United States Heading towards a Depression?

Wachovia Corp reported a record quarterly loss of $8.9 billion, slashed the dividend and announced 6,350 job cuts. Wachovia has dropped more than 75 percent since it spent $24 billion two years ago to buy Golden West Financial Corp..

Is anybody thinking? The only solution Washington is to through more money at the problem.

I'm now assigning numbers to the housing bailouts. FHA - Housing Bailout III???? FHA loans do not require lenders to obtain proof of citizenship or legal permanent residence. Many FHA borrowers use a “taxpayer identification number” (TIN) issued by the Internal Revenue Service. No criminal background check is required before applying for a TIN, which many banks now accept from illegal alien customers as a primary form of identification.


SUBPRIME BAILOUT - HOUSING BAILOUT I - $300 Billion housing bailout that allowed Freddie/Fannie except jumbo loans and lifted the $417,000 loan cap.

HOUSE APPROVES FREDDIE/FANNIE - HOUSING BAILOUT II

Sen. Christopher J. Dodd, D-Conn., the banking committee chairman, said he would push for swift approval of the measure without any changes.

Two “discussion documents” about a potential housing bailout bill, both of which are stamped “confidential and proprietary” that Bank of America authored and circulated among Congress, shows that the legislation now making its way through the corridors of Washington, DC is almost word for word what Bank of America wanted.

Sen. Christopher J. Dodd
has received about $107,800 in campaign contributions–nearly 50% higher than initially thought–from Bank of America’s employees and political action committee

http://emac.blogs.foxbusiness.com/2008/06/27/the-bank-of-america-housing-bailout-bill/

Conservative GOP senators led by Sen. Jim DeMint, R-S.C., were threatening to slow the measure unless Democrats allowed a vote on barring Fannie Mae and Freddie Mac — whose political operations are legendary — from lobbying and making campaign contributions.

The new housing bailout bill would let mortgage lenders off the hook for sour mortgages, as it would let the Federal Housing Administration assume the risk for these bad debts, shifting the burden to taxpayers and bond investors. Bank of America expects 43% of subprime mortgages to default in the next five years,


-- $15 billion in housing tax breaks
-- Credit of up to $7,500 for first-time buyers who purchase homes between April 9, 2008, and July 1, 2009
-- Deduction of $500-$1,000 on 2008 property taxes for people who don't itemize their taxes
-- Increases the statutory limit on the national debt by $800 billion, to $10.6 trillion
-- Increases to $625,000 on the loans that Fannie Mae and Freddie Mac may buy and the FHA may insure. It lets them buy and back mortgages up to 15 percent above the median home price in certain areas.

http://news.yahoo.com/s/ap/20080723/ap_on_go_co/congress_housing

 

Right now everyone is in hole-plugging mode just trying to keep the ship from sinking. Once the ship gets safely docked is the time to start thinking of structural repairs or overhauls.

 

So, Bogart, out of these three banks, which would you use? Bank of the West, Chase, Bank of America, or Other? I'm looking for a long term savings, good benefits, and one that won't tank on me in a massive recession.

 

I use both Chase and Bank of America. The banks have FDIC insurance that protects the first $100000 of deposits that are payable in the United States. You should put 100k in each one to spread out the risk. (actually a little less so that the interest is under the max)

 

Chase or BAC as bogart said will be fine as long as you're under 100k.

 

I don't have close to 10k. lol.

 

When it comes to Chase, I find my pillow is less of a risk, and yields a higher return.

 

I remember a few saying

• there was no problem in the US economy,
• Bush had the economy under control,
• gas prices aren't an issue,
• the banks are fine,
• inflation and unemployment aren't a threat,
• any talk of a depression is just an overreaction, and
• that everything was so great & wonderful because their neighborhood had people
  • driving gas guzzlers,
  • living in luxury homes, and
  • spending like no tomorrow.

It's funny, now that reality has hit, these same people will not admit they didn't know what they were talking about and acknowledge they have a lot to learn about politics, the economy, and how banking works.

It also amazes me, with all that's happened, since this thread started, people still defend Bush.

I'm not saying Democrats are any better, but why is it so hard for people to admit Bush should never have been President. He's going to go down on the level of Jimmy Carter once it's all said and done.

These so-called experts were either lying all along or are the most incompetent people on Earth (yet they still control our money and make millions of dollars a year for being uninformed, unintelligent, and out-of-touch).

This is a GREAT system!

 

• 
  
  No one said there was not problem. We just all do not subscribe to the doom and gloom mantra when things either slow or correct.
  
  
  Bush is no more in control of the economy than the fed is. The American people, global markets, oil and other things drive the economy.
  
  
  Who said that? Energy costs are always an issue. They are currently what our currency itself is based and backed by. The issue is not so much with the prices as it is with those controlling/manipulating them.
  
  
  I don't remember anyone saying that.
  
  
  I'm not sure that "threat" is the appropriate word, but both are at an all time low, even now.
  
  
  Not an overreaction. A misstatement, yes... Overreaction? No.
  
  
  Things were and are still pretty good in a lot of places. Never heard anyone complaining when unions were kicking out those gas guzzlers that drove people to those neighborhoods.
  
  
  • 
    
    Part of the problem.
    
    
    Again, part of the problem... Those are the same people complaining now. eg, those that live or lived in the luxury homes and drove gas guzzlers... The ones living beyond their means.
    
    

But isn't that what its all about. If we learned nothing from the 90's, its buy now, and don't pay later. Spend other peoples money. What you've witnessed by way of greed and excess is a prime example of the failed policies of the previous administration from which these problems were born.

By January of 09, we will have a new President, (likely our first half white - half black, half muslim - half christian president), who will inherit all that is good in the world. Oil below 90/barrel, increased jobs, home sales, and a better tomorrow all the way around. People fail to realize that the economy does not go up or down on a whim and it certainly does not do this over the period of a few years. The policies introduced from admin to admin will likely have recurring affects for years in advance of a previous administration. Meanwhile, all this good that will likely appear on the horizon in the next year will be the work of those who came before, but will be credited to those who are in office at the time it happens.

It's a vicious cycle.

Oh, it's quite the opposite. Some of us have been around long enough to recognize a pattern and have previous witnessed the same cycles in the past.

What would you rather we do? Blame him? Cheer doom and gloom? I've listened to people complain and play the blame game for almost 8 years now. Before that it was 12 years of Reagan Bush, before that... Well, those that have managed to grow pubic hair, further our education and life's experience could go on and on even further back.

I was alive during the Carter admin. Were you? If you really knew anything about Carter you would draw a direct parallel to Obama, not Bush.

What it comes down to here is that you are another in a long line of cry baby whiners that is still pissed that Bush won; not once but twice. Still think that he "stole" the election. Still think that he is an oil man. Still think that he invented Halliburton. Should I go on?

Where where you while the Clinton's were screwing me and my family over? Where where you and the other naysayers when the government was taking my wealth and distributing it to people who refuse to earn for themselves?

I don't remember anyone crying when the oil companies were hurting. When they were losing money. What about those people that call Bush stupid, yet bought a $3500/mo. mortgage on a Sky Caps salary?

What about those poor, poor destitute people that have to live in a van down by the river because the bank took their 4 million dollar beach front Santa Barbara home?
Bad, BAD, Bush... How dare Bush cause such grief and heart ache.

How dare Bush make an uneducated sky cap buy more home than he can afford.

How dare that evil Bush with his nasty weather machine breach levees in NO instead of letting the Chocolate Mayor spend more federal levee funds on useless and unrelated projects.

How dare that sick twisted Bastard Bush take food from the mouths of Hummer driving teenagers in Beverly Hills...

Oh God no...

The best in the world my friend... The best in the world!

 

Looks like there is a 'bank run' going on at Washington Mutual

Washington Mutual Inc. dropped 13 percent to $4.03, bringing the stock's two-day decline to 31 percent. Gimme Credit LLC said unsecured creditors were ``pulling funds'' from the biggest U.S. savings and loan, citing a decline in federal funds purchased and commercial paper.

http://www.bloomberg.com/apps/news?pid=20602061&sid=aL7_a_Vf5JHE&refer=movers_by_index

The Great Depression was an era not an event. The crash started with Fed intervention in 1927. Even after the 'Black Tuesday' stock crash in 1929, the market recovered most of its losses in early 1930.

Electing another 'Jimmy Carter' may set all hell to break loose. 'Jimmy Carter' meant well look what happened with the double dip recessions of 1980 and 1982. That was the worst recession since the great depression.

The Labor Department reported Thursday that the number of new applications filed for these benefits rose by a seasonally adjusted 34,000 to 406,000 for the week ending July 19.
http://money.cnn.com/2008/07/24/news/economy/initial_claims.ap/index.htm

Unemployment Rates
Michigan 7.4%
California 6.9%
Ohio 6.8%
Tennesse 6.5%
North Carolina 6%


The slump persists: Home sales tumble across US

The National Association of Realtors reported Thursday that home sales dropped by 2.6 percent last month to a seasonally adjusted annual rate of 4.86 million units, the slowest sales pace since the first quarter of 1998.

Inventories of homes on the market rose by 0.2 percent to 4.49 million units, meaning it would take 11.1 months to exhaust the current backlog at the June sales pace, the second highest level in the past 24 years.

http://news.yahoo.com/s/ap/20080724/ap_on_bi_ge/home_sales;_ylt=Ak45Z0aO9Fuxcq6KZmPwk02s0NUE

 

Lets keep in mind that there is a HUGE surplus of homes out there. With such a large supply and low demand, prices will continue to fall, and new construction will continue to be low as well.

Lets duplicate this with oil...

 

The historical price of a single family home is 14x the annual rent.

Homes were selling at 25x rent and have dropped to approx 20. Home prices will have to drop another 30% to realign with the historical average.

Oil is a commodity which price is based on 'supply and demand' as well as inflation.

The housing bailouts are inflationary as well as the low Fed funds rate. The minimum wage increase will also add to inflation. The rate has increased to $6.55 and next year raises to $7.25.

 

This down economy looks really rough. The scope of the bubble and now the backtracking is dramatic.

I worked through a couple of recessionary periods. The recession of the late 80's early 90's was a depression for my then industry (commercial real estate). It was brutal. It also totally rocked the financial world...came with an enormous bailout....and its effects lasted over several years.

One thing that bears similarity imho is that while certain industries were getting crushed, there is a lot of other industrial activity going on. That is what ultimately eases the pain.

While the recession of that period was in its throes the wide tech world was consistently evolving and growing.

Actually there are various good signs and significant profitability in the wide world of tech both domestically in the US and around the world today. Industries of that ilk will ultimately help ease the economic pain.

It appears that the bubble in 2nd mortgages, huge real estate upswings in values over the earlier part of the decade, and enormous reliance on spending via 2nd mortgages was unprecedented and out of whack.

The blame lies everywhere and a large part of it lies in a societal move to borrow against home values at what would have been considered alarming rates in previous eras.

I'd batton down the hatches and wait out the storm!!!! UGH

 

What do you guys think about Credit Unions?????

I have my money in Schools Credit Union - for students and teachers.

 

Everyone is admitting that america is in a recession, but depression is way way way more bad,i really doubt that america will go into a depression though.

America did learn and will not let it happen again.

 

My post wasn't specifcially directed at you, just those who think like you.

Your favorite game is the blame game. If someone fails, it can't possibly be any reason other than their shortcomings. Why?

Because people have complete control and knowledge of their environment, surroundings, government, banks, business, the courts, and whatever else affects their life. So, since people have complete control and knowledge of everything affecting their life. If they fail, it must be their fault.

I understand your mentality and that's fine.

I just find it amusing when people like you are always surprised when people do not share this view.

If you think something is the best, it becomes a self-fulfilling prophecy. All evidence, all facts become irrelevant.

All that matters is what you want to BELIEVE! If you BELIEVE this is the best system in the world, I can't argue with that.

 

Rising unemployment is driving foreclosures. It's going to be hard for a lot of people to weather the storm. Unlike the recessions in the early 1980's where people had $600 mortgages, many borrowers are paying $5000 a month and only able to make the payment by the skin of their teeth. There's no way they are going to be able to keep the mortgage current in a downturn.

On an annual basis, home foreclosure filings soared 121 percent from the same period in 2007, RealtyTrac said in releasing a survey of the country's 100 largest metropolitan areas.

RealtyTrac said that foreclosure filings were reported on 739,714 US properties during the second quarter

"Although much of the fallout from foreclosures is being driven by rampant activity in a few states, such as Nevada, California, Florida, Ohio, Arizona and Michigan, most areas of the country are seeing at least some increase in foreclosure activity,"

Foreclosures push all home values down by an estimated 6 percent, and will contribute to national prices declining another 15 percent by the end of 2009, Ethan Harris and Michelle Meyer, Lehman Brothers Holdings Inc. economists in New York, said in a report yesterday.

New Jersey filings rose 140 percent. One in every 201 households in the state received notice, the 12th-highest rate in the U.S.

http://www.bloomberg.com/apps/news?pid=20601068&refer=home&sid=adFFhHtUhCLY

 

Americans Organize to "Save Starbucks" as the Economy Slips into Recession

Citizen groups around the country are mobilizing to save their Starbucks after the company announced it will shut down 600 stores. These people don't realize that Starbucks will have to double or triple their prices as the dollar continues to crash and the reason Starbucks has to close stores is because Americans are too broke to buy "premium" merchandise now that their currency has become the laughing stock of Forex.

 

I was starting to like you post, until you compared Jimmy Carter to stupid GWB. That is unfair!

 

LOL. The only other person that can compete with the stupidity of GWB is GWB himself. What a disaster of a president. A miserably failure!