United States Heading towards a Depression?

Well, this is Bernanke's big moment. He gets to put all of his pet theories into practice, that we can inflate ourselves out of the mess.

It could be a disastrous experiment.

 

100% of those delinquent sub prime mortgages are the result of people living beyond their means.. This is not a sign of a recession.

New home building is down 25%.. But again, not a sign of a recession.. It's a sign that there are too many friggin homes on the market!!! Do keep in mind that many of these homes in foreclosure are 2nd and 3rd homes...

Let's try to keep everything into perspective here and remember to look at the bigger picture.

Please show me a source that shows there has been a decline in GDP for two or more consecutive quarters. When I see that, I will jump on the Recession Bandwagon..

Hell, I'll even campaign for Ron Paul!

 

Bush and Federal Reserve chairman Ben Bernanke have proposed a $100-billion package to prevent recession including a $600 per household tax rebate, an extension of unemployment benefits by up to 26 weeks, a targeted housing tax break, a research tax credit and an instant tax break for businesses.

http://www.theglobeandmail.com/servlet/story/RTGAM.20080117.wbernanke0117/BNStory/Front

 

I say the hell with it.. Let it all collapse.... I'd like to see interest rates rise personally!

Tax cuts good... Housing breaks, foreclosure bailouts, unemployment extensions.. Screw that!

Let doom and gloom come!!!

 

The inflation cure is worse than the illness.

 

Too bad no one's sick yet...

 

1 High dividends doesn't mean instant wealth. Sure dividend paying stocks are great, but they aren't the end all solution.

2. The markets are what someone will pay for something. If you're going to assume that stocks are sold only on the quality of the company/area of business, then why is Yahoo trading at a PEG ratio of 2 and Google at a PEG of 1.1? These are similar businesses, why aren't they priced the same? Why when a company does a stock split does the stock usually go up in value? (The business certainly hasn't changed.)

Technical analysis will yield better results for obvious reasons. When selling a product, I'm not going to base the price off what I think its worth, I'm going to sell it for what people are paying.

Learn why prices for securities change. Lower and lower bid prices will drop the price of the stock. If I know a stock typically bounces when it falls to $40 per share to $45, why wouldn't I buy it? Buying and selling makes the market, not the oversimplified view that earnings/quality automatically means price.

 

GDP is an easily manipulated statistic. Because it is based on dollars, the FED could input more credit into the system to keep GDP at current levels, even if the overall value of the GDP is down.

GDP = C + I + G + (Ex - Im)
* C = total spending by consumers
* I = total investment (spending on goods and services) by businesses
* G = total spending by government (federal, state, and local)
* (Ex - Im) = net exports (exports - imports)

As you can see, GDP can be continually pumped up by overspending. The government can prevent the word recession from happening just by spending more than it has. At this point, I want to see the word recession, that would mean that money/credit is being taken out of the system. And you're right Mia, recession isnt happening, we're still operating with too much credit.

 

Anyone on a fixed income is getting sick. Healthcare and energy costs are rising constantly. We're going to start seeing the energy costs reflected in the cost of our imported goods.

Right now, the Europeans are paying double for oil what they were 8 years ago. We're paying 3.5 times as much, and the Euro-Dollar exchange has been reflecting this.

 

How much longer do you think we can operate this way before we go bankrupt?

 

But I'm not trading stocks, I'm investing for dividend returns. What you wrote is correct, but the goal and strategy is different.

I'm also not talking about instant wealth, I am talking about steady and consistent earnings. That's why the investment ratio changes as one gets older, moving from speculative investments to more secure ones.

With a falling dollar, I'd rather be getting my returns in a strong competing currency, and hence the reason for investing offshore.

 

I tried to explain this to Jeremy recently, that the increase in tax returns is inflated by government deficit spending.

What we are bordering on now, is stagflation. A contraction could be the tipping point.

 

Don't let Guru-seo here you say this.. He'll hound you through three threads telling you how "un rich" you are..

No such thing as quick/easy money... The best return occur in a consistent and controlled environment with the least amount of risk...

 

Even long term investment in a way is speculative. What I have told you before is this:
If you have a lifetime to wait to be rich, than consistent, controlled investing might work for you (if you do it right). You'll be old but might be rich.
On the other hand if you want to be rich younger than you definitely have to be aggressive. (I choose the later)
I'm more of an aggressive investor myself, my returns are between 15-20% yearly. I do not touch stocks, bonds or anything of that nature. I buy small struggling businesses online/off-line and usually install a turnaround strategy that works pretty well.

P.S. Of course there is a way to get quick/easy money if you know how to do it. I do it on a daily basis online and it works pretty well.
Haven't you learned anything from this forum yet???

 

"If nothing else works, a total pig-headed unwillingness to look facts in the face will see us through." General Melchett

Government reported inflationary figures are completely bogus. When you look at more realistic inflation rates GDP in the US has grown slower than inflation for at least the last two quarters.

When you calculate consumer inflation using the old CPI of 1981 method its running at over 10%.

http://www.shadowstats.com/cgi-bin/sgs/data

When you use the 1991 method its running at 7%.

http://www.shadowstats.com

Its also happening in the UK and a lot of other western countries like Australia.

http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2006/12/04/ninflation04.xml

I would suggest you forget about Ron Paul. He is completely irrelevant in this discussion. No politician is going to save the situation over the short term.

The point is, if you're not already prudent and conservative with your own personal finances, then you should be more so at this stage.

 

True, and the financial firms were finding quick, easy money with sub-prime stuff, and now it is biting them in the ass.

 

Quick and easy always comes at high risk. Many of these short term, monster earnings are fueled by investments that are over, or at least , heavily leveraged.

Remember, a fund manager gets paid if you make money, he gets paid a lot more if you make a lot of money, but if you lose money, he doesn't lose money as well.

It creates a condition where many fund managers overextend themselves, try to ride a short term wave, and then cash out before, or collect a severance package when it falls apart

 

what the US goverment do immediately is cut it's defence spending in iraq by pulling out completely.....it will save billions and hence economy from definate recession......

 

How about pull out of the war on poverty started by President Johnson and save trillions?

 

no, atleast now america is not heading toward depression!!