United States Heading towards a Depression?

http://www.msnbc.msn.com/id/27121535

 

http://www.russiatoday.com/news/news/31727

This is quite "funny".

 

I think america will come out of this by the second half of 2009 as the impact of bail out plan by the govt. will be reflected in the market in the next 3-4 months atleast.I am strongly of the view that this situation meems like recession but since everybdy is tackling with the situation to avoid the worse scenario,,things will get smooth

 

Former Federal Reserve Chairman Paul Volcker said on Tuesday U.S. now in recession

"House prices in the U.S. are still declining. There are still more losses to come there. The economy, I believe, is in recession."

Volcker was asked by a member of the audience if the massive infusion of liquidity by the Federal Reserve could lead to inflation or stagflation.

"It's not going to be a problem in the short run. Inflation doesn't flourish in the face of recession," he said.

"It's something we have to worry about when we get out of this recession."

http://news.yahoo.com/s/nm/20081014/us_nm/us_financial_volcker

 

interesting. In other words, buy something big right before we recover from the recession because your dollar value will go down big time after that. Although i think we are headed for a slow and and permanent decline in our economy and we will never be like we were before.

 

I have heard gold in going to go down to $650 and that is buy point, the money men are saying this.

 

Ive heard people are buying gold now like crazy and the price over 1K isnt futuristic. They showed the biggest gold factory in South Africa and interviewed their ceo's.

 

Im thinking of buying gold at kitco. Isn't there a way you can buy gold and they hold it for you like a pooled account?

The only thing im scared of is if the S** hits the fan that they will make gold illegal to possess or somethign and then I won't be able to redeem it. They did that in the great depression.


Thoughts?

 

I heard a couple of interesting localized tidbits today. I live and work in an area that was featured in one of the national media as one of the better places to live during this financial period. Within the greater metro region there are areas with severe problems, but within the close in area so far it hasn't felt bad direct problems.

Regardless.....the operator of a chain of 4 well located restaurants was referencing that starting in September 1 business has fallen off a ton for him in 3 of 4 locations, all with hefty rents. One of the 4 has yet to take a hit.

2ndly he referenced a type of business that is flourishing. Across the street from one of his locations he has a law firm that does lots of bankruptcy business.

Those guys are absolutely flourishing. They have business up the kazoo.

I recall when the commercial real estate crash occurred during the late 1980's and into the early 1990's the bankruptcy attorneys were busy as could be, were making tons of money, they were adding attorneys and adding staff as they had tons of work. Hell even if your not a lawyer you can get legal assistance work with these guys.

 

Doesn't the amount in the world stay pretty much the same?

For example, a company that's worth 1 billion may go bust, however they spent their 1 billion on wages, paying for things etc (so it's not like the 1 billion has disappeared)

If so, when there's a depression, where does the money go if "everyone" is doing it hard? It's got to be somewhere... perhaps the rich just get richer and others struggle? I've thought about it... not really sure, being 18 I've had limited exposure to all this stuff.

 

Ive thought the same thing. My thoughts were that essentially most of it is sitting empty not being used or it got wasted on useless things like gas or it is being sent to countries that won't be affected. for example, we have an overabundance of houses sitting empty in foreclosure. We have people with more cars and boats and other luxury items than they needed doing nothing. So some of the wealth is sitting around doing nothing. The rest went to paying for gas that was grossly overpriced. So the arabs have some of the money from gas profits. China has alot of the wealth too from the trading. Even in a worldwide recession China or the Middle east is laughing all the way to the bank cause they are certainly not facing a recession I don't think.

So I personally think most of the money globally is being transferred to an overabundance of inanimate luxury objects (like houses, cars, etc) that no one needs and the oversupply of it is dropping the price of everything , and to countries like China, and Middle East.

This is just my thoughts though id love to hear what others think.

 

depression only will beat at rich people so poor people will get benefit from this depression cause rich people will sell their home car etc from cheap price and poor people can buy that things

 

leandar, what are you talking about? I didn't understand a word of what you said. It sounded like you were saying that the rich would be the only ones impacted by a "depression". If you look at history, this clearly isn't the case. Everyone was impacted in one way or another. A lot of the rich became poor and the poor became poorer.

 

I agree.

The United States of America has lost all sense of its priorities!

The US spends billions of dollars on sports stadiums for millionaires to play, but won't spend the money on high-speed rail or communication network.

The US spends billions on SUVs but won't invest in building refineries, energy production, or energy research.

The US spends billions on McMansions, new housing, new developments, but won't spend money on the roads, sewage, and electrical grid in existing communities.

The US spends billions on wars but won't spend money on building levees, dams, and water treatment.

The US spends billions on prisons/jails/courts which could be used for education, work training, and job development.

The US gives tax breaks to companies sending jobs overseas but not to companies keeping jobs in the US.

It's all deliberate by the elected Representatives in Washington DC to destory what little control the people of the US have over their lives.

 

I was stunned by this article today in the Washington Post describing record breaking sales volume in one Virginia County.

In one distant suburban county of Washington DC home sales volume went through the roof in September. The County is Prince William. More houses were sold this past September than in any September in history. More homes were sold than in a neighboring County with 3 times the volume of houses.

Of course average sales prices have taken a huge hit.

Prince William has suffered in this region as amongst the areas worst hit by foreclosures. It appears that investors jumped in like crazy last month buying up homes. It also appears many were bought by investors.

Still it leaves me confused. I think the market will be in turmoil for a long long time. In various neighborhoods there will be comp prices on similar homes that are totally out of whack with some homes stuck on values that represented sales and purchases in 2004, 05, 06 and 07 and then a slew of homes purchased recently at fractions of the costs of the ones from recent previous years.

I don't think there will be clear market definition of home values in that county for a period of time. I wouldn't want to be an owner of a home purchased with a flat rate mortgage in 2005 or 2006. I think I'd be stuck on a house value far in excess from where the actual market will have moved.

Its somewhat like the stock market in the last two weeks with absolutely wild gyrations.

 

They are fools because housing is going down for awhile. Anyone buying a house right now is a especially an idiot if it is in california, florida, nevada or arizona the hardest hit areas. Ive read statistical charts and house should continue to go down on average for about another year. I personally think housing prices are going to drop AT LEAST another 15%, although if you look at the historical data of inflation adjusted prices which had been steady for the last 100 years until just the last 10 years it probably should drop another 50% before we hit bottom! Housing should actually go below normal historical pricing levels (after inflation adjustment) to swing in the opposite direction to make up for the heavily overinflated prices we had over the last 10 years. I think sometime next year there are going to be some embarrassingly low housing prices.

We are no where near the bottom, Im still seeing houses drop in prices in the last few weeks where I'm at in california that had a huge housing boom. If I had to guess, in my areas houses dropped probably 15 to 30,000 in just the last month on the low end sized ones.


Here is one chart that you guys should check out

http://mysite.verizon.net/vodkajim/housingbubble/

 

How much are houses on there on average? Here, smaller town, average 3-4 bedroom house will set you back $350,000 to $400,000. Average wage (nationally... if you counted the average wage of this town given it's basically all hospitality and retired people it's probably $30k if that) is $60,000/yr before tax. I've been looking at getting a block of land... even 10-15 minutes out of town (for a town that's 10 minutes from one side to the other, that's a fair way out) and it's $125k+ for just an acre... I hope this "depression" knocks this town over, the prices are ridiculous and need to be brought back into line. 5 years ago, average house price was $200,000, 7 years ago when we bought our first house here, we got it for a little over $100,000. So the price has basically gone up 400% in 7 years... so looking at it like that, it's not a "depression" its a well needed "realignment".

The town next door has pretty cheap houses in comparison, average would be $200-$250k. Granted the houses are older, the town is full of unemployed slum and odds are you'll be stabbed or robbed, but hey it's cheaper

I'm looking at the moment for cheap land+houses which involves moving to some small town somewhere... anyone lived in a small town? (1000 people or so) Is it as boring as it sounds?

 

Where are you at? That is strange that your prices are still so high. Most peoples houses have tumbled big time lately. The average 3 bedroom 2 bath is selling right now between 125,000 to 150,000, however most are actually not selling it looks like at the moment. Either they are sitting there with no buyers or in the newspaper it says "Sale pending" maybe cause no one can get their loan approved cause of tight credit. WHich means prices will probably keep going down as people try to get eligible to buy the house at a lower price. The town has about 11,000, but it used to be only 5000 15 years ago.



Keep in mind a year and half ago these same sized houses were selling for 315,000 to 325,000 at its peak!!! So we have dropped by more than half already from the peak. We are about 110 miles from san francisco (about 30 miles from outside ring of expensive bay area). A lot of people moved out here to get away from even higher prices in the bay area. We are one of the hardest hit areas in the country.

 

I'm in Australia, Hervey Bay to be exact. Jesus, I should move to America! That's dirt cheap in comparison to here. I'm looking at random places throughout Queensland at the moment, the cheapest blocks of land are around $20k-$30k and they're hundreds (some thousands) of KM from anywhere! Towns with 5 roads and the like. So by the time a house got put on it (which would cost more because of how far out it is) it'd be looking at $150,000 for a 3 bedroom bare-essentials home in the middle of nowhere.

I hope they keep coming down, I wouldn't have $300,000 anytime soon. $150,000 is far more affordable.

 

Oh well that explains why housing hasn't gone down where your at. LOL

According to the currency converter 1 us dollar = 1.45 Australians.

So 135,000 U.S dollars = 200,000 Australian dollars, so housing is probably in the same neighboorhood in both countries. Keep in mind the average house in the U.S is 200,000, its just less than that where I live.