Forget recession! Are we headed for another Great Depression? The Dow fell over 500 points today after Lehman announced a 700 billion dollar bankruptcy. Now Merryl Linch is folding. Are we about to lose our life savings? What has happened to America?
Are we headed for a Depression?
- Thread starter Ark-Tider
- Start date
According to the Stock Trader's Almanac, the Dow Industrials peaked at 381.17on September 9, 1929. It bottomed on July 8, 1932 at 41.22--about a 90% hit. Unemployment during the depression was, I believe, around 25%. That was at a time when more people had manufacturing jobs. Now we have a lot of service jobs. Demand for a lot of services will not wane as much as the need to manufacture big heavy things made of metal.
My first thought is people who are over leveraged will be the most affected as we are seeing in the housing markets. The housing boom that was in effect 1998 -2006 saw house appreciate to a level that was not justified followed by the ease in credit restrictions that allowed everyone a piece of the American dream. Mortgage brokers (I know a few) were offered incentives to push ARM's with the promise that you can refinance later and lock in a low rate.... Here come the problem, rates rose, housing gluts reduced prices and "stupid" mortgage companies adjusted rated to levels that the consumer couldn't afford - hence the foreclosures.... In hind-sight the better option for the mortgage companies would have been to lock in the current rates that could be afforded and tighten the credit limiting new loans..... (Feel like I am preaching)......
Anyway, will we have a depression like 1929, probably not the global economy will balance out as the reducing dollar makes goods and travel to the USA a bargain. Will we see tough times, yes but I believe we will hedge to a better economy in 2009, post election (regardless of the winner)..... We will see people unable to get home loans without a 680 fico and 20 to 25 percent down. The days of no down payments and low down payments will be limited to the 780 fico scores....... The stock market will correct but probably in the 25 to 30 precent range.....
The biggest problem is the biggest asset most people have (their house), will reduce in value regardless of locations, 401K's will also reduce...... Instead of the 2nd house at the beach it will be the fifth wheel at the state park for vacations.
My first thought is people who are over leveraged will be the most affected as we are seeing in the housing markets. The housing boom that was in effect 1998 -2006 saw house appreciate to a level that was not justified followed by the ease in credit restrictions that allowed everyone a piece of the American dream. Mortgage brokers (I know a few) were offered incentives to push ARM's with the promise that you can refinance later and lock in a low rate.... Here come the problem, rates rose, housing gluts reduced prices and "stupid" mortgage companies adjusted rated to levels that the consumer couldn't afford - hence the foreclosures.... In hind-sight the better option for the mortgage companies would have been to lock in the current rates that could be afforded and tighten the credit limiting new loans..... (Feel like I am preaching)......
Anyway, will we have a depression like 1929, probably not the global economy will balance out as the reducing dollar makes goods and travel to the USA a bargain. Will we see tough times, yes but I believe we will hedge to a better economy in 2009, post election (regardless of the winner)..... We will see people unable to get home loans without a 680 fico and 20 to 25 percent down. The days of no down payments and low down payments will be limited to the 780 fico scores....... The stock market will correct but probably in the 25 to 30 precent range.....
The biggest problem is the biggest asset most people have (their house), will reduce in value regardless of locations, 401K's will also reduce...... Instead of the 2nd house at the beach it will be the fifth wheel at the state park for vacations.
I keep mine in Mason jars buried in the backyard....I just wish I could remember where I buried them.
Here's a scary article.
This isn't at all my specialty, but it looks like there are only two "big" banks left, both of which inherit substantial debt from the market. As the remaining banks falter and the two dwindle to one, the federal government will have to jump in and save it to such an degree that the link between government and banking will be blurred until indistinguishable. And then Marxism happens.
[/prophecyofdoom]
This isn't at all my specialty, but it looks like there are only two "big" banks left, both of which inherit substantial debt from the market. As the remaining banks falter and the two dwindle to one, the federal government will have to jump in and save it to such an degree that the link between government and banking will be blurred until indistinguishable. And then Marxism happens.
[/prophecyofdoom]
back in the 70's when I was a kid, that's exactly what we did. We couldn't afford vacations so we'd go to a State park and camp for the weekend. My grandparents had a pop-up camper and we might go with them. I told my wife that I'm looking somewhat forward to inevitable correction in the market. You'll see/hear of a lot more people having "family" time and I think we'll all be better for it. We've all gotten a little spoiled and a little big for our britches with the money we've been making/spending.
And don't forget that market corrections offer some wonderful buying opportunities for those of us with longer time horizons.
I've been thinking the same thing. I know diddly about the market, but have wondered if it wouldn't make sense to just put down a few hundreds bucks on Freddie and Fannie and see what happens.
And then the stage is set for Obama to assume leadership of the New World Order.
That's "bush-speak". He stole the phrase from you know who.:rolleye2:
Who? Al Gore? Or John Kerry? You know, since they were all part of secret societies and they're all masons hell-bent on handing complete power to Obama.
Those two may be a little risky but if you are looking for a potential bargain, GE is taking a beating because of their financial (GE Capital) side but looks like its business side is ok. Its at a 5 year low.
Thanks. Any others come to mind?
The Mac's came to mind mainly for the potential to hit a homerun on a small amount of money. Last week they were under a dollar I believe.
Well, we need to go into a recession before we can go into a depression. Since we still haven't gone into a recession, I will wait before I get in on the Depression talk.
Ask me after Medicare and Social Security go belly up. You think our country has financial problems now? You haven't seen nothin yet. These pathetic polticians on both sides have done nothing but try to pass off this albatross to another generation. They need to get this problem fixed and pronto before another revolution occurs.
Has your thoughts changed any over the past few days with the bail out of AIG and other large banks scrambling to find a buyer? Wash Mutural, Morgan Stanley, Merryl Lynch along with a few others are pretty large institututions. Just curious if you believe that this is in line with the market adjustment you were talking about.
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