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Milkman · 25-02-2007, 01:11 PM

Too much gloom and doom, and we've heard this throughout history. Some good points, but I don't agree with all of it. I do notice the term "mortgage-slave"

Click Name for Bio of Mike Whitney Thursday, 22 February 2007 by Mike Whitney

Quote:

This week’s data on the sagging real estate market leaves no doubt that the housing bubble is quickly crashing to earth and that hard times are on the way. “The slump in home prices from the end of 2005 to the end of 2006 was the biggest year over year drop since the National Association of Realtors started keeping track in 1982.” (New York Times) The Commerce Dept announced that the construction of new homes fell in January by a whopping 14.3%. Prices fell in half of the nation’s major markets and “existing home sales declined in 40 states”. Arizona, Florida, California, and Virginia have seen precipitous drops in sales. The Commerce Department also reported that “the number of vacant homes increased by 34% in 2006 to 2.1 million at the end of the year, nearly double the long-term vacancy rate.” (Marketwatch)

The bottom line is that inventories are up, sales are down, profits are eroding, and the building industry is facing a steady downturn well into the foreseeable future.
The ripple effects of the housing crash will be felt throughout the overall economy; shrinking GDP, slowing consumer spending and putting more workers in the growing unemployment lines.

Congress is now looking into the shabby lending practices that shoehorned millions of people into homes that they clearly cannot afford. But their efforts will have no affect on the loans that are already in place. $1 trillion in ARMs (Adjustable Rate Mortgages) are due to reset in 2007 which guarantees that millions of over-leveraged homeowners will default on their mortgages putting pressure on the banks and sending the economy into a tailspin. We are at the beginning of a major shake-up and there’s going to be a lot more blood on the tracks before things settle down.

The banks and mortgage lenders are scrambling for creative ways to keep people in their homes but the subprime market is already teetering and foreclosures are on the rise.

There’s no doubt now, that Fed chairman Alan Greenspan’s plan to pump zillions of dollars into the system via “low interest rates” has created the biggest monster-bubble of all time and set the stage for a deep economic retrenchment. Greenspan’s inflationary policies were designed to expand the “wealth gap” and create greater economic polarization between the classes. By the time the housing bubble deflates, millions of working class Americans will be left to pay off loans that are considerably higher than the current value of their home. This will inevitably create deeper societal divisions and, very likely, a permanent underclass of mortgage-slaves.

A shrewd economist and student of history like Greenspan knew exactly what the consequences of his low interest rates would be. The trap was set to lure in unsuspecting borrowers who felt they could augment their stagnant wages by joining the housing gold rush. It was a great way to mask a deteriorating economy by expanding personal debt.

The meltdown in housing will soon be felt in the stock market which appears to be lagging the real estate market by about 6 months. Soon, reality will set in on Wall Street just as it has in the housing sector and the “loose money” that Greenspan generated with his mighty printing press will flee to foreign shores.

It looks as though this may already be happening even though the stock market is still flying high. On Friday, the government reported that net capital inflows reversed from the requisite $70 billion to AN OUTFLOW OF $11 BILLION!

The current account deficit (which includes the trade deficit) is running at roughly $800 billion per year, which means that the US must attract about $70 billion per month of foreign investment (US Treasuries or securities) to compensate for America’s extravagant spending. When foreign investment falters, as it did in December, it puts downward pressure on the greenback to make up for the imbalance. Everbank’s Chuck Butler put it like this:

“Not only did the buying stop in December by foreigners in December, but the outflows were huge! Domestic investors increased their buying of long-term overseas securities from $37 billion to a record $46 billion. This is a classic illustration of ‘lack of funding’. So, the question I asked the desk was… ‘Why isn’t the euro skyrocketing?’”

Why, indeed? Why would central banks hold onto their flaccid greenbacks when the foundation which keeps it propped up has been removed?

The answer is complex but, in essence, the rest of the world has loaned the US a pair of crutches to bolster the wobbly dollar while they prepare for the eventual meltdown. China and Japan are currently hold over $1.7 trillion in US currency and US-based assets and can hardly afford to have the ground cut out from below the dollar.

There are, however, limits to the “generosity of strangers” and foreign banks will undoubtedly be pressed to take more extreme measures as it becomes apparent that Team Bush plans to produce as much red ink as humanly possible.

December’s figures indicate that foreign investment is drying up and the world is no longer eager to purchase America’s lavish debt. The only thing the Federal Reserve can do is raise interest rates to attract foreign capital or let the dollar fall in value. The problem, of course, is that if the Fed raises rates, the real estate market will collapse even faster which will strangle consumer spending and shrivel GDP. In other words, we are at the brink of two separate but related crises; an economic crisis and a currency crisis. That means that the unsuspecting American people are likely to be ground between the two mill-wheels of hyperinflation and shrinking growth.

In real terms, the economy is already in recession. The growth numbers are regularly massaged by the Commerce Department to put a smiley face on an underperforming economy. Industrial output continues to flag (In January it was down by another .5%) while millions good paying factory jobs are being air-mailed to China where labor is a mere fraction of the cost in the USA. Also, automobile inventories are up while factory production is in freefall.

In addition, new jobless claims soared to 357,000 in the week ending February 10. 44,000 more desperate workers have been given their pink slips so they can join the huddled masses in Bush’s Weimar Dystopia.

December’s net capital inflows are a grim snapshot of the looming disaster ahead. As the housing bubble loses steam, maxxed-out American consumers will face increasing job losses and mounting debt. At the same time, foreign investment will move to more promising markets in Asia and Europe causing a steep rise in interest rates. This is bound to be a stunning blow to the banks which are low on reserves ($44 billion) but have generated $4.5 trillion in shaky mortgage debt in the last 6 years.

It’s all bad news. The global liquidity bubble is limping towards the reef and when it hits it’ll send shock-waves through the global economic system.

Is it any wonder why the foreign central banks are so skittish about dumping the dollar? No one really relishes the idea of a quick slide into a global recession followed by years of agonizing recovery.

Maybe that’s why Secretary of Treasury Hank Paulson has reassembled the Plunge Protection Team and installed a hotline to his Chinese counterpart so he can quickly respond to sudden gyrations in the stock market or a freefalling greenback; two of the calamities he could be facing in the very near future.

Greenspan has successfully piloted the nation into virtual insolvency. In fact, the parallels between our present situation and the period preceding the Great Depression are striking. Just as massive debt was accumulating in the market from the purchase of stocks “on margin”, so too, mortgage debt between 2000 and 2006 soared from $4.8 trillion to $9.5 trillion. In both cases the “wealth effect” spawned a spending spree which looked like growth but was really the steady, insidious expansion of debt which generated economic activity. In both periods wages were either flat or declining and the gap between rich and working class was growing more extreme by the year. As Paul Alexander Gusmorino said in his article, “Main Causes of the Great Depression”:

"Many factors played a role in bringing about the depression; however, the main cause for the Great Depression was the combination of the greatly unequal distribution of wealth throughout the 1920's, and the extensive stock market speculation that took place during the latter part that same decade".

The same factors are at work today except that the speculation is in real estate rather than stocks. Just as in the 1920’s the equity bubble was not created by wages keeping pace with productivity (the healthy formula for growth) but by the expansion of personal debt. Also, one could buy stocks without the money to purchase them, just as one can buy a $600,000 or $700,000 house today with zero-down and no monthly payment on the principle for years to come. The current account deficit ($800 billion) could also weigh heavily in any economic shake-up that may be forthcoming. Bob Chapman of The International Forecaster made this shocking calculation about America’s out-of-control trade deficit:

"US debt was up 10.1% to $4.085 trillion and accounts for 58.8% of all the credit issued globally last year. That means the US expanded credit at a much faster rate than the economy grew. This was borrowing to maintain a higher standard of living and attempt to pay for it tomorrow."

Think about that; the US sucked up nearly 60% of ALL GLOBAL CREDIT in one year alone. That is truly astonishing.

There are many similarities between the pre-Depression era and our own. Paul Alexander Gusmorino says:

"The Great Depression was the worst economic slump ever in U.S. history, and one which spread to virtually all of the industrialized world. The depression began in late 1929 and lasted for about a decade....The excessive speculation in the late 1920's kept the stock market artificially high, but eventually lead to large market crashes. These market crashes, combined with the misdistribution of wealth, caused the American economy to capsize.

(The income disparity) between the rich and the middle class grew throughout the 1920's. While the disposable income per capita rose 9% from 1920 to 1929, those with income within the top 1% enjoyed a stupendous 75% increase in per capita disposable income…A major reason for this large and growing gap between the rich and the working-class people was the increased manufacturing output throughout this period. From 1923-1929 the average output per worker increased 32% in manufacturing8. During that same period of time average wages for manufacturing jobs increased only 8% (This ultimately causes a decrease in demand and leads to growth in credit spending)

The federal government also contributed to the growing gap between the rich and middle-class. Calvin Coolidge's (pro business) administration passed the Revenue Act of 1926, which reduced federal income and inheritance taxes dramatically…(At the same time) the Supreme Court ruled minimum-wage legislation unconstitutional.

The bottom three quarters of the population had an aggregate income of less than 45% of the combined national income; while the top 25% of the population took in more than 55% of the national income...Between 1925 and 1929 the total credit more than doubled from $1.38 billion to around $3 billion”. (Just like now, the growing wage gap has spawned massive speculative bubbles as well as a steady up-tick in credit spending. Wage stagnation forces workers to seek other opportunities for getting ahead. When wages fail to keep pace with productivity then demand naturally decreases and business begins to flag. The only way to spur more buying is by easing interest rates or expanding personal credit, and that is when equity bubbles begin to appear. That's what happened to the stock market before 1929 as well as to the real estate market in 2007. The availability of credit has kept the housing market afloat but, ultimately, the resultwill be the same.

On Monday October 21, 1929, the over-valued stock market began its downward plunge. It managed a brief mid-week comeback, but 7 days later on Black Tuesday it plummeted again; 16 million shares were dumped and there were no buyers.

The game was over.

Confidence evaporated overnight. People stopped buying on credit, the bubble-economy collapsed, and the mighty locomotive for growth, the American consumer, hobbled into the Great Depression. Tariffs were thrown up, foreigners stopped buying American goods; banks closed, business went bust, and unemployment skyrocketed. Tens years later the country was still reeling from the implosion.

Now, 77 years later, Greenspan has led us sheep-like to the same precipice. The economic dilemma we’re facing could have been avoided if the expansion of personal credit had been curtailed by prudent monetary policy at the Federal Reserve and if wealth was more evenly distributed as it was in the ‘60s and ‘70s. But that’s not the case; so we’re headed for hard times.

Link: Atlantic Free Press - Hard Truths for Hard Times - The Second Great Depression

Mr Earl · 25-02-2007, 03:24 PM

This article is a wee bit hysterical.

It is also just wrong.

Quote:

The excessive speculation in the late 1920's kept the stock market artificially high, but eventually lead to large market crashes. These market crashes, combined with the misdistribution of wealth, caused the American economy to capsize.

The "crash" was caused by the federal reserve bank because they tightened credit at a time when it's should have been loosened it. Essentially it set the economic stage for the second world war.

What is going on now is far more complex. There is too much US currency out there which is causing a devaluation.

The so called crash is really a slide.

The USA is still a very rich country. Allowing the currency to weaken in the short term will actually strengthen the economy in the long term.
A low dollar mean cheaper exports of corn, soy beans and the vast array of resources in the USA.
The is no other place like Iowa in the world. And that's just a small part of the US wealth.

man with no head · 25-02-2007, 06:05 PM

Exporting low cost and low value items such as corn and soybeans isn't going to put the U.S. back in the black.

Without much of a manufacturing base left there's not much of value we can export which won't be undercut by Asia, Inc.

I can't believe anyone would buy a house now.

Boon Mee · 04-03-2007, 10:54 PM

Quote:

Originally Posted by surasak

.

I can't believe anyone would buy a house now.

This is the best time to purchase real estate.
Prices are off from their all-time highs couple years ago.
REITS are taking off...if you have good credit.

Milkman · 05-03-2007, 12:45 AM

Quote:

Originally Posted by Boon Mee

Quote:

Originally Posted by surasak

.

I can't believe anyone would buy a house now.

This is the best time to purchase real estate.
Prices are off from their all-time highs couple years ago.
REITS are taking off...if you have good credit.

It depends on the market.

It also depends on one's goals.

CAP RATES.

I have current and perfect credit, and my FICO is very, very, good.

But the cap rates are not good.

For me, now.

GooMaiRoo · 05-03-2007, 03:09 AM

^Unleveraged residential REITS could do OK, since more people may be forced into renting their living spaces. These often pay a nice, solid dividend. But when the sh*t hits the fan globally, there's rarely a good place to hide, investment-wise.

blackgang · 25-02-2007, 07:59 PM

Got to agree with some of that, US has nothing of real value to export anymore, but there is money to be made exporting grains, They have a lot of rice [OH Yea I forgot], they shipped GE rice so now no one will take it.
But they do have a lot of farm products and Thailand has got a hell of a trade surplus thru being the worlds largest rice exporter.

GooMaiRoo · 04-03-2007, 10:07 AM

An excellent but depressing article, Milkman. The economic meltdown has been an ongoing slide, as Mr. Earl pointed out. However, I don't share his optimism about the future. The stock market (when adjusted for dollar devaluation) has actually been going down since year 2000. So have real incomes. The real unemployment rate is well over 11% when you include discouraged workers, those in jail and the growing number of people on disability ('white man's welfare'). Yet Washington comforts the public with bogus statistics and talk of 'the recovery'. Like a frog being boiled in water, the American public won't feel the danger until it's way too late. The financial hangover from the Vietnam War lasted for over a decade and this could be worse. Any middle class American who hasn't started paying off his debts and salted away some savings should be getting very nervous.

Milkman · 04-03-2007, 11:45 AM

Quote:

Originally Posted by floorpotato

An excellent but depressing article, Milkman. The economic meltdown has been an ongoing slide, as Mr. Earl pointed out. However, I don't share his optimism about the future. The stock market (when adjusted for dollar devaluation) has actually been going down since year 2000. So have real incomes. The real unemployment rate is well over 11% when you include discouraged workers, those in jail and the growing number of people on disability ('white man's welfare'). Yet Washington comforts the public with bogus statistics and talk of 'the recovery'. Like a frog being boiled in water, the American public won't feel the danger until it's way too late. The financial hangover from the Vietnam War lasted for over a decade and this could be worse. Any middle class American who hasn't started paying off his debts and salted away some savings should be getting very nervous.

Floorpotato,

You hit on a lot of salient pionts:

1. "disability" (white man's welfare) and other entitlements are a huge portion of the budget.

And let's wait until the baby boomers get sick, go to hospitals, etc.

2. Unemployment statistics: I've always wondered about them.

3. Savings. Last year it was in the negative.

Butterfly · 04-03-2007, 10:46 AM

all the numbers are bogus these days. Company executives on WS report bogus earnings to boost their stock options, most inflation numbers in the Euro zone are complete fuckups. If you would believe official numbers, inflation would be 2% annually and yet any European would tell you that since the introduction of the Euro, their cost of living went up more than 30%

Even joining EU members like Romania have seen their local prices going up dramatically.

We are all being fucked, from left to right, with nowhere to hide. Even Thailand with all their "government" stats is starting to look good.

The US is a giant economic scam, always been. I mean most people there believe the American dream is real, like it was some kind of reality TV show like "American Idol"

Butterfly · 04-03-2007, 10:52 AM

This is what's wrong with the US economy these days, people with no income flipping houses like they would daytrade dotcom stocks. 100% financing is a reality in the US and the only reason why the property boom went nuts. Financing artificial growth through debt, like in the 20s. This is worst than the dotcom bubble.

For anyone interested, you need to take a look at that blog. Comments are pretty funny as everyone is egging on the stupidity of that guy, basically he deserve his shit.

Have a laugh or just cry

I am Facing Foreclosure .com

man with no head · 04-03-2007, 05:25 PM

Unemployment, like crime, is a fake statistic.

sabang · 05-03-2007, 03:45 AM

Most consumer wealth is tied up in real estete, and we absolutely do not need a real estate crash.
The situation is not dissimilar in the UK and Oz.
We are in a relatively high risk situation.

Milkman · 05-03-2007, 08:32 AM

Quote:

Originally Posted by sabang

Most consumer wealth is tied up in real estete, and we absolutely do not need a real estate crash.
The situation is not dissimilar in the UK and Oz.
We are in a relatively high risk situation.

The ARM foreclosures will start in 2007, for many.

If there is a dip (if) there could be a lot of Negative Amortization.

Milkman · 05-03-2007, 02:23 PM

I know this thread focused on a Housing article to begin.

But there have been good comments about other aspects of the U.S. economy and per capita debt.

Here's an article about American retirees who are in the red.

Quote:

DALLAS — Miss Daisy has retired in the red.
When she adds up her monthly bills for her mortgage, car loan, electricity, gas, water and phone, they exceed her income from Social Security and a part-time job by almost $200.
"I rely on my credit cards to make ends meet," said the Dallas woman, 65, who asked that her last name not be used. "I have no savings, so I have no choice."
She owes more than $7,000 on three cards.
Seniors who grew up in frugal times and have usually been reluctant to go too far into debt are turning increasingly to credit cards to make do in retirement, says a study by the National Consumer Law Center (NCLC).

"Older people have generally held less credit-card debt than younger consumers, but their generation is catching up," said Deanne Loonin, principal author of the report by the Boston consumer-advocacy group.
The study quantifies a trend that credit counselors have seen recently.

It found that the average credit-card debt for consumers 65 to 69 skyrocketed 217 percent in the past decade to $5,844. Researchers calculated the inflation-adjusted increase by examining Federal Reserve data on the assets and liabilities of U.S. families.
The consumer group's report blames the trend on a combination of seniors' shrinking or stagnating incomes, higher expenses for housing, medical care and utilities, and creditor practices that push seniors to borrow.

....The National Consumer Law Center report said Medicare recipients aren't insulated from medical-debt problems. Seniors average more than $3,500 in out-of-pocket medical costs annually, a 45 percent increase in 10 years, it said.

Entire & Link: Retirement strains finances, nerves of debt-laden seniors: Business & Technology: The Seattle Times

Anonymous Coward · 05-03-2007, 02:44 PM

Quote:

Originally Posted by Milkman

Here's an article about American retirees who are in the red.

I'd be much the same if I hadn't moved here....

Milkman · 05-03-2007, 04:37 PM

Quote:

Originally Posted by Anonymous Coward

Quote:

Originally Posted by Milkman

Here's an article about American retirees who are in the red.

I'd be much the same if I hadn't moved here....

And I think I will much the same, for the most part if I don't live overseas.

U.S. Medical care costs, prescription medicine, rent, utilities, insurance premiums, etc.

Milkman · 07-03-2007, 11:54 AM

We ought to start a thread on the U.S. economy/jobs/cost of living, but here's an article on medical prescription costs for seniors.

Another reason you can kiss retirement in the U.S. good-bye.

Quote:

Updated: 4:33 p.m. PT March 6, 2007

CHICAGO - The prices for about 200 prescription drugs commonly used by seniors in the United States rose nearly twice the rate of inflation, a seniors group said Tuesday, making a case for letting the government negotiate drug prices.

Entire & Link: Prescription drug prices soar for U.S. seniors - Aging - MSNBC.com

Milkman · 07-03-2007, 11:36 PM

Quote:

US mortgage crisis goes into meltdown

By Ambrose Evans-Pritchard
Last Updated: 1:15am GMT 24/02/2007

Panic has begun to sweep the sub-prime mortgage sector in the United States after the bankruptcy of 22 lenders over the past two months, setting off mass liquidation of housing loans packaged as securities.

Reduced sign outside house for sale
Analysts say the housing bust is pulling America into recession, citing a 14.4pc drop in housing starts

The rapid deterioration could not come at a worse time for British bank HSBC, which has set aside $10.5bn (£5.4bn) to cover bad loans in the US.

The cost of insuring against default on these loans has rocketed in recent weeks, from 50 basis points over Libor to 1,200, raising fears that a credit crunch could spread to the rest of the property market.

Low-grade BBB-rated securities - measured by the ABX index - have crashed from near par of 100 in early November to 72.5 this week.

Peter Schiff, head of Euro Pacific Capital, said the sector was in an unstoppable meltdown. "It's a self-perpetuating spiral: as sub-prime companies tighten lending they create even more defaults," he said.
advertisement
California's ResMae Mortgage filed for bankruptcy last week as it struggled to cope with defaults on a $7.7bn book of sub-prime loans issued last year, while Accredited Home Lenders in San Diego warned that bad debts had reached 7.18pc of its portfolio.

HSBC chief executive Michael Geoghegan, who stepped in to take control of the US division earlier this month claiming "The buck stops at my door", has ousted top executives. But the worst may not be over for Household International, the property arm it acquired for $14.4bn in 2003 to capitalise on the housing boom.

Rating agency Standard & Poor's is shifting its focus to the tier of debt above sub-prime, eyeing loans covering people viewed as better credit risks but who lack the steady income needed for prime status.

S&P has placed 11 loan packages worth $146m on watch for a possible downgrade this week, saying it was most worried about "piggyback" second mortgages. "There is a potential danger of default on these deals," said credit strategist Robert Pollson.

For now, the US Federal Reserve believes the damage can be contained. "I don't think there'll be a large impact on prime mortgages from the sub-prime market," said governor Susan Schmidt Bies.

However, she warned of a "hidden" problem caused by sellers pulling property off the market. " The percentage of homes where nobody is living in them is at a record level. So the potential for inventory correction is still very high," she said.

Nouriel Roubini, economics professor at New York University, says the housing bust is slowly pulling America into recession. He cites a 14.4pc drop in housing starts last month; an expected loss of 600,000 real estate jobs in 2007; a sharp fall in home equity withdrawals - down from 6pc of GDP at the top of the boom; and a squeeze as $1,000bn of mortgages are adjusted upwards this year to higher interest rates.

Mr Roubini said: "America faces a 'reverse cycle' where a credit crunch has hit before the slowdown, a rare pattern. Normally, recession comes first, setting off credit troubles in its wake. We have a housing recession, an auto recession, a manufacturing recession, and a real investment recession already present. If all this happening in what the consensus terms as a 'Goldilocks economy', what would happen if the economy slows down?"

Link: US mortgage crisis goes into meltdown | Business | Money | Telegraph

Butterfly · 08-03-2007, 10:54 AM

well the economy will always slow down after a big credit crunch because overall economic growth is being artificially maintained by those easy credits in those different sectors.

25-02-2007, 07:59 PM	#7 (permalink)
blackgang Thailand Travel Forum Last Online: Today 02:25 PM Join Date: Dec 2006 Location: Phetchabun city Posts: 13,370	Got to agree with some of that, US has nothing of real value to export anymore, but there is money to be made exporting grains, They have a lot of rice [OH Yea I forgot], they shipped GE rice so now no one will take it. But they do have a lot of farm products and Thailand has got a hell of a trade surplus thru being the worlds largest rice exporter. __________________ To view links or images in signatures your post count must be 10 or greater. You currently have 0 posts. Did you know the average male is 6 inches long, and the average female is 8 inches deep? So in New York City alone there is over 3 miles of unused pussy! To view links or images in signatures your post count must be 10 or greater. You currently have 0 posts.

04-03-2007, 10:46 AM	#10 (permalink)
Butterfly Suspended Member Join Date: Mar 2006 Posts: 16,917	all the numbers are bogus these days. Company executives on WS report bogus earnings to boost their stock options, most inflation numbers in the Euro zone are complete fuckups. If you would believe official numbers, inflation would be 2% annually and yet any European would tell you that since the introduction of the Euro, their cost of living went up more than 30% Even joining EU members like Romania have seen their local prices going up dramatically. We are all being fucked, from left to right, with nowhere to hide. Even Thailand with all their "government" stats is starting to look good. The US is a giant economic scam, always been. I mean most people there believe the American dream is real, like it was some kind of reality TV show like "American Idol" Last edited by Butterfly : 04-03-2007 at 10:48 AM.

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25-02-2007, 06:05 PM	#3 (permalink)
man with no head Somewhere Travelling Last Online: 11-08-2007 07:39 PM Join Date: Apr 2006 Posts: 5,162	Exporting low cost and low value items such as corn and soybeans isn't going to put the U.S. back in the black. Without much of a manufacturing base left there's not much of value we can export which won't be undercut by Asia, Inc. I can't believe anyone would buy a house now.

05-03-2007, 03:09 AM	#6 (permalink)
GooMaiRoo Wat Phra Mahathat Last Online: Today 08:49 AM Join Date: Nov 2006 Posts: 905	^Unleveraged residential REITS could do OK, since more people may be forced into renting their living spaces. These often pay a nice, solid dividend. But when the sh*t hits the fan globally, there's rarely a good place to hide, investment-wise.

04-03-2007, 10:07 AM	#8 (permalink)
GooMaiRoo Wat Phra Mahathat Last Online: Today 08:49 AM Join Date: Nov 2006 Posts: 905	An excellent but depressing article, Milkman. The economic meltdown has been an ongoing slide, as Mr. Earl pointed out. However, I don't share his optimism about the future. The stock market (when adjusted for dollar devaluation) has actually been going down since year 2000. So have real incomes. The real unemployment rate is well over 11% when you include discouraged workers, those in jail and the growing number of people on disability ('white man's welfare'). Yet Washington comforts the public with bogus statistics and talk of 'the recovery'. Like a frog being boiled in water, the American public won't feel the danger until it's way too late. The financial hangover from the Vietnam War lasted for over a decade and this could be worse. Any middle class American who hasn't started paying off his debts and salted away some savings should be getting very nervous.

04-03-2007, 10:52 AM	#11 (permalink)
Butterfly Suspended Member Join Date: Mar 2006 Posts: 16,917	This is what's wrong with the US economy these days, people with no income flipping houses like they would daytrade dotcom stocks. 100% financing is a reality in the US and the only reason why the property boom went nuts. Financing artificial growth through debt, like in the 20s. This is worst than the dotcom bubble. For anyone interested, you need to take a look at that blog. Comments are pretty funny as everyone is egging on the stupidity of that guy, basically he deserve his shit. Have a laugh or just cry I am Facing Foreclosure .com

04-03-2007, 05:25 PM	#12 (permalink)
man with no head Somewhere Travelling Last Online: 11-08-2007 07:39 PM Join Date: Apr 2006 Posts: 5,162	Unemployment, like crime, is a fake statistic.

05-03-2007, 03:45 AM	#13 (permalink)
sabang Watching the Wheels Last Online: Today 02:26 PM Join Date: Feb 2006 Location: where the streets have no name Posts: 11,571	Most consumer wealth is tied up in real estete, and we absolutely do not need a real estate crash. The situation is not dissimilar in the UK and Oz. We are in a relatively high risk situation.

08-03-2007, 10:54 AM	#20 (permalink)
Butterfly Suspended Member Join Date: Mar 2006 Posts: 16,917	well the economy will always slow down after a big credit crunch because overall economic growth is being artificially maintained by those easy credits in those different sectors.

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