United States Heading towards a Depression?

That's a game of Russian Roulette. The loans are guaranteed by the government, but still, the system is in bad shape...

 

how much lower will fannie mae go, its already down like 60% isn't it?

 

Not right now. You'll be decapitated by mother market. I don't know if there will be any good points to enter to short these guys anytime soon.

 

I was reading an article the other day that shareholder equity is declining in both freddie mac and fannie mae.Every time they take a hit the common shareholders absorb most of the losses and the prefered stockholders left with a large piece of the pie.

 

Of course. I'm surprised some of you smarter guys here don't "get it".

There was no great depression. There was a transfer of wealth, first from inflation, then deflation exactly as the Founders warned about.

What you are seeing now, is another transfer of wealth. The wealthiest and most savvy investors rode the housing boom up, and now they are going to profit (like Goldman Sachs) as it goes down.

The people getting hurt are pensioners, investors, and taxpayers. No one has brought any criminal charges to my knowledge against the companies falsifying mortgage apps. It's not going to happen. We're all going to bend over, take it in the @ss, and then turn around to Sec. Paulson and say, "thank you sir, may I have another"!

Through warfare and corporate welfare (call it all fascism if you will, Mussolini did), we've slowly strip mined the wealth of this nation away. There is absolutely no reason why anyone in America should be poor or without health care. We've thrown tons of taxes and government at it, and have very little to show for it. There is absolutely no reason we should be losing our place in the world with regards to education, but it's happening.

So through all of this discussion of the symptoms, don't forget what the disease is called and how it can be treated.

 

Their propaganda is too effective. People look at the primarily government-run economy and call it "capitalism" because that is the answer they had to write on their high school civics test to pass. Repeat it enough, force the people to repeat it, and eventually the lie is believed.

The successful business leaders won't stand up to our government because they have too much to gain by playing along. The common people won't stand up because they truly believe that just a little more inflation, or a little more taxation and everything will be better. The voters operate under the delusion that the government would fix everything if it just had a little more power. Well I wonder, what power does it not have that it is waiting for?

 

maybe the savvy investors will make money of it going down but there is tons of people who made a ton of money on the way up that are losing most of if not all of it on the way down

I don't know if its different where you guys are but there are tons of little stores closing down where I am. Small eateries and furniture stores mostly, but in the news places like sharpen image are on the verge of going out of business

its also funny here, in that property values increased in most of Florida from 100-400% in the past 8 years or so, so property taxes also sky rocketed, but counties and local government just burned through all the money. The recently voted to limit property taxes and now all these government employees are being laid off and they are doing stuff like closing the library an extra day a week.

 

Well when everyone loses they bail out the large & powerful companies that have high political donations. The smaller businesses start going under but they won't let the institutional ones fail - and suddenly the large companies can afford to scoop everything up at depressed prices: essentially, using Fed-created macroeconomic conditions and government subsidy to buy out competition, cheap.

One of the big targets of acquisition will be small banks and any urban commercial properties.

Speaking of Florida state budget cuts, they're looking to slash more than $350 million from the schools in this year's Florida education budget. We have billions to hand over to the banks, but we don't have anything to teach the children so they can understand what's going on.

 

Well that's how it works. You inflate, so people put money into bad investments (malinvestment, a result of moral hazard), then when you deflate and it crushes those bad investments, the smart players clean up.

It's no different than bluffing your way to a big pot with a winning hand.

It's basic Austrian business cycle theory. And while that sounds complicated, it's really not.

I know I have a rep as a doom and gloom guy, but honestly, things are going to get a lot worse before they get better. The scariest thing about the current circumstance is that the government is like a punch drunk fighter. Everything it throws at the problem is not working, in fact, it's actually making it worse.

 

It is against the law to let these guys go bankrupt, Bernanke does not want to goto jail.

 

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/03/12/cnfed112.xml&CMP=ILC-mostviewedbox
Fed takes boldest action since the Depression to rescue US mortgage industry

Yeah, you read the title right. I remember people telling me (probably early in this thread) that this wasn't a big deal, and the government would have it all under control.

I like at the end, how it says that the mortgage companies may have to be nationalized, and this is going to be a massive bailout.

Who here still loves the FED manipulating interest rates?

Btw, the author of this article is a really smart cat. Ambrose Evans-Pritchard.

 

I would love them if they moved the rate to double digits. My money market sucks balls right now.. I'm thinking of moving cash some place else now...

My guess is I could make more putting it under my pillow..

 

Unlikely. They are debasing it with every rate cut, and now with this insane $200 billion exchange program, where the FED basically takes potentially bad mortgages and swaps those for government securities, that it will then buy up in an open market operation to create even more debasement....

Gold and silver are good hedges for cash, but they won't earn you much of a return (unless the economy collapses, and you can buy everything for 10 cents on the dollar).

 

The solution as I see it is to let the housing market collapse completely.. It will rebound itself. Let the morons that caused the mess tuck tail and run, or lose it all.. Those that have cash can come in and clean up, while making a hefty profit in the process.

 

With the depreciating dollar people have to be wary of the yen carry trade.

 

come on its Florida , things like education and libraries are for northern liberals

as much as I fret over my mutual funds and cash, it is kind of fun watching the dumb rednecks around me go belly up

Florida is full of people who have been doing really well on real estate bubble money, and have no real education or job skills outside of shuffling around over priced properties

Plus there are so many people here who have been going hog wild on heloc money

Did you see this article on areas of the country that are already in recession

http://www.usatoday.com/money/economy/2008-03-04-local-differences_N.htm

 

informative article ya got there.

 

NYMEX crude is now at $109.84. I hope we don't have a hard hurricane season.

I'm wondering how many people are having problems now paying their morgages due to the high cost of living.

Great article.

There's still a lot of air in the bubbles so there's still money being made.

 

http://www.washingtonpost.com/wp-dyn/content/story/2008/03/11/ST2008031103060.html

 

Technicaly , it is not a recession , realisticaly it is . The problem is not if we are in or not . because it is a recession . The problem is taht we don't know for how long we are in it.
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