunting deer.
> Damn, the appocalypse is at hand!!!
The American advertising industry teaches us that happiness can purchased with money and that success is only measured by the number of houses we own, the size of our yachts and the prestige of the schools that our children go to.
We scare each other with tales of bankruptcy and poverty, with the specters of loss of jobs and income and with the chaos of crime and revolution in the streets.
At the same time, we scoff at the ancient values that philosophers such as Aristotle listed as essential for a happy life.
Friendship, family, learning about the natural world around us, enjoying and practicing the classical arts such as music, literature and philosophy, is seen as a waste of valuable time that could be used for making money.
From the time of its inception, the American Constitution, rather than being the sacred document that it should be, has been interpreted by the Supreme Court to be whatever is best for the oligarchy.
Economic chaos wouldn't hurt the poor very much because they have a very short distance to fall. The rich would feel nothing, of course.
It is the small middle class, or about ten to fifteen percent of the American people who would suffer the most.
The real question is, if economic chaos comes, will the mass of poor side with the rich, who will try to buy them off, or with the middle class who will try to convince them to create a more 'vituous' society.
Those who get wrapped up in the Right-Left, Repub-Dem paradigm delude themselves. The actions are the same.
Choose Substance Over Symbolism. Event and action as the only evaluation metric.
I care not what club our leaders subscribe to - I care only about what they do. There is little representation in DC these days - K-Street has more influence than any State in the Union.
On Mar 30 10:43 AM Jimbo wrote:
> I cannot share joes opinion that the prophet Obama will steer us
> away from the "conservative Iceberg". The so-called "conservatives"
> have certainly screwed up things( such as repealing Glass-Steagall)
> but I fear that the naive and inexperienced Obama and his collectivist
> acolytes will fly our economy into the ground. I see nowhere to run
> or hide either.
"These will be useful tools to navigate the next decade."
Whoever conceived the 2nd amendment is a genius. He saw this all along.
Most people vastly overestimate the short term, and vastly underestimate the long term, economic effects of great events such as we are now witnessing.
Short term we should expect wild currency fluctuations and other shocks. Long term we should prepare for, and accept, a reduction in some living standards and the end of easy money.
Let's hope we accept this with grace and without guns and violence. We have almost everything we need in North America so an adjustment means we'll get to produce more of our own consumption. Is this really so bad?
This of course is coming undone rapidly as the commercial properties lay vacant across Australia,tenants decideing in many cases that no business is better than working yourself to death just to pay a rediculous rent .
We are seeing the beginning of the new financial breakdown as McQuarie bank etc suddenly find income streams getting rather shallow as more and more small businesses either move all manufacturing to Asia or simply walk away from the lease. legal costs are peanuts compared with a several thousand dollars perweek in rent and little to show for any extra to recover the cost.
Finally,many years ago i read a book by brazilian Millionaire who said the rent should only be 3% of businesses turnover ...in Australia? fat chance !.
Bricks and mortar is no good if it is empty.
The results of this perfect storm are still being "worked thru" and will be for quite some time.
Whilst Greed is a normal part of the Boom, Bust capitalism business cycle, the mixture with Peak Oil & the start of the Boomer Bust has seen the normal end of business cycle, morph into a once in history economic event.
Regrettably, these factors and a few others will make the period ahead extremely volatile & difficult.
This is not the usual V Recession, be prepared for the longer term.
On Mar 30 09:36 AM Allan Frain wrote:
> Agreed.
>
> While most of these points can be found throughout media, the last
> regarding the demographics of the Baby Boom is the most overlooked.
> It was overlooked as the housing bubble was engineered and it is
> being overlooked as the correction of Real Estate is being fought.
>
>
> Flying in the face of profound demographics does not make for sound
> economics. The retirement of the Baby Boom would have weighed heavily
> on Residential Real Estate even in the best of times.
Next thing you need to do is buy yourself a gun and a lot of ammo well you can still buy it, because there going to be coming.
On Mar 30 01:13 PM henarl wrote:
> Bagman: Unfortunately moving to Canada, Costa Rica, etc. will not
> help in escaping the current malaise. Corruption and avarice is not
> just endemic to individual countries but rather endemic to the human
> race. Your passport is not a ticket to utopia.
So America will find a way to dump the bulk of the pain on someone else. No different to big US banker woes getting dumped on US tax payers internally. That's how the world works. Show some faith America!
But America is too financially "moral" to do that surely? Well apart from the liklihood that stringing the words Financial and Moral together in any sentence probably creates an immediate oxymoron - All I can say is: Vietnam anyone? Kissinger gets OPEC to sell only in USD anyone? Iraq I anyone? Enron anyone? Afghanistan anyone? Iraq II anyone? American banks toxic assets anyone? Rated AAA by America's Ratings Agencies anyone? And sold to the rest of the world as such based on America's "well deserved financial reputation." (Thus speaketh Ms Clinton.)
But then I don't believe in Santa Claus either.
On Mar 30 04:25 PM neutrino23 61 wrote:
>I'm not convinced about the effects of the boomer retirement. It
>may also be that this generation wants to keep active and as they
>are well educated they will continue to write, create, teach and
>volunteer. It won't be all consumption.
I'm not sure I'd want to look into a crystal ball if I even had one right now.
Thumbs up for starting my day with a good laugh.
On Mar 31 02:47 AM Ned S wrote:
> As to all you dumbies who feel to comment on whether the author is
> cute or not - Go buy a really classy prostitute if you desperately
> need a cute chicky babe in your lives - Or surf some porn sites for
> an hour. Hey, "she" just could be Boris in Moscow pulling your chains
> - This is the internet - Grow up.
The Founding Fathers were genius! Yes, they anticipated the government running a muck. The "checks and balances" were supposed to contain a bad branch of government. They left it for future generations to keep from having bad leaders permeate the entire government. We failed them.
Unfortunately, the Obama administration could not care less and is perfectly content to smite the Founding Fathers and all they stood for. Personally, I think Pelosi and Reid should be used for stem cell research (to see what went wrong).
Dang! I still have equity in my house. That makes dumping it and leaving the country a drag.
The only industries I can see with promise are:
1) Job hunting and resume writing (has a growing market)
2) Software firms that write programs to spy on (monitor) citizens and their finances
3) Therapists to counsel those who voted for Obama, Pelosi, and Reid
If some predict that crime is on the rise due to this economic malaise then they are revealing just how stalwart the urban poor really are considering they have been suffering through their own economic depression for years. So now a little economic hardship is predicted to send the law abiding middle class into the streets for their supper. Just how thin is the social fabric that separates the criminal from the "law abiding citizen"?
"When times get tough, the tough go shopping." That's what we are being urged to do. And short term this may be the answer since it will enable us to live business as usual without actually questioning the notion that economic growth for its own sake is good. Good for whom?
On Mar 30 09:11 AM bagman432 wrote:
> OMG - smart & beautiful.
>
> Talk about nailing the situation. It might be time to renew that
> passport, sell that house (if you can), and think about moving to
> a place with a little less corruption. The way this country is going
> how long will it be before the government puts restrictions on leaving
> the country with gold, silver, or other hard assets? I know they
> trample our constitution on a daily basis. Anyone who thinks for
> a second that our rights are safe in America is delusional or blind.
> The clock is ticking and Ms. Bawden's comments are on the money.
> If you really want to protect your family it might be prudent to
> consider an escape plan. It may seem absurd to some but considering
> the average American's apathetic nature I just don't see much hope.
>
>
> Canada?, Costa Rica?, here I come!
1) Commercial RE - I agree this is a likely problem area. I do see refinancings which will help ease the problem. The Boston bldg that sold for 50% of its previous sale price is a harbinger. We will get through this however.
2) Insurance companies - Insurance has funding set aside and reinsurance and I dont think it will be systemic
3) Corporate bankruptcies - I am sure some will happen. It used to be companies went bankrupt once in a while and the world lived on. Someone else will buy the assets and be aggressive and grow their business.
4) Dollar - We have had the world by the tail. That may change but the dollar and the US are important to the world economy and will be for a long time.
5) Thrift - gosh I hope so! A few years ago I went to collect rent from some tenants who couldnt pay... They were living better than I was.
6) Crime and Boomerang - blah blah blah
Booms and busts have been going on for centuries or more. The US will not perish. I graduated around 1979 from college. Things really looked bad with 15% unemployment and 18% interest rates. It looked like and many people thought the US was in severe decline.
Cheer up! We will get through this and without every imaginable boogie man jumping out of a closet. I am curious what Bawden Capital is investing in these days given your outlook?
Jstratt -- Claim reserves and reinsurance are irrelevant to the insurer problems the author references (liquidity crunch created when csv demands on life policies exceed current cash, requiring the sale of illiquid assets at so-called fire sale prices).
When you would examine it carefully, you would find that much of it is either from old news or collected from a digest of other SA authors had covered in similar tops to now.
I do not think I am the only one to think we will not come to that, are things going to get worse, most likely especially when the treasury seems to be run by a staff of one and nobody has told the president to stop campaigning. Some one tell him - You have got the job, please get on with the job.
And by the way, when a house is on fire, one normally put the fire out as soon as possible, not stand around planning on the extension and the landscaping .
But trust that the stock market precedes the economic recovery by six months, BECAUSE WE NEED your sucker money to get it recovered. Won't you help...dial...1-800-LO... and for your donation, you will receive a picture of your Wall Street child, and be able to correspond with them...for less than the cost of a coffee company a day.
Didn't comment on simon Properties this AM @12;37 ?
I must have a 6th sense !
Michael,
Ouch, that hurt…Yes, when I was in my 20’s I ran a fashion company. I grew up and graduated into running a homeland security company. My book was an attempt to battle against a book called ‘The Rules’ on how to trick and trap a man into marriage. I was advising women to get their own life rather then to get a man to take care of them. I bet even you would agree on that advice. Although I finished writing the book 10 years ago it is still in print and the publishers wanted to keep the website up. Long before gloom and doom interested anyone back in the summer of 2007 I wrote about the similarities between what I saw unfolding and the crash of 29. I can’t believe that you have me apologizing for the fact that in my career I have had more interests then just the markets.
J. Bawden
PS. Other then my love and interest in macroeconomics I have nothing to gain by driving people to my firm as you unfairly suggest.
On Mar 31 07:47 PM MichaelSchmichael wrote:
> I find mildly entertaining that the author can not only dish out
> juicy macroeconomic spin, but can also give you the low-down on fashion,
> dating and relationships (including the need to "Get A Life THEN
> Get A Man") (www.jenniferbawden.com...). But I
> have to admit that the author clearly excels at self-promotion and
> marketing, giving the public exactly what it wants (gloom and doom)
> to drive interest in her firm.
>
> Jstratt -- Claim reserves and reinsurance are irrelevant to the insurer
> problems the author references (liquidity crunch created when csv
> demands on life policies exceed current cash, requiring the sale
> of illiquid assets at so-called fire sale prices).
>
Where are the stock market now? - Down the Drain.
What has not been discounted are the following (only the ones I can think of):
- The backbone of the US economy, which is corporate America, is still relatively healthy (or should i call unusually resilient?) despite all the doom and gloom we have had suffered for more than 18 months already. How many big companies have declared bankcrupcies during the last 18 months? How many should already have declared bankcrupcy during that period of extreme economic stress?
- The US demographic situation is still relatively much better than most other developed countries such as Germany and Japan due to immigration. There is still a healthy balance of new breed young population to replace the future retiring baby boomers.
- Look out of the window. See, China is now in the cusp of economic Revival. Their economic rescue plan is working, and working beautifully. Their stock markets have been on the rally mode with 75% gains since Oct 2008 while the rest of US and Europe had been digging new lows.
Likewise, India, Hongkong, Taiwan, Korea, and even the Philippines, and to some extent Japan and Australia among others; are following the Lead of China.
That can mean one very important thing: China is growing a New Breed of local consumers and the other developing countries are following China by not depending upon their exports to the US and Europe for the sake of their own economy.
The US can and should take that brewing opportunity in order to re-envigorate it's export industry. It is never too late, it is never too soon.
Soon, the tables will be turned with the US doing the export to BILLIONs of new breed consumers in the developing countries as they pursued their course of action of becoming developed countries similar if not equal to Western standards.
This is not a mirage. It is going to take decades - which means decades of opportunities for the US with 300 million population to be able to export to BILLIONs of new breed consumers in the developing countries.
The collapse of US consumer spending only added impetus to hasten such eventuallity.
What else can prevent such an eventual course of economic history that has been progressing for more than 20 years - - World War III?
But remember, even in The Great Depression, the stock market was open for business, and there was business. Unemployment was high, but few starved. People helped each other and we survived it. And we did this even with banks cutting the money supply and many banks failing without the FDIC around.
Sorry folks, but regardless of how bad it gets, and how many material things disappear from people's lives, the world is not ending, and we will come out of this ok.
Those of you with your "guns and ammo" nonsense, have probably seen a few too many silly movies, and obviously have read far too little history.
Don't worry; what you think may happen, is all just in your mind right now, and even if it gets here to some extent, it will be a great challenge, and you can tell your grand kids all about how you made it through and survived.
Relax, and in the meantime, how are doing putting your money where your mouth is?
Getting back to basics:
-America has homes for everyone that needs a home,
-America grows more than enough food to feed itself and much of the rest of the world.
-We have all the clean water we need.
-The people are generally literate and well educated.
-Ninety two percent of people that want jobs have jobs.
We are in a bit of a rough patch. This is a great transition between older technologies and methods and newer ones (look at an earlier post of mine)
It is unfortunate that government is trying to preserve the old against the winds of change, but change will out, and we will be the better for it.
It is unfortunate that the dollar and dollar-based assets will not survive in their present form, but we have so far debased our currency TWICE (the Continental and the Civil War Dollar) and still survived.
Taro Aso, Japan's prime minister, is emerging as one of the most vocal proponents of a continued Government spending spree. This stance has been taken via criticism of Europe's only responsible leader, Angela Merkel, and her resolve to limit the German Government's future stimulus/spending activities. The leader of the world's second largest economy points to the experiences of his own country, in the early 1990's, when the Government staged a wholesale intervention into the financial system. We would concede that the present day United States and the Japan of two decades past are/were both inflicted with a similar strain of economic contagion i.e the spectacular rise and fall of real estate values. However, we do not disagree with Taro Aso as to the premises of his argument, but rather as to the conclusion itself.
It is widely acknowledged that Japan suffered a "Lost Decade" ,characterized by a deflation of values across all asset classes, as well as stagnant, only interrupted by declining, growth in the overral economy. However, a brief assessment of the data concerning Japanese GDP growth, as well as real estate and stock values produces the inevitable conclusion that Japan did not just lose a single decade, but Japan Lost Two Consecutive Decades.
We can not possibly fathom why the leader of a country would voice support for the same policies that had already led to a two-decades long stagnation in his country. The Japanese Government, in the 1990's, rushed in and propped up every large and ailing financial insitution via capital injections. The Bank's, fearing a further deterioration of required regulatory capital, failed to lend the money. The Government injected more capital. This ongoing process succeeded only in producing a Zombie Banking System that was allowed to pretend that losses did not exist. Sound Familiar?
TheValueatRisk.blogspo...
On Mar 31 11:25 AM Itsonlymoney wrote:
> As a measurement of negative sentiment this article seems to have
> revealed some. The contrarians among us will no doubt point to these
> expressions (guns and ammo) as indicating a bottom in near. I would
> not count this as evidence of a bottom mainly because "going for
> my gun" is not an economic response, but rather an expression of
> the pure raw hair-trigger fear that arises in any crisis, not just
> economic ones. Certainly owning ammo is not a rational response to
> a decline in commercial real estate values.
>
> If some predict that crime is on the rise due to this economic malaise
> then they are revealing just how stalwart the urban poor really are
> considering they have been suffering through their own economic depression
> for years. So now a little economic hardship is predicted to send
> the law abiding middle class into the streets for their supper. Just
> how thin is the social fabric that separates the criminal from the
> "law abiding citizen"?
>
> "When times get tough, the tough go shopping." That's what we are
> being urged to do. And short term this may be the answer since it
> will enable us to live business as usual without actually questioning
> the notion that economic growth for its own sake is good. Good for
> whom?
The question now is where to park your money for a whole lot of people have gone broke looking for yield and return.
Pelosi is authoring the map for the road. She is also putting in 8 lane superhighways.
Oh wait, not superhighways, rail systems run on sunshine and pipe dreams, after all we have to think about "global warming".
Kudos!
On Mar 30 11:04 AM retiredengineer wrote:
> I AGREE. THE ONLY THING THAT WILL SAVE US IS IF CONGRESS SEE'S OBAMA'S
> "ROAD TO HELL" FOR WHAT IT IS. IF THE DOLLAR CONTINUES TO STRENGTHEN
> THEN YOU KNOW THE SMART MONEY BELIEVES CONGRESS WILL NOT PASS HIS
> MORTGAGE THE FUTURE BILL.
Your "facts" are nothing but American ego and not true in any form.
You state, (I reply)
: -America has homes for everyone that needs a home, (yet our homeless families are straining all available resources and the banks are not lending even the credit-worthy money, so lots of good the house does)
> -America grows more than enough food to feed itself and much of the> rest of the world. (we import nearly SEVENTY (70) percent of our foods and nearly 50% of our medicine. so just how would we "feed ourselves" when Chinese goods are quadrupled or worse)
> -We have all the clean water we need. (funny, we are spending BILLIONS because we are dangerously depleting fresh water reserves around the country)
> -The people are generally literate and well educated. (you apparently do not watch reality shows, read blogs/message boards for the masses, nor shop at WalMart or eat fast food. We are a nation tipping towards the unknowing having the majority)
> -Ninety two percent of people that want jobs have jobs. (wow, 8% unemployment, wish I could find that city. The unemployment rate-as would have been reported under Reagan-is at least 12%, the REAL fully employed rate is no where near 20%, not even close.)
> We are in a bit of a rough patch. This is a great transition between older technologies and methods and newer ones (You must work for a union or other guaranteed job, there is no "new" technology that is going to fix this especially after it is created, then the manufacturing off shored.)
Reality is going to be a bitter pill for you to swallow when it hits. Sorry about that.
On Apr 01 08:07 AM Jonathan Christopher wrote:
> The phrase, "It is Darkest before the Dawn" comes easily to mind
> here.
> Getting back to basics:
> -America has homes for everyone that needs a home,
> -America grows more than enough food to feed itself and much of the
> rest of the world.
> -We have all the clean water we need.
> -The people are generally literate and well educated.
> -Ninety two percent of people that want jobs have jobs.
>
> We are in a bit of a rough patch. This is a great transition between
> older technologies and methods and newer ones (look at an earlier
> post of mine)
>
> It is unfortunate that government is trying to preserve the old against
> the winds of change, but change will out, and we will be the better
> for it.
>
> It is unfortunate that the dollar and dollar-based assets will not
> survive in their present form, but we have so far debased our currency
> TWICE (the Continental and the Civil War Dollar) and still survived.
1. Auto industry layoffs are on the way with all the auto makers.
2. Many more layoffs will be coming in retail, no one is buying anything.
3. The insurance companies may be the next big failures.
4. If the toxic asset program doesn't work, bye bye Miss American Pie.
5. Our government is printing more money than we have paper and spending it on all the wrong things!!! WE ARE FU**ED!!
All in all, the sky is falling - where is Chicken Little when you need him!
Also there is the problem that we are now essentially borrowing money FROM OURSELVES (buying our own debt)...That just can't end well, hardly anything that ends, ends well...
When did they put Bernie Madoff in charge of things?? When will we get something other than the ponzi scheme we have had for YEARS & YEARS now??
We are in a Mexican standoff situation: people had no money (even during the bubble) so they borrowed, prices went up faster and faster, people borrowed more money, and now that the whole thing is falling like the house of cards it is, everyone is not only surprised but trying to hold on to what was, keep the prices of homes and equities higher when REALITY DOES NOT SUPPORT THIS!! You can't jump out of a window and fall UP!!
-- Seems like that should be "unemployment rate and crime rate..."
On Mar 30 09:03 AM kelm wrote:
> Over the centuries it has been shown that inflation rate and crime
> rate are highly correlated so the Fed's QE strategy will lead to
> higher crime. Indeed, the local police force, at least where I live
> are expecting it now that the weather is warming up.
We in America can do better: First, let's print money with abandon. We can float our economic boat, and not worry about what others think. We can also become protectionist, because we will be facing protectionism everywhere else. Buying overseas oil with petrodollars will be out, but barter might work, as many oil exporters need food and other resources.
When our dollar is worth a penny, or less, things will be very bad for some, and much better for others. Freed from servicing the federal DEBT, not just the DEFICIT, our treasury will be able to help those Americans who have lost their security blankets. This will stifle unrest, and, besides, old people don't riot in the streets. The potential street rioters can be bought off with social programs and CCC camps.
If we go 200% into energy conservation and conversion. If we recreate the industrial base, at lower wages than before. If we threaten to drop a few nukes on anybody outside the You Es Aye who doesn't agree. Then all will be rosy for the foreseeable future. Sure.
Happy. Happy. Joy. Joy.
Paranoia.
On Mar 30 08:36 AM MichaelJ007 wrote:
> OMG! the sky is falling.... still.