United States Heading towards a Depression?

The US is lot diffrent than Japan. The Japanese have a trade surpluss and trillions in cash reserves and the US is a debtor nation with a 4.1% inflation rate.

 

The Japanese suffered due to the effects of a deflationary spiral. The US wouldn't be that lucky. I beleive the US faces the greatest danger in a dollar collapse and inflation.

 

I think the next president will determine whether the USA has a depression or not - the price of oil is not helping - if they are serious they will start to move the USA to a post-oil economy?!

 

Deflation and inflation are neither good nor bad. They are ying and yang.

What's bad is only having deflation, or only having inflation.

 

I also think deflation is worse than inflation.

 

Americans' percentage of equity in their homes fell below 50 percent for the first time on record since 1945, the Federal Reserve said Thursday.

Home equity, which is equal to the percentage of a home's market value minus mortgage-related debt, has steadily decreased even as home prices jumped earlier this decade due to a surge in cash-out refinances, home equity loans and lines of credit and an increase in 100 percent or more home financing.

Moody's Economy.com estimates that 8.8 million homeowners, or about 10.3 percent of homes, will have zero or negative equity by the end of the month. Even more disturbing, about 13.8 million households, or 15.9 percent, will be "upside down" if prices fall 20 percent from their peak.

http://news.yahoo.com/s/ap/20080306/ap_on_bi_ge/home_equity

Hyper-inflation like went on in Argentina in the 1970s is worse. It wipes out the middle class. At the end it costs you millions to buy a loaf of bread.

 

There was deflation in America during the later part of the 19th century (in between two panics) where American's purchasing power actually grew and new industry was popping up everywhere.

Deflation isn't, in itself, a bad thing. A sudden, swift contraction of the money supply is a whole different phenomenon that may lead to results including deflation.

Or Brazil when you need tanks on the street and military dictatorship to keep people going to work.

 

http://www.newsweek.com/id/118914/page/1
Reviving the Real Estate Market
Why lower home prices are the only true solution to the housing collapse

Excerpt

 

Mortgage Markets `Utterly Unhinged'

There are also something like 1.3 million or so home loans that get to be reset this year.

There is a lot of leverage that needs to be unwound.

 

Anyone here about the three biggest lenders, Country Wide, Citigroup etc, paying out $460 mil to their CEO's over 5 years? That's over 30 mil a piece each... No wonder these guys are in trouble. My suggestion.. If you hold a cc or other no-reclaimable/intangible debt to these guys, just don't pay it. They deserve to crash and burn.

 

Hell yeah, I've been preachin' burn n' die for these companies for some time now. You can lump in Lehman Bros. in there too. It is not the $460 mln. that put them in trouble, that is just a drop in the bucket over the years.

 

$460 million is not just a drop in the bucket when compared to a 20 billion dollar loss. It is 1/2 billion in that equation of loss... if it were 20 million to 20 billion, yeah, drop in the bucket... 1/2 bil to 20 bil? It's a noticeable part of the problem.

 

They would be completely fine if it were not for stupid decisions and this does not include CEO Pay. There are many other companies paying their CEO's loads of money and they are fine. A lot of it is stock options as well.

 

It's not just the CEO pay, but as recently as a week ago CountryWide sent their 30 top executives on a multi-million dollar week long ski outing in Aspen...

 

WTF are you babbling about? The shareholders don't deserve any of this mess which is the result of CEOs and corporate executives raping more American corporations without any fear of punishment. The victims of Enron were the shareholders and they are at the mercy of these corrupt boards, executives and politicians who won't take them down.

What is even worse is the supposed "foreclosure crisis" which taxpayer dollars should not be funding to help 'bail out.' Who are the baliees? People who extended themselves way beyond their financial means. People who bought second and third homes and shouldn't have. Let them deal with their own messes instead of having creditworthy, responsible Americans continue to bail out those truly responsible for this mess.

America is in for a long, hard haul because it's been everyone out for himself, starting from Citizen Number One, and they could care less about the welfare of the country and people so long as, during their lifetime, they have more than what they need financially.