America's Descent Into a Third World Country Has Begun.

In the depression, Wall Street was a good indicator of financial hard times. Credit contractions were reflected directly in the market. Today, credit contractions are more likely to be reflected in securitized instruments, like mortgages and credit card debt.

There is a credit contraction coming, because the Keynesians cannot afford to pump much more liquidity into the system without diluting it completely, and forcing foreign creditors to dump their dollar assets.

The question is, will we take our lumps and start contracting slowly and gracefully, or will it come fast and hard. The former will lead to a lot of discontent and hardship. The latter will change America forever.

 

One point I'll make. Long term the dollar will continue to lose value but short term they may be some advantage in having cash to snap up some real estate on the cheap.

The Fed can do one of two things. (1) Inflate the economy so that houses reach equilibrium to their worth in dollars. Traditionally a house is worth ten times annual rent. Most of the homes on the coasts are selling 20x annual rent. (2) Raise interest to control inflation and deflate the bubble.

If #2 occurs having some cash will be a good thing. But should the Fed do #1 then there will be a whole world of hurt.

 

That's sure to increase inflation. The costs of houses are not calculated in the inflation rate, whereas, rent is a significant factor that is calculated

The Federal Reserse is political. This is an election year and they will not let the country go into recession. I was talking with some Korean businessmen and they expect a correction after the persidential election

Cheap credit created a bubble. It was like the stock market and everyone was trying to change their jobs from day trader to house flipper.

 

The diffrence is that Japan is an export country.

The US owes trillions of dollars in debt to foreign countries and has a 800 billion dollar trade deficit.

 

There's a cafe which gives internet access on the main street in Jefferson City, capital of Missouri, the cafe interior, old monitors and sloppy internet access was worst than what you could find in Eastern Europe 3 years ago. I travelled around 1500km through America and saw many places where people live in worse conditions than people in Eastern Europe now.

 

Unfortunately, that is true. The prosperity has been slowly drained out of the country, and I'm worried that people may not realize it until it is too late.

The prosperity or projected prosperity of a nation is directly tied to it's savings rate. Savings are sacrifices and accumulated productivity, that is deferred for later consumption. It is the basis of capital formation.

We're a debtor nation, when a negative savings rate, and the government has muddied the waters between productivity and consumption, because we consume far more than we produce.

 

They (the elites) will be looking hard to implement Internet 2 because they are losing control over the people (or should that be sheeple? )

I still think that they have left it too late to completely suppress the internet, unlike the utterly controlled TV stations that you alluded to in post #19.

They planned everything out meticulously but they underestimated the power of the internet, that is for sure.

 

Try owning a Flat/House in England-When i went college in Holloway Road (North London) i was paying 200 GBP (400 USD) a month.
Try looking it up on google,its no Paradise and i was paying top dollar.

 

Shhhhh...don't be so damn critical of our country and our great economy or you will have the crazies come after you with all kinds of names.

 

It is what it is. Unlike the subjective positions on the war, or the welfare state, the economic situation is pretty clear and obvious. Name calling is a poor substitute for facts.

 

umm .. in Miami and many parts of Florida rental prices are going down due to the sudden surge in rental units due to speculators trying to rent their properties instead of flipping them

Also what do you think happens when someone loses a home? It disappears?

When someone "loses" a home usually someone else picks it up at foreclosure

all the over building will translate into more affordable housing when things settle out

 

Sure, but anyone stuck in a mortgage at an inflated valuation, will be paying interest for negative equity.

The damage has been done.

 

who cares about them? Its cheaper houses for us

 

More people in trouble = more subsidy and welfarism, which equals more corporate profits, and when you take a wholistic view of your finances = cheap house, not so cheap anymore.

We can't afford to be small minded about our own immediate interests when the system is stacked up this way. You pay for everything, all of the time, whether it is taxes, monetary inflation or public/foreign debt.

 

hey what you mean starting, have you ever been to michigan? like in the bowling for columbine and that other micheal mores documentry farenheight 911

 

The U.S. isn't truly rich, it is credit rich, meaning most Americans have decent enough credit to borrow for everything they have. Then people in poor countries see our new cars, big houses, and gadgets and think we're rich. In reality, we're just a nation full of borrowers.

The problem is, we are starting to lose our borrowing power, and once that happens, you're done. A truly rich nation would have a positive savings rate, not a negative one. In a rich nation, 1% of the population wouldn't control like 48% of the wealth.

I don't consider a man or woman to be rich when they live in a home that they're making payments on, one which isn't truly their own. I don't consider you to be rich when you have to take out loans to get a car, go to college, or start a business. You may be credit rich, but you're not rich in the true sense of the word.

The only thing that separates the United States from third world nations is that its citizens have high enough incomes so that banks loan them money for everything, but the income of Americans is based on a currency that is weaker than the Euro, which is not even the currency of a single nation state.

Calling the average American rich is like someone claiming they are $5,000 richer because the bank suddenly approves them for a credit card with 5 grand on it...........the $5,000 doesn't belong to the person who gets the card, the money belongs to the bank, they're just allowing the borrower to use the money, and then it must be repaid back with interest.

Now, when the person with this $5,000 credit card goes shopping at the mall, or wherever, everyone who watches them buy a bunch of stuff well think he or she is "rich." But they are not rich at all, they are just using the money of someone else, and the day will come when the money will need to be paid back.

The analogy above perfectly describes the U.S., and how it is perceived by people who think this country is rich. The day is coming soon when it will be time to repay back our debts.

This may be true in Florida, but where I live, the housing and rental market is overvalued. Besides, Miami is not a good place to live anyway, it has a high crime rate, and the city is located in the lighting and hurricane capital of the U.S. I would probably never live in Miami.

 

So true! This Americans are "rich" is a myth and a perception. Our economy is very very fragile. If you loose your job you loose your house, your home, your everything. Try missing a house or car payment and your "rich" status changes to delinquent. At least in third world countries people might live in a shack but at least its theirs and they own it outright. In this country you miss your house payments you become homeless and your credit is ruined, you can not borrow, you are screwed!

P.S. Miami is nice to live if you can afford to live here in a nice place, otherwise you will be miserable making minimum wage, stock in a swamp inland and drooling over those with serious money parading in front of you in nice cars and eating gourmet food across someone that is homeless and drunk. Across the street I see groups of 4-5 homeless people on a daily basis right on Collins Ave.

 

This is so true, and this is the financial philosophy that I live by on a personal level. Anyone in this world who thinks prosperity is tied to how high your credit score is, you are sadly mistaken, and the chances of you ever becoming financially independent are low.

The banks have brainwashed the general public into believing that credit is a sign of their financial stability, when this is a lie. This is also why you never here "financial experts" on TV talking about saving money. Saving money is the true path to financial freedom, there is no reason to borrow money if you have your own.

If you go down to your local Barnes and Noble, or Borders book store, and look at the financial section, I guarantee you that you will find few, if any, books on saving money. You will find hundreds of books and making money and investing it, but never on saving money.

Saving money takes discipline and the ability to look beyond the present. It also requires you to make sacrifices and trade offs. When you live a society where you constantly told by the media that "consumption is a sign of wealth," it should come as no surprise that hardly anyone saves money anymore.

The American economy is so fragile that our currency is being beaten by a currency that has only been existence for 7 years, now how pathetic is that?

The Euro is not even the true currency of any nation state in Europe, just the European Union, and this new currency is beating the American dollar. This should be a clear sign to anyone that the concept of Americans being rich is the biggest illusion that was ever created.

This should also tell you that having all your assets in dollars is the very definition of stupidity. The American dollar and toilet paper have a lot in common, the only difference is that the dollar "appears" to be valuable, another illusion.

The U.S. economy is nothing but smoke and mirrors. And the "economic experts," "financial experts" and Wall street guys keep getting suckers to lose everything they have.

You have to look at the bigger picture. First off, only the wealthy will be at auctions getting houses for pennies on the dollar. This means they will take more land and property for themselves, and wealth will be further consolidated into the hands of a few.

Now, you are right in the sense that there are opportunities for entrepreneurs out there who are looking to get into the real estate market, I mean, if you want a house now, it is definitely a buyers market. But you have to look at the economy at large, when the economy goes down, everyone but the very wealthy feel it.