United States Heading towards a Depression?

At the best every 10 years there is a recession. Apart from recessions there are slowdowns. If the FED cuts rates .5% at the end of the month oil could hit $125 and Gold $1000

 

I'm refinancing a house now locked in a 30yr at 5.8 I wonder if I should just wait till the end of the month.

 

Here is a good calculator for mortgage scenarios.
http://www.mortgageloan.com/calculator/mortgage-payoff-calculator
On a $100K loan a 0.5% means about a $40 a month +/-

 

Bernanke said the Fed is ready to take 'substantive additional action' to cut interest rates in order to support lagging economy.'

http://money.cnn.com/2008/01/10/news/economy/fed_bernanke/index.htm?postversion=2008011105

 

It won't be enough. I think he is talking a lot to buy time, to try and create some confidence temporarily.

He's really up the creek without a paddle.

 

Yea, sounds like he is trying to buy time, but the truth and the matter is that we are heading towards a recession and there is not doubt about it. (I think we already are in one)

 

Bernanke is going to keep on printing money until the election is over. For the short term we will have a dead cat bounce. However, inflation in Europe is high and in China it's 6.9 percent. Food costs in China have also increased 18.2 percent in November. At some point the Fed will have to raise rates or the whole cookie will crumble.

http://news.yahoo.com/s/ap/20080114/ap_on_bi_ge/china_economy;_ylt=Ah9Dx7tEnxMIL3r19TLIRe.s0NUE

 

I've used the Argentine economy as a great example of what will likely happen to the U.S. economy in the future. It should also be emphasized that the Argentine government "froze" bank accounts when the peso fell through the floor, and people were not able to get out their money. So basically, if you had $50,000 worth of pesos in the bank when the Argentine economy went into the toilet, the bank declared a state of emergency, locked your money in the bank, and you could only withdraw it in small amounts.

The people who were responsible for the Argentine crash knew it was coming, and they invested in dollars and got their money out of the banks early. Many Middle Class Argentines ended up living in shantytowns after the smoke cleared, and heavy amounts of security had to be provided to the banks.

A wise man learns from the mistakes of the past, and does not repeat them. The U.S. government is just as corrupt as the Argentine government. Our financial system is all smoke and mirrors. If the dollar falls far enough, you'd better not think that the U.S. government may not suddenly freeze bank accounts in order to stop a massive bank run, because it is possible, even with FDIC.

This is why everyone should buy precious metals, and store them in a safe place. As I have said many times, if you have $100,000 in the bank, and you convert 15% of into gold/silver, if the dollar flat lines, the gold will shoot up to replace its value, so your $100,000 will be obtained.

Anyone on this forum right now who isn't buying gold and silver is a damn fool, and you're going to get whats coming to you. For every day that you sit around without gold, the government is turning your money into toilet paper. I should also note that right now is a rare opportunity to become rich if you're smart.

For example, instead of converting only 10% of your cash into gold/silver, which is the minimal amount recommended, I'm actually thinking of increasing my gold/silver holdings as high as 25%, or even 30%. I think the gold bull market is just starting, and silver will rise as well. If I convert 25% into gold, and it goes from $894 per ounce to $2,000 per ounce(which is possible when you adjust the price it reached in 1980 by inflation to today), I could realize a fabulous profit in the thousands of percent.

It is really a no brainer. The Asian are hungry for gold, we almost have a trillion dollars floating around, and it is only a matter of time before the dollar falls further. The REALLY smart thing about buying gold is that if you convert 25% of your assets into gold/silver, and wait for it to hit an all time historic high, you can then turn around and visit coin dealer in your town and sell it from a handsome profit. The transaction will be untraceable, and the IRS knows nothing.

Anyone who has gold stocks, and no physical gold, is a fool. You need to have physical gold, and that means Numismatic, not bullion. Gold and silver stocks are subject to capital gains taxes, brokerage fees, and if the dollar goes in the direction of the Argentine peso, having gold stocks won't mean anything when compared to having physical gold.

 

I locked at 5 1/4 a few years back and have never looked back... Commercial was a bit different, but still a lot better than the 14% of the 70's...

I think the time to re-fi and make it worth it has long since passed... Unless you are paying above 7%, most are not going to get much better than that.

 

I have an idea, and I want to get the opinion of people here such as Guru SEO, Bogart, or Guerilla. I have a zero balance on my credit card with good credit, and though I hate borrowing money, I'm actually thinking about taking some of the money off my credit card and using it to purchase numismatic gold coins. Because of the rate at which gold is increasing, I'm thinking if I hold the gold for about a month, it will grow largely in value, and as long as I retain a profit after making my monthly payment on the credit card, I would essentially use the banks own money to realize a profit.

What do you guys think? I'm not sure if this strategy is good, it is risky, well, not really, because I will simply transfer the bank's money into another form of money(Gold) in order to take advantage of the bull market. In the worst case scenario, I could simply sell the gold coins and pay back the money from the card. I think this strategy would work if you have a 0% interest rate, but I'm not sure.

 

I have a 4.875% ARM that resets in a few months that I took on my other house like 4 years ago. Couple of days ago locked the 5.8% 30YR with no point no prepayment penalties.

 

It does sound risky but than again most people I know (including myself) made their money taking risk not letting the risk and fear take away the opportunity. I would suggest the following.
Excel is your best friend! Start a spreadsheet with the different scenarios of growth/loss over time + allocate a risk factor percentage to your various scenarios, also do consider that your credit will take a hit initially when you take all of the credit out, so if you do not intent to make any big purchases like a house, I say got for it. Also you can apply for 0% credit cards note that most have a 3% transfer balance fee which you should take into consideration and plug that into your spreadheet. I would recommend that along side the high risk investment I would invest into something less risky, even a FDIC insured online savings account at say 5.05% will offset the losses up to a couple of percentage points if the gold goes south by say 2%. Use these values as a threshold of when to hold, buy or sell. If Gold goes down 2% you have the 2% gain on your savings account to offset the losses. If gold goes up, the 2% on your savings is iceing on the cake. +/- 2% might not seem like a lot, key is the amount invested, the more you invest the more of a return you will see so the 2% depending on the overall value of the portfolio could be a nice chunk of change.

 

This is a good strategy. Unfortunately, my interest rate is not 0% because I haven't been calling the bank to lower it(they never lower your interest rate unless you request it). I think I will close this credit card and then apply for one that has a 0 percent interest rate, that has the same amount of credit available on it that my credit card has. It if it is only 0 percent for the first six months, this is six months I have to buy and hold gold. Before the end of the six months, I can close the credit card and switch to another one with a 0 percent balance for six months.

There is a risk with this, but I think it is a calculated risk instead of a gamble. Everything I've seen with the economy tells me that gold is not going to drop any time soon. The recession has just started, so once the smoke clears, I definitely believe gold will go to $2000 per ounce. I just checked gold price, and right now it has went over $900.

If I combined the money I earn off the credit card money I invest in gold, combined with my savings which I transfer into gold, I believe I can earn a huge return. I also like your idea of opening a savings account to put the money in. If I can get the account at 5%, that would help as well. I'm about to start doing some research on this.

 

I will try to create a spreadsheet with some scenarios that will articulate the risk factors better so we can have something visual and dynamic with ranges and dynamic amounts that you can move around to see how it affects everything.

 

There's a risk that gold will drop. But that wouldn't happen until the FED raises interest rates. I don't expect to make a move until after the election. I would be hesistant to invest in Gold using credit cards.

 

Another idea is to invest in foreign dividend bearing stocks. But you have to pick your market and currency carefully. Look at EuroPacific or Prudent Bear for ideas. You don't want to buy through a US broker because they will use the margin from the pink sheets and you will over pay.

You need someone who actually trades on the foreign exchanges directly, and choose stocks that do not pay out in US funds.

I have a friend who took out $5,000 and bought gold at around $425 or so.

 

You are probably better off taking one of those 0.0% by 12 months courtesy checks, writing one out to cash and sticking it in the bank for a year. That or a CD... Hell, 5% on $40k will earn a decent return without the risk...

 

Thats only $2,000 Mia...a year. You need to add a few more zeros to that 40 of yours to make it worthwhile or you need to be in the 10-20% return range to be making money.

Heck, a bottle of Greygoose this weekend cost me about$400!