Quote:
Originally Posted by aimeecc
I'm really worried about this recession. I can only imagine if I didn't have job security or savings how I would feel. I worry about my brother - he in construction.
Anyone else scared?
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Scared? No. Finally, opportunity is appearing because the damage created by George Jr, money games, oil that was too cheap, et al is finally being realized. That damage created many years ago is only just appearing on spread sheets. Time to worry was when previous posts here discussed dangerously high housing prices fueled by money games (sub-prime loans only one of those problems). At that same time, the front page of The Economist showed a falling brick labeled 'housing prices'. Housing prices must drop something approaching 30% - a number that varies across regions.
How severe is this crisis? Defaults appear to be about 2%. Non-performance loans may be either 4% or 6%. Trivial? Yes. But due to spread sheet lying and money games (similar to those in Enron and encouraged by pathetic regulations by the George Jr administration), the last straw broke it. Many once regarded 'stable' entities (ie Bear Stearns) were doing what Enron did.
A resulting downturn should attack the many entities that have been playing spread sheet games. This will result in job losses, significant inflation, or other problems. But then you should have been preparing for 'bad weather' before my posts were warning of it.
At this point, the majority of damage to investments has probably been done. Company reports will continue to be negative. But knee jerk reactions this late in the storm are ill advised - a generalized comment that may not be valid for some entities. For example, if invested in Chrysler, then consider getting out of what has been a terrible investment for the past decade - see the product to know why.
Starting maybe this summer, some good deals should be available as, for example, house prices drop enough to return to reality. IOW time now to start study or planning for what those investments will be next year.
But again, learn from history. The massive spending by a wacko and lying government has only started to be felt. Deja vue Nam. Once those costs actually appear is about the same time that massive war spending finally stops. America's slow withdrawal (defeat) in 1972 Nam resulted in recession in 1976 and 1979. Don't expect investments to be as robust due to so many outstanding bills. See the next post to appreciate how large those hidden costs. We owe so much money to everyone that the dollar has dropped to $0.67. And then in the past month, it dropped another 4.5%. That is further loss on your investments and a reason why prices must increase.
Economics will punish America for "financial mismanagement" (quoting an international source) by George Jr's administration. Excessive economic incentives when the economy needed to be fixed by a downturn. From the 1970s, the economy prospered by selling off American assets and by exporting. One of the most productive jobs back then was selling used American construction equipment to many other nations that did not use money games to promote (lie about) growth. For example, Caterpillar is finding almost all its growth in exporting construction equipment. And, of course, companies who only cater to the top 1% income earners should remain profitable. Good reasons explain why companies such as Sharper Image must not exist.
Expect problems in public services and government spending. Government has been mortgaging itself especially with tax cuts while government spending only increased. Construction jobs created only by government pumping money (liquidity) into the economy must be reduced significantly - years from now.
Massive drop in the dollar is only part of the problem. Inflation will eventually also take revenge for all that spending created by mortgaging America. What happens to a treasury bond of 3% when inflation is 1.5%? Welcome to another pending problem.
Bottom line - getting out of investments is too late. Your time to get out is when others foolishly accused this poster of being so negative. Now is the time to start preparing for the many good buys. Now is the time to recognize that past history is not a good measure of better investments because some industries were fueled only by George Jr's economic mismanagement (stimulus packages).
When should you have been scared? When the Economist labeled the falling brick “Housing Prices”. The problem was that obvious back then. Too late to be scared now.