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?

How will the DOW close this week?

View Results

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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

The US Economy is doomed“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….

Second wave of mortgage resets and defaults

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?…

Adjusted Monetary Base

READ THE REST OF THE BAD NEWS HERE!

Can anyone suggest a STABLE country to move to? New Zealand? Antarctica?

Leave a Reply

36 Comments on "The American Economy totally doomed?"


Member
6 years 12 days ago

IMO, real estate is going no where – though realtors all around are hyping up a recovery actually for 2011. Based upon what? Unemployment is over 10% and climbing to the teens for those who haven’t yet given up looking for a job and being counted as unemployed. For those who gave up, and decided to participate in the food stamps government housing and handouts, they aren’t counted. Unemployment in some areas in the 20%+. If you have a decrease in the job force, yet increase in the in the stock market dailies, and ever increasing government debt over GDP,… Read more »

Member
oceanbloo
6 years 12 days ago

This stuff is scary, for sure. But even more scary is the recent Supreme Court ruling that lifts limits on contributions that corporations can give to politicians. Very soon, our elected officials are going to work on behalf of what large companies want, not what people want/need – even more than they are doing right now.

Member
getz76
6 years 12 days ago

McCain-Feingold was ineffective. The 527 organizations were not only able to completely bypass the McCain-Feingold, but also cloud the true source of some of these dollars. The root of the problem is not the money, it is a disengaged and uneducated electorate. Lauded as impressive, the turnout for the special election in Massachusetts was approximately 72% of registered voters. Really? Impressive? The election had impacts locally and nationally, and 28% of REGISTERED voters stayed home. That does not even count those that cannot even be bothered to register to vote. In response to oceanbloo who said: This stuff is scary,… Read more »

Member
mcgato
6 years 11 days ago

I’m pretty sure that Congress is currently a wholly owned subsidiary of Wall Street. Your fear is a little late to the game.

In response to oceanbloo who said:
This stuff is scary, for sure. But even more scary is the recent Supreme Court ruling that lifts limits on contributions that corporations can give to politicians. Very soon, our elected officials are going to work on behalf of what large companies want, not what people want/need – even more than they are doing right now.

Member
6 years 12 days ago

I’m more scared of red herrings, they smell fishy.

Member
6 years 12 days ago

If we go down, we’re taking the rest of the world with us. That includes China. Fact.

Member
6 years 12 days ago

The Monkey King will be free.

In response to emarche who said:
If we go down, we’re taking the rest of the world with us. That includes China. Fact.

Member
rag246
6 years 12 days ago

But super conservative Randroid Alan Greenspan said the ARM might be a good idea!

usatoday.com/money/economy/fed/2004-02-23-greenspan-debt_x.htm

The economic picture looks bleak now, but people should have been paying attention since the repeal of Glass-Stegall, which basically fueled the credit derivatives boom that printed all this money. Instead, they were too busy gushing about stainless steel appliances and granite counter tops (which were funded by money the banks were printing). Oh well, much easier to blame it on Obama I guess.

Member
getz76
6 years 12 days ago

There is absolutely nothing wrong with adjustable rate mortgages. Buying more house than you can afford is not. A lot of folks who are struggling with ARMs are doing so because they put 3% down and had interest-only payments for two years… all based on the speculation that they would refinance with the house being worth 20% more than what they paid for it. In response to rag246 who said: But super conservative Randroid Alan Greenspan said the ARM might be a good idea! usatoday.com/money/economy/fed/2004-02-23-greenspan-debt_x.htm The economic picture looks bleak now, but people should have been paying attention since the… Read more »

Member
rag246
6 years 12 days ago

There is nothing wrong with an ARM unless it is being touted as a means for one to buy more house than they could afford otherwise. The language is subtle, but that’s what “The Maestro” is saying. That article was written in 2004, and by then the housing market had frothed up nicely. Greenspan shilled ARMs because he realized the credit fueled economy might come crashing down before he was able to hand the mess he made (since the mid eighties) to some other poor schmuck. And now that I think about it, I can’t see any other reason to… Read more »

Member
getz76
6 years 12 days ago

ARMs are not toxic instruments. There are individuals that can handle interest rate fluctuations without issue. An ARM will be inherently cheaper at issue because the lender does not have to price in the interest rate risk. ARMs are very attractive to consumers in high interest rate environments when there is more likely to be a shift down in interest rates versus up. Additionally, if you lock into a fixed rate mortgage at a high rate, do not assume you can just refinance. There are plenty of folks that are upside-down on fixed rate mortgages just like ARMs. They cannot… Read more »

Member
6 years 11 days ago

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. In response to getz76 who said: ARMs are not toxic instruments. There are individuals that can handle interest rate fluctuations without issue. An ARM will be inherently cheaper at issue because the lender does not have to price in the interest rate risk. ARMs are very attractive to consumers in high interest rate environments when there is more likely to be… Read more »

Member
HansBrix
6 years 11 days ago

Well, yeah.

And also in the early 00s lots of pressure was put on banks to lower their lending standards so that more loans could be extended to precisely the people the standards were intended to keep out.

Let’s help the poor and innumerate buy homes by letting them borrow more. What could go wrong?

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.

Member
getz76
6 years 11 days ago

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.

Member
6 years 11 days ago

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… Read more »

Member
Watchmaker
6 years 11 days ago

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… Read more »

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