The American Economy totally doomed?
6/4/2010 Update:
[Note: Hoboken411 will continue offering an alternative point of view to the mainstream broadcasters and businesses who insist the economic recovery is "real." I'd be happy to publish your point of view - IF it makes sense.]
Delusional to believe we’re on the road to recovery?
The other day, I found an email in my spam folder from Toll Brothers – who proudly announced that they finally sold some of those “townhomes” on the ground-level waterfront side of Maxwell Place, claiming they were in “high demand” and that prices were actually increasing.
The first line in their press release was: “As Wall Street continues to steady, and bankers are confidently returning as buyers to the luxury real estate market…”
Everything I’ve seen about the global economy, socialist programs failing, and ever-expanding government and bailouts made me wonder who actually wrote that release!
Regardless, several 411 readers sent this latest link in from the Economic Collapse Blog – which details “25 questions to ask anyone delusional enough to believe this economic recovery is real…”
A couple I found noteworthy were:
- #4) How can the U.S. real estate market be considered healthy when, for the first time in modern history, banks own a greater share of residential housing net worth in the United States than all individual Americans put together?
- #16) Both Fannie Mae and Freddie Mac recently told the U.S. government that they are going to need even more bailout money. So what does it say about the U.S. economy when the two “pillars” of the U.S. mortgage industry are government-backed financial black holes that the U.S. government has to relentlessly pour money into?
- #21) The bottom 40 percent of those living in the United States now collectively own less than 1 percent of the nation’s wealth. So is Barack Obama’s mantra that “what is good for Wall Street is good for Main Street” actually true?
You can read the rest here. But the pressing question is – is real estate really an answer? Gold? Leaving the country?
SEE MANY PREVIOUS “ECONOMIC” UPDATES AFTER THE JUMP…
5/24/2010 Update:
False sense of reality propagated by TV Networks?
I don’t have to detail the number of TV networks that say one thing or another here. Because many financial “speculators” think that the media plays a huge role in influencing how the market reacts – one way or another.
However, many Hoboken411 readers have sent in links from this website called ZeroHedge.com – with practically every person saying that this site is the one you need to read to get “the truth” about what’s transpiring behind the scenes, saying today’s stock market isn’t “even remotely resembling orderly, efficient or fair.”
Some of the links recently sent were:
One of the contributors of ZeroHedge.com even suggests taking all your money out of the market!
5/10/2010 Update:
People are nervous – should they be?
There’s all sorts of fidgety people in the financial world at the moment, wondering what the global market is going to do this week. Hype? Real worry? Doom? Or big profits to be made if you play your cards right?
Loading ...4/1/2010 Update:
“Sense of entitlement” – “Elegant form of theft”
The global economic system is complex, and not easy to understand by most regular people. It’s so complex, hectic and mismanaged – that practices which caused the recent financial crisis of the past few years – happen before anyone can prevent them. Of course, some people like Peter Schiff and Ron Paul have been waving warning flags for years – but no one listens.
There was a great piece that ran on 60 Minutes recently – where Steve Kroft interviewed Michael Lewis – Author of the book The Big Short: Inside the Doomsday Machine, where he simply explains why we collapsed, and how some people got rich betting against the market. Fascinating.
SEE ORIGINAL POST (AND 60 MINUTES PART 2) BELOW…
(Economic Meltdown, continued…)
60 Minutes Part 2
Here’s the last 10 minutes of the interview with Michael Lewis.
Also – how Lehman Brothers lied and stole.. horrible
ORIGINAL UPDATE BELOW…
1/26/2010:
Whoa Nelly!
If you want to be scared – then you ought to read this article at The Economic Collapse Blog, which details 20 reasons why we’re in an Economic Black Hole, and will simply not recover. I picked two of the 20 that I’m particularly nervous about…
Note to doubters: Feel any of those statistics or statements are inaccurate? Please explain why.
The U.S. Economy is dying
“Even though the U.S. financial system nearly experienced a total meltdown in late 2008, the truth is that most Americans simply have no idea what is happening to the U.S. economy. Most people seem to think that the nasty little recession that we have just been through is almost over and that we will be experiencing another time of economic growth and prosperity very shortly. But this time around that is not the case. The reality is that we are being sucked into an economic black hole from which the U.S. economy will never fully recover.
The problem is debt. Collectively, the U.S. government, the state governments, corporate America and American consumers have accumulated the biggest mountain of debt in the history of the world.
Our massive debt binge has financed our tremendous growth and prosperity over the last couple of decades, but now the day of reckoning is here.
And it is going to be painful.”
Number One: Real Estate Bubble
Do you remember that massive wave of subprime mortgages that defaulted in 2007 and 2008 and caused the biggest financial crisis since the Great Depression?
Well, the “second wave” of mortgage defaults is on the way and there is simply no way that we are going to be able to avoid it. A huge mountain of mortgages is going to reset starting in 2010, and once those mortgage payments go up there are once again going to be millons of people who simply cannot pay their mortgages. The chart below reveals just how bad the second wave of adjustable rate mortgages is likely to be over the next several years….
Number Nineteen: Devalued Money
The reckless expansion of the money supply by the U.S. government and the Federal Reserve is going to end up destroying the U.S. dollar and the value of the remaining collective net worth of all Americans. The more dollars there are, the less each individual dollar is worth. In essence, inflation is like a hidden tax on each dollar that you own. When they flood the economy with money, the value of the money you have in your bank accounts goes down. The chart below shows the growth of the U.S. money supply. Pay particular attention to the very end of the chart which shows what has been happening lately. What do you think this is going to do to the value of the U.S. dollar?…
READ THE REST OF THE BAD NEWS HERE!
Can anyone suggest a STABLE country to move to? New Zealand? Antarctica?
Hoboken NJ
36 Responses to ** The American Economy totally doomed? **
January 26th, 2010 |
The vice president of real estate for Barnes & Noble released a statement regarding the store closing:
“We are as disappointed as our customers to be closing our Hoboken store, but the fact is the rent became too high, which made it impossible to continue leasing the space from a business point of view.”
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January 27th, 2010 |
I hope the banks will find a way to save us all. Bonuses are $39.9 billion this year. Even though they are down from 44.7 billion last year, maybe they will be able to help us all rise up from our boot straps in spite of them being so being horribly affected by the down economy.
After all, you don’t want all that top talent going overseas to fuck some foreign economy in the ass, it would be like they were cheating on us, and that would be bad for some reason.
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January 27th, 2010 |
matt,
In that case, all debt is toxic. Get rid of overdrafts, credit cards, charge cards, and car loans. Cash only.
In response to matt_72 who said:
And you have exactly articulated why an ARM is a toxic instrument, it marketed to buyers who couldn’t afford the house they were buying. So an ARM is a toxic instrument, but mostly b/c the buyers were toxic buyers.
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January 27th, 2010 |
Debt is not at all toxic if you have the cash flow to REPAY IT. That is not at all the case w/ an interest only loan. Those were often times taken out by folks who could not at all afford to amortize their loans. The were marketed to folks who expected that future raises they might get or the appreciation in the home price would help them pay down the loan over time (or flip the home at a profit). No car company would be dumb enough to loan money to a person who only could afford an interest only loan when buying a car, not even Government Motors.
In response to getz76 who said:
matt,
In that case, all debt is toxic. Get rid of overdrafts, credit cards, charge cards, and car loans. Cash only.
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January 27th, 2010 |
The toxicity of debt is inversely proportional to the borrower’s decision making competence.
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January 27th, 2010 |
The interest only loans are perfectly legitimate financial instruments: they were created for people who would pay the principle in large and perhaps irregular chunks, rather than through regular monthly cash flow. An example are people in finance with their annual bonus or people who got paid in stock as they await vesting, etc.
That said, I agree that most of the people who took such loans expected the home price appreciation to finance the loan.
In response to matt_72 who said:
Debt is not at all toxic if you have the cash flow to REPAY IT. That is not at all the case w/ an interest only loan. Those were often times taken out by folks who could not at all afford to amortize their loans. The were marketed to folks who expected that future raises they might get or the appreciation in the home price would help them pay down the loan over time (or flip the home at a profit). No car company would be dumb enough to loan money to a person who only could afford an interest only loan when buying a car, not even Government Motors.
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January 27th, 2010 |
If I recall correctly, some state out West lost faith in the U.S. Dollar because of all the debt. Some town businesses (sorry, don’t remember the details) began paying their workers in gold as real value currency instead of fiat paper money.
The US, a long time ago, had a true value exchange (The Bretton Woods system – 1945) where a paper currency (then called certified certificates) would be exchanged for the numerated value in real gold bullion. From people, to banks, to international banks, this is how paper money created a value for itself and why the USD was so popular, rather than paper from a Banana Republic. Given the unconstitutional powers of the Federal Reserve, the national debt explosion under FDR during the 30′s, and more and more debt through the 80′s, 90′s (Clinton claims no annual deficit, but the national debt still grew), and 2000′s. But back in the 1970′s, it was already too much debt for the system and exchanging paper fiat money for gold ended. There just wasn’t enough gold to match the huge debt. Thus begin the end of the US by fiat money’s devaluation of the once gold backed USD.
Going back to April 5, 1933, the FDR administration (Dem.), under Executive Order 6102, actually banned and confiscated private (U.S. citizens) ownership of gold (how do you constitutionally do that?). The Executive Order forced U.S. citizens to hand over all their gold to the Federal Reserve (an private NGO that was never given authority in the Constitution), thereby paving the way for the Federal Reserve to begin their games. Up until the 1970′s, you could exchange the fiat money for gold, but thereafter, noway. Why? Because it would’ve limited the Federal Reserve from printing up paper fiat money as much as they wanted. Skip to 2009 when Obama’s appointee Ben Bernanke and Tim Geithner testified to Congress about where a bulk of TARP money went, and is going, and how much and which foreign entities did they hand over that money to. They both said they didn’t have to answer, and that no federal law could make them answer. Funny that the Federal Reserve has never been audited – even funnier that the U.S. Constitution never ever gave authority to create such a private entity.
And here we are today, current administration a month ago raising the debt ceiling 1.4 trillion, then a month later this month requested another debt ceiling raise of another 1.9 trillion.
Damn the fiat monetary system.
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January 27th, 2010 |
Monopoly
the banker, luxury tax, rent increases – it’s not just a game
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April 2nd, 2010 |
Property Grunt had a good take on this…
Whatever fail safes that were in place, if they were ever in place at all, have completely failed.
Nobody did their due diligence or cared even to do it.
Just because you help someone out of a hole does not mean they will change their ways. And as Wall Street demonstrated when they were bailed out, they jumped right back in.
We are not out of the woods yet and this will happen again. In fact, I would bet that there are forces at work right now who are preparing to take advantage of the double dip, and probably engineering another Greece.
In Wall Street as long as money is being made, nobody gives a f**k. It’s their nature. Like a scorpion.
http://propertygrunt.blogspot.com/2010/03/its-in-their-nature.html
Yup, LIKE THE FABLED SCORPION.
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April 2nd, 2010 |
Let’s bail out some more banks!
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May 10th, 2010 |
I’m not as worried about the economy as I am about the source of the problem: stupidity. There is no good reason for just anything that’s happened. It’s all epic failure on the part of the people involved. They completely disregarded cold hard facts and reality in favor of their fantasies in their decisions, and it’s costing us all a great deal.
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May 20th, 2010 |
The DOW close today is 300 points lower than when this story was published… whoops! Should have made the poll for two weeks instead of one…
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May 20th, 2010 |
More importantly is the markets keep resetting lower and the CDS levels on sovereign debt keep resetting at higher levels. Every time there is some government intervention, the effect is only temporary. Nobody has confidence that the sovereign debt crisis can be solved without a lot of pain and until that gets resolved, the equity markets will continue to be suspect. The only reason we aren’t down more is people are more worried about Europe than they are about the US. Been an interesting few weeks indeed.
In response to hoboken411 who said:
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May 24th, 2010 |
It is ugly. As Matt says above, stimulus is a shell game when you have problems in the economy this pervasive. Targeted stimulus can work in certain areas, but we have problems everywhere. You need to adjust either the input or the output to make the machine change.
The fix is painful and mainly needs to happen in social welfare cuts to have any impact. The Europeans are going to get the biggest shock. China is in for a huge shock when demand for goods plummets as disposable income from the West drops so significantly that no currency manipulation can be done without breaking the back of the already strained Chinese workforce.
The only way to “fix” this is either big cuts and more efficiency (do you think the federal, state, and local governments are giving you your money’s worth) or a game-changing breakthrough (think a huge leap in energy generation, like cleaner nuclear deployment or similar). The former causes other problems, because you have to redeploy the cut government worker into something productive, while the latter could really cause some ripples until it settles down (i.e., cheaper energy could make a “brute force” impact on producing goods, making it effectively cheaper to produce vital goods by increasing energy used in production with no additional cost).
In short, we’re hosed.
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May 24th, 2010 |
Texas Rangers go bankrupt – Alex Rodgriguez loses 25 million! That’s more than I’ll earn in a lifetime!
zerohedge.com/article/texas-rangers...ferred-comp-largest-unsecured-credi
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May 24th, 2010 |
You should see what Hicks (Rangers owner) is doing to Liverpool Football Club. I have no love for that club or their thuggish supporters, but what Hicks and Gillette have done to that club out of greed and incompetence is stunning. And in European sport, going into administration (bankruptcy) has actual ramifications in the league.
The English are hating on the “Yanks”. You should see the Anti-Glazer (Manchester United FC owner, also owners of the Tampa Bay Bucs) protests…
bleacherreport.com/articles/394198-...azers-debt-rises-another-75-million
They all loved the Americans when they swooped in with leveraged buy-outs and effectively bought trophies with insane spending, meanwhile siphoning off a healthy profit. Now they are leaving debt-laden husks in their wake.
In response to camel2 who said:
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