United States Heading towards a Depression?

The cut is already priced into the market friend. You'll never be faster than the "smart money".

I hope and pray you don't lose your shirt playing around in such volatile times.

 

That was the start, its not over!
We shall see...

More people that believed we were headed in a depression are now staying quiet

 

We're busy talking about Ron Paul. Don't worry. Ron predicted the '87 recession in '83, I'm pretty sure he's right about the coming situation.

 

the Labor Department reported a startling jump of 69,000 new jobless claims in the latest week, pushing the total to 375,000. That the highest level since early October and the largest increase since September 2005.

http://biz.yahoo.com/ap/080131/wall_street.html

 

DJ may view higher unemployment as a constraint on inflation because of less wage pressure. Additionally, with higher unemployment the Fed with take the Fed rate down to 2%

The issue with that is that we now have a negative Fed rate due to the fact inflatin is running 4.1%

Lower interest rates in the long run will increase inflation and furthererode the value of the dollar.

Greenspan is predicting that the Fed will eventually have to raise rates to 1980 levels to combat inflation.

 

Do you ever stick to the topic at hand? Stop following me around from post to post and harassing me. It's really getting old, and it is bound to get you banned again.

Please behave or go away.

Better get them white tennis shoes and cut off your balls.. The mother ship awaits.. Doom and gloom!!!

 

Greenspan predicts double-digit rates in coming years

http://www.usatoday.com/money/economy/fed/2007-09-14-greenspan-book_N.htm?loc=interstitialskip

Double digit rates are a good thing in the long term as they strengthen the dollar and reduce the money supply which controls inflation.

If the Fed continues to print money and lets inflation get out of control, we will see the biggest recession since the great depression.

Of course the Fed can avoid this by letting the housing bubble deflate and raising interest rates.

 

Well, the worst month of january is now over! Yes!!!

 

I see Feb to be positive on the DJ

 

Simple solution is, let the bubble burst.. Let all those that cheated reality take a hit, and move on; raise them rates!!!!

Give the media something else to talk about for a change...

 

It's not that simple. The paper (securitized mortgage bundles) is bad, but it still holds a triple AAA rating. If there are mass defaults, the paper will be downgraded to AA or lower, which will force pension funds and other secure investments to dump them, because they are not allowed to hold less than AAA securities.

This will flood the market with bad debts, and it will destroy the financial sector.

That will cascade to all of the hedge funds and other investments that are heavy into financials.

The problem with a bubble like this, is that it is the grandchild of several other bubbles that never properly burst, and the risk and moral hazard now runs very deep.

It's not as simple as punishing the mortgage brokers, the mortgage holders etc. It's truly a global phenomenon, because a lot of these securities were sold overseas, and when they get dumped, those inflated dollars are going to come rushing back to the US domestic economy, which is the only place they will have any short term value (Gresham's Law, see Bretton Woods agreement).

Then you're going to see hyperinflation, and every sector will be hammered.

This is why it is so important to watch the dollar, and monitor M3. It is absolutely heinous that the FED stopped releasing the total money supply figures in 2006. Nearly impossible to measure the impact, from a super bad recession, to an economic crisis.

 

Actually, it IS that simple... It will help thin out a lot of dis-honest, irresponsible banks as well.. If anything consolidation in banking industry is long over due.

No it won't.. The old days of chapter 11/13 do not exist anymore.. These are real liquid assets that can be recovered at a gain, not a loss... If anything, it means that are more realistic valuation of these properties will take place, they will be acquired while interest rates are still low, and resold again at a profit no doubt.

Doubtful, because again, housing market = assent, not commodity, and certainly not speculative... It's a solid, stable ever appreciating market that always has consistent gains and losses.

The sky is not falling.

Like?

Sure, it is just that simple.. Let them all take a hit. What comes out of it are a leveling off of over-valuations, and a more realistic appreciation of liquid assets. The only thing inflated here are the future values of homes by over zealous mortgage brokers and lenders. Why did they do it? Larger value = larger commission.. That's why... for the brokers..

For the banks, larger value = more money they can borrow against it.

Why did the consumer? Because some people want to borrow against what is not, rather than working for what is..

Let them all suffer and things will fix themselves.

Again, most of the people in the midst of the meltdown are losing 2nd and 3rd homes, not their first home. You really have to look at the borrowers here... They are not, or were they in dire straights to begin with.. They just lived beyond their means and are now paying for it. That is the fault of three entities.. The borrower, the lender and the broker. That's it, thats all, no one else.

We have to see inflation itself first, that of which we have not as of yet.

The dollar itself is not a good indicator of economic downturn since it can be artificially affected by sources both on the outside, and the inside.

 

Shazz you are one headstrong bull, lol. Buy now? Probably not. The non-farm payroll data is released tomorrow and if it is bad then I can see the markets tumbling down a hill.

http://bigpicture.typepad.com/ quote of the day:
"No emergency can justify a return to inflation. Inflation can provide neither the weapons a nation needs to defend its independence nor the capital goods required for any project. It does not cure unsatisfactory conditions. It merely helps the rulers whose policies brought about the catastrophe to exculpate themselves."

-Ludwig von Mises

 

Congress is sneaking a provision into the stimilus bill allowing Fannie Mae/Freddie MacDaddy to accept loans up to $724,000 up from the current cap of $424,000. This is an attempt to offload bad loans onto the US taxpayers.

Why are homes in San Antonio sellling for between $124,000 to $164,000 and in the bubble markets the same home is $700,000?

Price: $125,000 Approx. Sq. Ft.: 1582

http://rebekahhuerta.remax-northsan...irstLetter=&Sort=6&Cookies=&UseColorBar=false

Price: $164,500 Approx. Sq. Ft.: 2423

http://rebekahhuerta.remax-northsan...irstLetter=&Sort=6&Cookies=&UseColorBar=false

 

The sucks, the drastic increase of the price on jumbo loans is one of the things what would help make where I live more affordable

 

There probably should be some reform at Ginnie Mae before any of this stuff occurs. All they are doing with Fannie Mae and Freddie Mac is increasing the "f*** up" threshold, which doesn't address the issue for homeowners.

It's just more moral hazard.