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United States Heading towards a Depression?

Discussion in 'Politics & Religion' started by decoyjames, Dec 27, 2007.

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  1. domainer_10

    domainer_10 Peon

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    #3621
    Percentage of people out of work 15 weeks or longer is worst since Great Depression

    http://norris.blogs.nytimes.com/2009/06/05/long-term-unemployment-rate-hits-record/?hp




    U-6 Unemployment (the best accurate measure of unemployment, unlike the more narrow and manipulated u-3 rate) also hit an all time record (the worst since the depression) coming in at 16.4 percent in may. U-6 was about 15 percent at it's peak in 1982. U-6 counts people who are part time but would like a full time job, and those who have "given" up looking for a job in the last few weeks because they just can't find one.


    May hit another record low in average hours worked by americans too. Which is in line with the u-6 stat.


    Change in umeployment from peak to trough has gone from 4.4 percent in 2007 to 9.4 in 2009 for a 5 percent change. That is the worst consecutive change from trough to peak in unemployment percent since the great depression.


    If the recession lasts through all of 2009 that would be 6 consecutive quarters of negative GDP growth. The only other time that happened in the last 120 years was during the great depression. It might of happened in the 1920 depression but I can't find stats on that one. The point is only in the last 2 depressions did that happen.



    Anyone getting the picture now?

    May is officially a Worse employment situation then even 1982.
     
    domainer_10, Jun 6, 2009 IP
  2. Obamanation

    Obamanation Well-Known Member

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    #3622
    Thank god Barack is in office to save us!
     
    Obamanation, Jun 6, 2009 IP
  3. domainer_10

    domainer_10 Peon

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    #3623
    With the chronically long term unemployed (15 weeks or higher) at record rates, I strongly suspect that since with the stimulus package money certain states (those with over 10 percent unemployment rate) are now eligible for 1 year and half year of unemployment checks that people are basically sitting on the sidelines and not putting much if any effort into the job search. I know if I was going to get money for that long I'd just sit on the sidelines and let some other sucker try to find a job. I mean why make the effort in this bad economy if you don't have to? You get to sit on your ass and get money for free. Plus youd have to work very hard to find a job in this economy anyways so who would do that? I suspect a substantial amount (more than people realize) are not even bothering or doing it half assed. Even if it is 1900 bucks a month that is more than enough for someone to live comfortably in. You only need food stamps in this world to survive without a job. That and a tent. Everything else is optional. And since many people now have 2 income households, if they lose one income its not the end of the world so for many its nothing more than a year and half welfare check. Sure you have to cut your high living on the hog, but most people were living beyond their means anyways.
     
    domainer_10, Jun 7, 2009 IP
  4. Obamanation

    Obamanation Well-Known Member

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    #3624
    This is what I've been saying all along. Those people (the ones riding the 18 month unemployment cycle ) are the smart ones. When they get really smart, they'll take a union job working for some government organization and go out on stress leave for the disability money. You get your spouse to do just enough work (6 months a year) to file for unemployment, then she pulls back EITC and you would be AMAZED at how much money that all ads up to. Welfare checks and food stamps are good enough for most, but if you want to have a seriously comfortable lower middle class income, you need one half of the marriage out on disability and the other earning just enough to cap out EITC and unemployment. If you are really greedy, you set up a web business in the name of a corporation that never makes a profit and pays other niceties like a new car, etc, etc, etc.

    IMHO, the real dummies are the ones busting their ass. The rest of us (more than 60% now) have got it figured out, and honestly, things are only looking up for us in America.
     
    Obamanation, Jun 7, 2009 IP
  5. domainer_10

    domainer_10 Peon

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    #3625
    Well your view of the world is very anti productive and marxist. No one will have a desire to succeed in that environment. Communism has never succeeded which is why all of them have fallen economically.

    They don't give unemployment insurance to new graduates or people who cant find a job and never had one or ones who can't qualify for unemployment because they got fired. You have to have ALREADY had a job and LOST it before you qualify. Small business owners who's business went up can't get it either.

    So what about the people who can't find a job out of college or during college but get nothing while those who had a job get money for a year and half afterwards? Thats why unemployment shouldn't be federally extended. I understand employers pay into the fund for the state, but thats where it should end, whatever amount of time the employers are paying into the insurance fund. Anymore is welfare. And as said previously all it is doing is discouraging bad behavior. There should be no federal extension unless we ALL get unemployment insurance simply for being unemployed regardless of our circumstances. I don't believe in that either though. I think it should just not be extended in the first place to anyone.
     
    domainer_10, Jun 7, 2009 IP
  6. bogart

    bogart Notable Member

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    #3626
    bogart, Jun 16, 2009 IP
  7. domainer_10

    domainer_10 Peon

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    #3627

    Yeah they are also saying that a lot of those option arms that are supposed to reset are ALREADY experiencing a high rate of default before they even resetted yet. I suspect its because many are underwater and needed to move or lost their job and couldn't pay anything monthly and becuase many option arm houses are underwater anyways they just walked away from the house.

    I think here will be a additional waves in the futures, but since some are already defaulting as we speak it won't be as big as some may think.
     
    domainer_10, Jun 16, 2009 IP
  8. bogart

    bogart Notable Member

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    #3628
    The market reset charts are alarming.

    Approximately 1 million option ARMs will reset to higher rates in the next four years. 3/4 of those loans will adjust next year and in 2011, with the peak coming in August 2011 when about 54,000 loans reset. Over $750 billion of option ARMs were originated in the U.S. between 2004 and 2008.

    There's people that are paying $98 a month now and will have their mortgages reset to $3500 a month.

    http://www.bloomberg.com/apps/news?pid=20601109&sid=aQ_ZgC75Zfyw

    The waves keep rolling. We haven't reached the midway point.

    1st Wave - Subprime
    2nd Wave - Alt A and Liar loans
    3rd Wave - Option Arms
    4th Wave - Jumbo on million dollar homes
    5th Wave - Prime that can't afford to pay because of job losses
    6th Wave - Commerical

    The banks are going to have their hands full with commerical. I ran across this and just on one building there's a $100 million loss.

    Maguire Properties Inc., a struggling Los Angeles-based real-estate investment trust, sold a newly developed office building in Irvine, Calif., for about $160 million, a price representing an estimated 40% discount to its construction cost.

    http://online.wsj.com/article/SB124501516281013449.html
     
    bogart, Jun 16, 2009 IP
  9. earlpearl

    earlpearl Well-Known Member

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    #3629
    Interesting bit on the commercial side, Bogart. After reading about the building....the first thing...I wouldn't trust Maguire properties, the developer for a second.

    There is no way in God's green earth that building should have cost about $500/foot to build...which is where the estimated construction cost (about $260 million) for a 531,000 foot building. Maguire screwed around on that one. Someone pocketed big money somewhere.

    I have no idea of the LA market, and don't follow or have access to commercial real estate data and data bases...but at a construction price tag of about $500/foot...there was some serious cr@p going on there.

    Notwithstanding something that smells of borrowing cr@p in the original construction costs...(wherein borrowers and lenders are conspiring somewhere) and the shareholders at Maguire's REIT were being taken for a ride....yep...on a general sense...it looks like there will continue to be a slide in the entire world of real estate for a while. All those existing loans that will come due in residential and commercial, all the adjustable rate stuff that will have costs shoot up when the period comes for the rate to be adjusted...and all in all a weak economy that can't support the prices and costs of real estate funded, bought and sold when the economy was stronger.


    Meanwhile...if you want to go back to that wayward building Bogart referenced...here is a point of reference from a construction data company....http://www.reedconstructiondata.com...ncreases-for-four-office-building-categories/

    (note I have no knowledge about the source, Reed Constructiondata...but the numbers I looked at across the country made reasonable sense to me)

    In 2008 hard construction costs for a building in the LA area according to the source were just under $144/foot (10-20 story building). The above referenced building came in ...in total at $500/foot.

    There is something deeply fishy about that deal.

    Notwithstanding the specifics on that property...I agree...there continue to be dark days ahead across the country in real estate for property owners, lenders, etc.

    I hope most properties though don't have as bad a stink about them referenced in the WSJ and brought to our attention by Bogart.
     
    earlpearl, Jun 17, 2009 IP
  10. bogart

    bogart Notable Member

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    #3630
    I'm guessing that they had demolition costs or paid an inflated price for the land. They probably ripped down a perfectly good building as well.

    You are correct that the dark days are ahead for property owners. Mortgage lending has been down for the TARP Banks the last few months. Commerical losses and other waves of forclosures are going to tear up their balance sheets.

    This thing is far from over. State and local governments are in financial crisis. Property taxes are running around 8k-10k in the high tax states. In some areas property taxes are increasing around 10% per year.

    I saw press conference last night where Schwarzenegger said that we will see "Kabuki dancing" the next couple of months instead of any positive solutions to the California budget crisis. California has state income tax that approaches 10% for high income earners and sales tax of almost 10%.

    Schwarzenegger is proposing to eliminate state welfare program,
    reduce about 235,000 state workers' salaries by an additional 5 percent
    and scrap Cal Grants, the state's college financial aid program.

    http://www.laprogressive.com/wp-content/uploads/2008/08/schwarzenegger-august-6.gif

    The California budget crisis is really reminiscent of what was going on in New York City back in the 70's and early 80's. Some cities really never recovered.
     
    bogart, Jun 18, 2009 IP
  11. happy_s

    happy_s Active Member

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    #3631
    I don't believe that would happen
     
    happy_s, Jun 18, 2009 IP
  12. earlpearl

    earlpearl Well-Known Member

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    #3632
    @ Bogart:

    When I saw that article about the building I did a little research. It struck me that something was amiss.

    The building is relatively new construction in an office park in Irvine. Nothing was torn down. Its a 110 acre office park with other properties already on it.

    You don't reassign all land costs from an office park into one building. The land had to have been purchased or purchased and optioned years ago.

    The $144/foot represents base building costs. Tenant fit out and land costs are a separate item.

    If they really went whole hog with something fancy...and they reassigned prior purchase costs to this property...the extra costs might have brought it to a high of around $300/foot total. That is an educated guess.

    $500/foot or the $260 million--> no way. Something stinks on that deal.

    Again I'd stay far away from the developer-->Macguire REIT. They pulled some bs on that property.

    F' em on the loss. On the other hand they are an REIT. Investors got f'cked somehow.

    Yep real estate will be bad. Look, its bad in residential. There are more problems coming in residential. Who knows how bad it will be before the bottom hits. It is also regional in nature. Some areas will start recovering while others will be going down.

    I lived through the commercial real estate depression of the late 1980's and early 1990's. I was a commercial broker w/ some of my own holdings.

    It s*cked. In my region the money for loans started being removed in 1989. It started in Texas and other parts of the Southwest earlier.

    I've stated this before. In my region...my first recollection of a reasonably big building being sold was several years after the market collapsed...which was 1989 (I don't recall what year it resold) and it sold on about $0.25 on the dollar of its pre collapse rough value. In between the time of the sale and the time of the collapse...virtually nothing was happening on the sales side. The RTC (resolution trust corporation) was taking over all these buildings around the country. It took them years to sell them all off.

    The circumstances underlying this current hit on commercial real estate and that hit are different. I don't anticipate it being as bad...but I think it will be pretty ugly and severe. Recovery will take years.
     
    earlpearl, Jun 18, 2009 IP
  13. bogart

    bogart Notable Member

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    #3633
    The Option ARM crisis could play out to be worse than the subprime wave of defaults.

    http://news.yahoo.com/s/mcclatchy/20090618/pl_mcclatchy/3255357

    The whole real estate market is amiss. 120% loans piled on top of each other with every fast buck trick in the book.

    The commercial default wave is still a few years off. Commercial loans which originated during 2005-2007 will encounter problems refinancing at maturity of 5 to 10 years. Two thirds of commercial loans maturing between 2009 and 2018 ($410 billion) will not qualify for refinancing at maturity without $100 billion in equity infusions from borrowers due to a 25-30% price decline from 2007 peak values. 80% of the loans from 2007 unlikely to qualify.
     
    bogart, Jun 19, 2009 IP
  14. earlpearl

    earlpearl Well-Known Member

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    #3634
    I don't know how it will play out. I suspect it will be ugly. For those who believe in the "theory" of markets...without any intervention...here is what could happen.....

    thousands of individual properties w/ billions in debt will need to be refinanced or sold. The properties will be under water. Values will be below total debt. Owners won't have the cash to make up the difference.

    Could it be massive amts of foreclosures w/banks and other institutions that underpin the national and world economy taking another huge hit to their finances...and then be unnable to support overall banking operations?

    Each potential foreclosure could be a microcosm of the market. An entire read of the market is the aggregate of all the transactions.

    All the lenders and all the owners will be fighting tooth and nail for every last dollar.

    Vulture funds, (they are out there) w/ liquidity will be waiting on the sidelines...hoping to buy assets at what they hope will be steal values.

    Will the govt step in again?

    I don't know. It will be ugly.

    Meanwhile I absolutely suspect the single large commercial property you referenced is a variation on the theme of the first line I cited from your above quote....

    I got this very strong feeling the above cited property in Irvine, California was developed with construction funds at probably about 160% of real valuation.

    If there are a lot of those...then the general problems you cited above will only exacerbate an already dangerous situation.

    The only big thing I learned from the last commercial real estate crash ...was that it takes years to sort through the problems and damages. Years. years.
     
    earlpearl, Jun 19, 2009 IP
  15. samster7

    samster7 Banned

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    #3635
    they have power to overcome on it......
     
    samster7, Jun 19, 2009 IP
  16. guru-seo

    guru-seo Peon

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    #3636
    Somebody wake me up when the nightmare is over.
     
    guru-seo, Jun 19, 2009 IP
  17. Mia

    Mia R.I.P. STEVE JOBS

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    #3637
    Mia, Jun 19, 2009 IP
  18. sachin410

    sachin410 Illustrious Member

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    #3638
    oh....I thought it is yet to come....:eek:.
     
    sachin410, Jun 22, 2009 IP
  19. bogart

    bogart Notable Member

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    #3639
    We are in a "slow motion" meltdown.

    47 states are facing significant shortfalls in their 2009 and/or 2010 budgets

    California deficit estimate for fiscal 2010: $24.7 billion

    New York State deficit estimate for fiscal 2010: $17.6 billion

    http://finance.yahoo.com/taxes/arti...-big-tax-hikes.html?mod=taxes-advice_strategy
     
    bogart, Jun 22, 2009 IP
  20. Obamanation

    Obamanation Well-Known Member

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    #3640
    Barack will fix it. California has only about 45 days left before we run out of money. Barack is "keeping an eye" on us, and given that we are entirely unable to obtain funds from any other location (thanks to the California voters who voted against tax raises and other such things) we will either be bailed out, or go broke. Period.

    The government puts food on my family's table so I should be concerned, but in honestly, I'm breathing easy. I know Mr. Obama wont let us fall and will bail us out at any cost. What is humorous to watch the rich people complain about what this debt will mean to their tax bill when, in reality, California, like most other states with enormous budget shortfalls, has already raised taxes to make up the difference. The future is now my friends.
     
    Obamanation, Jun 22, 2009 IP
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