United States Heading towards a Depression?

Author Laffer makes an incredibly strong case for a major turndown of the economy on 1 January, 2011 in Tax Hikes and the 2011 Economic Collapse.

You still have six months to beat this wave -- better get to it!.

 

Seriously - how old are you? Because you seem to be completely unable to relate to anyone here. Based on your sentence structure, I'd guess you were between 12 and 14 years old.

Don't your understand that your posts make no sense and have no impact? An adult would realize this, but you seem to be oblivious to everyone else.

 

A well managed and regulated economy by the central govn't is what is needed for a recovery that is beneficial for all the citizens.

The predictions by Republicans for an economic downturn only illustrate the shallowness of their past tenure - voted out of power by necessity less than two years ago for an economy left in complete disarray caused by their self serving philosophies of exclusion and retention of power.

Having failed, the reactionaries attempt any mode possible for re-election without the simplest admission to their own undoing and the cause for the present circumstances they are responsible for.
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Isn't that a quote from Joe Stalin?

More serious warnings...

• Breakfast with Dave
• ECRI Watching with Edwards
• Prepare for flash crash II and $10 trillion of QE
• The Great Depression II

These "Republicans" are from Canada, England, Scotland, and France.

 

It simply is not Republican but is the solution to head off your impending disaster.

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"Flash Crash" is the new nomenclature for the 1000 pt. inter-day drop in the DOW, occurred in May - No long term investor or just any investor believes such trading could properly occur as an example of what should and should not be allowed - its time for jail time for those type of offenders.
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Prison terms for people who choose to sell their stock holdings. That should help and attract the best and the brightest people to the finance industry.

It seems that you failed to read the links to which you are replying.

"... sadly the excuses used to play down Flash Crash 1 have been exposed as bogus, so I wonder what the next set of excuses are – its been a while since we used the old ‘rogue trader’ excuse so my money is on that horse." -- Bob Janjuah of the Royal Bank of Scotland.

 

Flash Crash II is set to begin around July on through to September, according to your ft,com link. That is next month.

 

Was not replying to a link, your sources, but to the ineffectiveness that was the result of the anomaly and its implications for a well regulated and managed exchange.

The confidence that is now emerging that actual steps will be taken to insure validity over the previous Administrations reliance for self governance and the corruption it fostered.
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War of the Economists


Many opinions out there. But most agree this year will be a year where there is a major devaluation of the USD followed by a quick derailment of the Euro.

Lindsey Williams on the other hand predicts additionally that within 2 years the USD will be completely worthless.

 

For responsible adults interested in recovery and appreciation for all the citizens the outlook continues to improve - the naysayers and their gloom do have competition but surly theirs is the right track for them and lets hope their candidates have the worst of it to come.

 

Lots of recent comments about personal real estate. Here is an article re: the big boys and the big bucks: http://www.latimes.com/business/la-fi-market-bottom-20100609,0,838155.story

Again: I was a commercial real estate broker. Worked during the time period referenced in the article by its comments on the RTC. The long timers don't see this period as bad as in the early 1990's when the RTC was in business. I agree.

The other thing that is interesting is the reference to all that investment money on the sidelines. Its out there. It wants to swoop up deals.

Its a function of the enormous volume of liquidity out there. Its the counter argument and potential impact of excess and available liquidity to the argument that all this liquidity is going to create hyper inflation.

Not going to suggest that excess liquidity can cause inflation. It can. The other side of the coin is that when investors put liquidity to use it can turn into productivity....especially when assets are going to waste without necessary liquidity. I saw it occur back in those RTC days. Buildings that fell into bankruptcy couldn't rehab, fix and alter space for lack of liquidity. Once the liquidity flowed back into those buildings/assets, they were able to spend the money necessary to attract tenants, build out space, and become working assets/investments again.

 

Interesting post. I suspect we are in uncharted waters right now. There are penthouse suites and condos in Miami that are going for ~100k$ right now, when just a few years ago you couldn't touch them for a million. Apparently people fear investing in a building where there may not be enough revenue generated from the owners to keep the elevators running, the taxes paid, or the water turned on. Normally deals like this would be "swooped up" by such excess liquidity, but it isn't happening in some areas. The number people are looking at is real unemployment, not the silly but far from low 9.7% being thrown about. People are out of work, people are earning less, which means fewer consumers spending less money. The government is hiring, but government jobs don't spur growth because they are paid for with tax dollars.

With all that liquidity on the sidelines to invest in property, business, what have you, where would you put the money if it were all yours? Would you buy up high end housing in Detroit? Buy up vacant condos in Miami, whose beaches may soon be coated in oil? Open a construction business in California? A 13 trillion dollar deficit and the government making no signals it intends to slow down its spending, or even take the foot off the accelerator makes for a lot of uncertainty. Not to flog a dead horse, but I'd invest it overseas, specifically China.

 

The real unemployment rate? 16.6%

Real unemployment is currently spec'ed at 16.6%. For some areas like California it is at a terrifying 20%. And when you add in the number of people laid off and now performing temp jobs or low-paying jobs, the rate could be much higher.

At first glance, it appears that the Top Ten states with the highest unemployment are all states completely dominated by Democrats (I'm excluding Michigan because automotive is non-political).

 

O_Nation: Everyone does it differently. Here is what I did. I invested in markets where I was working and I knew market conditions intimately well. I didn't invest outside of the territories where I had knowledge. Real estate markets are incredible examples of imperfect markets from a classic economic sense. Superior knowledge is the key to making money IMHO. I had some losers and winners. The losers came earlier. I learned from them.

I'd weight the unemployment stuff real seriously. To me that is one of the keys for the demand/supply curve that impacts real estate. the other thing is I'd rather be in an area with a diverse economy than one with a single dominant economic industry. If that industry takes a beating...that region's real estate takes a beating.

If I didn't have access to deep inside information and had excess money I'd be a price aggressive buyer always bidding at the lowest end of the market. The only problem with that is if you keep doing it in the same region you keep dealing with the same sellers/agents/banks and they get sick of you and don't treat you as real. There are ways to work around that too, but it takes time.

I'd never invest overseas especially in a land in which I knew so little and/or had a likelihood for serious political changes. Too risky for me. BTW: China: I've read a fair bit on how there has been some serious overbuilding without the properties being occupied. Could signal a problem. All that investment and no return. Could screw the financial institutions.

The basics to me are demand and supply. (that is trite). When the population is growing and jobs are growing its a good sign.

 

Certainly not. The liberty Americans had in the beginning is what made the country wealthy in the first place. USA is falling because of being too socialistic.

 

@earlpearl: I'm growing concerned I may be becoming a leftist. I agreed with pretty much everything in your post, again. The two big points, sticking with what you know about and letting supply and demand guide your investments are hard to argue with. The one place I think you may have inadvertently supported my recommendation to invest overseas is here:

I don't have the time to dig up the research on this right now, but China fits the bill on this one. Saving is part of the culture. Right now China may have the most rapidly growing middle class on the planet, which means more people to buy houses, cars, shamwows, or whatever the hell you want to sell to them. My understanding is that,of their 1.2bil size population, only ~200mil qualify as consumers of western products. A 10% jump in the size of their consumer population is pretty easy target to hit in the short term. 10% may not sound like much, but it is 20 million new consumers. Can you imagine what 20 million new consumers in the US market would do for our business climate?

The truth is, we've pretty much tapped out the US markets. We keep trying to find new ways to sell products through creative financing. I believe most Americans don't even consider the price of things when they buy them now. They consider the size of the monthly payment to see if there is room in their budget for it. The more people we fit into these pre-pressed molds working these 9-5 jobs for a predetermined salary without much room for salary growth through a lifetime, the more we expand sales through debt rather than earnings, the more we seal our own fate. It is unsustainable. I look at the expected earnings of the average person with a post graduate degree and offset the 8 years of study in lieu of earning it took them to get it, subtract the cost of tuition, books, room, and board, and I don't know whether to laugh or cry at what our business culture has turned into.

 

I believe it was several failed policies leading up to this, but sure, what better to put icing on this cake than good old socialism.

 

Ha ha. I wouldn't worry about it!! BTW: my business side has nothing to do w/politics. In business I love markets/love competing. To me its like team sports w/out getting your body smashed.

That is my way, learned over time. Others do it differently. I learned to relish taking advantage of having more knowledge about certain markets and benefitting from that.

I'm ignorant about foreign markets. Its like I'm ignorant about market conditions in Kansas City and 100 other parts of the US. I stick to what I know. OTOH: Someone I know recently came back from India and described it in similar ways. The difference is that India is a democracy and not a govt. controlled .......(whatever you wish to call it)

I think there is a lot of innovation out there. Tom Friedman in the NYT wrote about that today. Friedman himself is not a business guy but he cited business guys with interesting ideas.

 

Here is another thing or two I learned. Don't just believe the published numbers when it comes to something like real estate. The way data is aggregated, accumulated, and distributed doesn't necessarily do winning real estate investments justice. I've seen that first hand. Not too long ago I asked RobJones something about a report on Texas residential vis a vis the rest of the country. He sees it first hand. He described it very differently than how the data was presented. I believe the "feet on the ground" that can disect the aggregate numbers more than the aggregate numbers.

I learned that stuff in my market. I didn't know it off hand nor did I read it in a book. I learned it over time. Buffett basically practises it and talks about it for buying businesses.


Basically if I see prices are low relative to where I think I can turn them, my goal is to buy and not try and make the cheapest buy I can. I'm trusting in the ability to either create value or ride value appreciation. In other words if I see stuff valued (hypothetical numbers) around $80-100/foot for sale and I think I can get it into a range of $150-$250/foot then I'm going to make that deal. I'd like to make it at $80/foot, but the important thing is to make the deal. Don't lose it by underbidding it. If I don't buy it, make the deal...I'll never make the money. OTOH; If I'm just bidding low on everything without deep deep knowledge (as in this housing market) without knowing where values are or where they are going or how long it might take....then I just obnoxiously bid as low as possible all the time. To win some of them I gotta go to a different strategy that works some of the time.

When it comes to things like condo's in buildings where there aren't enough owners to pay for elevator maintenance and/or communities as in Arizona where they can't cover the community maintenance costs....I say punt and run.

 

China's last crisis/fourth turning started and ended about four to five years after America's. If our economy peaked in 2006 or 2007, things could get really interesting real soon, as the last engine of production kind of sputters out. Then again, this crisis could actually be a huge growth opportunity if it results in a more liberalized economic and/or social policy.