Neal Vanderstelt

40 Things to Expect in 2010

At one time people were called loonatics for saying these things. I was called one for saying we are going to have a 2nd depression back in 2005. Now it's not so outrageous. The two key reasons for my reasoning were the amount of savings consumers had (I think negative at one point) and the amount of leverage that was being used. Now look at all the deficits and to make the situation worse the strategy has been to bail-out thus compounding the problem / burden. Maybe it won't happen as quickly like back in the Great Depression but that's because the market is larger and takes longer to unwind. A recovery will be short lived. I see massive financial problems because of the looming deficits our gracious government has made. Unless some how GDP can ramp up to match the spending. Oil is in demand / will be in demand because other nations that are not broke still need it until there's a feasible alternative. Just take a look at China's road systems, they are ready to drive. In China they are also desperate for coal to power it's massive cities and food for their huge populations. These commodities are in high demand.

Long USD Trends, Neutral on Momentum

Nice article. The big question now is recession / recovery outlook and room that the fed has to intervene if inflation picks up.

Inflation: Is This the Real Danger?

People just keep looking over the hill expecting the worst to be over with ignoring the lessons of the great depression or even Japan for that matter. The government has sat idly by while masses of people are loosing all of their belongings. Oh wait they did come in afterwords after all had jumped off the cliff without para shoots but perhaps it wasn't to save anyone just an opportunity for the them in the chaos. One would think it wouldn't happen to a powerful nation but once again history repeats itself when given a chance to repeat scenarios that obviously lead to bad outcomes. I guess all those years of study to make one a politician or financial expert they didn't learn 1 lesson from history in acquiring their degree. Perhaps the lesson for them is to create more control over people and not to make society better with new circumstances. Any reasonable and educated leader would be able to see the crisis in advance but in the news leading to all reports signaled that there was no crisis looming or even a recession. Very sad to see such poor leadership and decisions that effect masses of people that don't have the same educations of our leaders.

Where Is That Mythical Housing Bottom?

And I remember Jim Cramer like it was yesterday saying that housing was not a bubble that there was only so much land available. Sure Jim Cramer and what do you say now?

Lessons from the Great Depression
-Don't buy something with leverage/credit that you could never possible afford to pay off in the future. this is what so many businesses did in the roaring 20's and the fatal yrs before the depression.
-Don't buy market slogans at market peaks of how strong the economy will continue to be or there's no end to the thriving economy. if it seems too good to be true it usually is. much like Jim Cramer quotes, quotes from analyst and politicians back in the depression, today and other economic crisis. they are paid liars nothing more. sometimes they tell the truth, sometimes half truths, and sometimes they outright lie when they have to.
-More debt creates more poverty. the more you owe the farther you have to dig out of a hole. each time you sign into something your signing your own fate away. with taxes you don't have a choice. this is why monetary policies are so important to balance an economy.
-always consider the risk not just the reward. what were the chances of the home buyers doubling their investment that baught 2yrs before the bubble collapsed? and what were the chance of them loosing it all? obviously the prices were high and rates were escalated. it may have been hard to predict that some would loose it all but the tell tail signs were surfacing.

and one of my favorite quotes:
The Light that burns twice as bright burns half as long...
and you have burned so very, very brightly

Where Is That Mythical Housing Bottom?

Hello all, (Let me try to make sense of this big mess they got us in)
Just keep in mind the complexity of the housing market. The fact that you have to go though a process of borrowing money to buy such a big ticket item and the process of selling a home requires time to find a buyer and a process to go though completing a contract when the market is illiquid for houses. Think about it - you put a sign out in front of your house and hope someone finds it no the mls. The buyer has to look at it and make all kinds of decisions of weather they should buy and if it is a good time to. When everyone is doing this at once it further complicates the matter because the asset is now in less demand. If you compare it to selling other assets you can see all the complexity of having an agent, a special contract, and what not. Selling other things are much less complicated and don't require complicated procedures. As far as jobs goes this puts all kinds of people involved in housing out of work such as builders, makers of products, those in construction trades and so on. So the big question is when will housing deflate to a reasonable value and what will fill the gap in unemployment. One would have to look back into history when the problem got out of hand (ie when house prices became overinflated) and what measures our government is doing to make put the economy on track. So then you have to consider is the government putting more cash into our pockets in one way or another to help stimulate the economy and not just feed debt. There's not only a process to selling a home but a process for the economy to rebound. If a person has less wages or no wages and has to pay a huge percentage out of pocket for the cost of living and taxes to the government the chances are slim for a recovery.

Recession Fears Go Global

very well written article.. no bs like in other articles.