United States Heading towards a Depression?

The goverment burnt 70 Billion US dollars in War!

Tha hard earned money of tax payer is nurnt for nothing. When you spend money someone else gains. But when you burn it, it just disappear.
IMHO, Sub prime mortgage crisis alone wouldn't have led US to a recession.

 

The Economy Calender:

Fed chairman Ben Bernanke's speech before the House Financial Services Committee today

the US Commerce Department will announce last month's consumer spending on Friday.

The market is pricing in a 50-basis-point rate cut for the March 18

Subprime loses could go into the trillions. What makes you think that loses in that range would not trigger ab economic crisis?

 

I have come to the conclusion that people on Wall Street have been snorting far too much cocaine than is acceptable, even by Wall Street standards. Fannie Mae losses $3.6 Billion last quarter and then the government decides to lift the limit of mortgages they are allowed to have and the stock gaps the fuck up. So they mess up with the first limits, now we let them mess up with more $$, perfect, this is ridiculous.

Despite any terrible news the market will still go up, these traders are on some sort of delusional hubris while in the coked-out world of theirs.

 

The traders are making money 'trading' So high volatility is a perfect market for them. Traders can also sell after hours or make their own market. They can get out fast and get back in fast. The market is not a measure of the economy.

The 7%+ wholesale inflation has to be making the year of year sales look good.

The economy is starting to degrade into 1970's style stagflation. The average rate of inflation was 6-12% in those days and the US went through a few recessions. You have to watch the show 'Good Times' with JJ Walker to get a better idea of the period.

 

DYN-O-MITE!

Found this on LRC, fascinating read, lots of graphs.

Who is Blowing Bubbles in the Global Commodity markets?
http://www.sirchartsalot.com/article.php?id=79


Excerpt

 

Jim Rodger's is predicting that the Fed attempts to prevent recession will lead to the biggest recession since the great depression.

http://www.sirchartsalot.com/article.php?id=79

Commodities investment guru Jim Rogers said on Feb 25th, “the Fed is printing money and are trying to prevent the recession, they are putting on Band Aids,” he told an investor conference in Dublin, Ireland. Rogers added, “as long as the US central bank and the federal government keep making mistakes, you will have a longer period of slowdown, and it will be perhaps, one of the worst recessions we have had in a long time in America,” Rodgers predicted.

 

One thing no one seems to mention is the fact that as the Dollar appears to fall against the Euro, an odd result of that is more sales of American goods abroad, and more tourism in the US. We've seen our business/sales triple in the last 8 months as a result, and there are no signs of that trend slowing any time soon.

Sad as it may seem, overpriced American made goods are finding a home in places only crappy, lead based, Chinese made goods used to.

In the end, it's all relative. These things go in cycles. If the fed would just leave things alone or at the very least raise interest rates, that and leave those that made poor choice to fend for themselves, the correction will, as it's name indicates, correct itself. It always does.

I cannot fathom how anyone can consider a $100,000 home, that was purchased for $150,000, then re-financed/appraised at $500,000, that is now worth $150,000 a loss... It's called a correction. Real estate traditionally always appreciates, and always will. REAL VALUES have not lost value. Over inflated and overly optimistic valuations have settled back down to reality.

Now, if a $100,000 home really was only worth $50,000 now, then we would have a problem. The thing is, the majority of the over valuations took place on existing homes in order to gain equity that was then used to the max, not on new home or existing home sales.

Your best bet to get any idea of your true home value is as follows:

(and this has always been the case)

1. What someone pays for it. (once it is sold)
2. What your local municipality has it listed on the books for, for property tax valuation

There is rarely much of a difference between the two. I've typically purchased property less than the tax roles had it listed for. That meant the next tax year I had lowered property taxes. The following year, the city had the price back up to where it was prior to the purchase.

This is one place a government appraisal is quite accurate. Something tells me that appraisals should be based on, or near to what the city has the property appraised at, or at least $40k in either direction more or less.

 

I've been bearish the dollar for a while now with UDN.

 

Successful Free Market principles (pseudo-Austrian) in practice (and working...)

Booming Hong Kong cuts taxes as surplus soars
http://www.breitbart.com/article.php?id=080227061713.sqghg27b&show_article=1


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The Euro has a lot of subprime loses so I don't think it will move to much out of the 1.40-1.51 range. The Yuan is a 7.14 and the Chinese are suffering double digit inflation due to the Yaun-Dollar peg. The Chinese will need to revalue the Yuan at least 10%.

The true value of a home is a combination of the intrinsic value of the land, labor & materials and the rate of return that can be earned renting the property.

The problem is that the Banks have made loans far in excess of the true value. More than 10% of all US homes are no in negative equity. The Banks are trying to pass off the bad loans on to the taxpayer via Fannie Mae/Freddie Mac and using the subprime securities as collateral for Fed loans.

Another issue is that the Fed is owned by many of the same banks that have made the subprime loans. Naturally these banks will put their own interests over the the American public.

In some subprime markets like Clevland and Detroit there are no buyers and the homes are falling into disrepair.

I've seen homes in foreclosed homes in Clevland selling for $10,000. Duetsche Bank owns around 10% of Clevland and is suffering heavy loses.

 

Before I know it I will be able to buy a nice house in California with a bushel of wheat.

 

Mia, not that you care what I think, but your economic posts have been really good lately.

Yeah, but the dollar falling doesn't immediately impact headline CPI. It will take time to develop and normalize. The short term benefit is increased export and tourism, but the rising domestic costs will catch up, and it will not be much of a trade-off.

You would see a lot of manipulation in these valuations if they carried even more weight.

 

Ron Paul schools Bernanke, again.

The cool thing is, he finally got Bernanke to admit on record that the value of the dollar affects domestic inflation. The last time these guys met, Bernanke tried to argue that the value of the dollar did not affect domestic prices.

Opening Statements
http://youtube.com/watch?v=7EQ1sg6GhZE

Ron Paul Schools Ben Bernanke Yet Again
http://www.youtube.com/watch?v=gldETRlhiXk

No, Ron Paul doesn't come across as Presidential. But he is heroic for defending the common man against the banking system.

 

Here's a graph I found on the WSJ that shows the loss in purchasing power at 4% inflation



Is that an understatement or what?

The Canadian dollar closed at US$1.0196

Oil prices hit a record high of $102.08 a barrel

Fannie Mae posts nearly $3.6B loss in 4Q

 

Banks are going to hell in a hand basket. They are borrowing and borrowing and borrowing from the FED. The FED is cutting rates and the banks still don't have enough to cover their assets.

Banks non-borrowed reserves have dropped by $60 billion since November 07

http://www.federalreserve.gov/releases/h3/Current/h3.pdf

The banks have $-18 Billion of non-borrowed reserves! While their reserves were dropping the banks were hitting the FED up for liquidity. How far will the reserve go? The reserve holdings have also been dropping precipitously. As seen here:

http://www.newyorkfed.org/markets/soma/sysopen_accholdings.html

Where in the hell is all this money going?

 

Well I happen to know a CountryWide exec that just took a multi-million dollar ski / work outing with the rest of the executive team.. They averaged about 4 hours a day of actual work/team building or whatever circle jerk activities bankers engage in.

I have no sympathy.. The best thing the fed can do is let them collapse.. Get your money out now, let them tank..

 

No offence.

But I do beleive that the finanacial experts in United States are not fools. If it was just subprme mortgage crisis, then they would have definitely come up with effective solution. The country does't loose the money in subprime crisis. You just need effective mesures to come out of the crisis.
Whereas when you burn billions in war it is money lost forever. No measures could bring back that money.
Don't believe everything your media reports. They always justify the action of the government. The rest of the world often keep quiet on the bad moves of US goverment because USA is the biggest customer for them in terms of purchasing power.

The sad truth is that most of the developing countries are affected by the US economy slow down. And it is bad for webmasters like us as well. I honestly wish US could come out of this.

 

Sure you loose the money in a subprime crisis. Someone sells a house they paid $120,000 in 2000 for $400,000 in 2006. They spend the money on a car, vacations to Thailand, new clothes and resturants. The money is gone and the new buyer can't afford the mortgage on the $400,000 home.

The financial experts may not be fools but may be crooks. Ever hear of Enron?

 

There have already been write downs of more than that $70 Billion price tag you put on the war. These write downs are vanishing dollars, while war money is spent and some businesses do well because of it.