Interesting Economic Times - What is going on with the economy?

[NoMoneyDown]

Re: Interesting Economic Times - What is going on with the econom

Just something else to consider from some of the articles I've been reading ...

1. Home prices peak as speculation in R/E tops out.
2. Housing construction stalls, home builder stocks drop.
3. Undocumented temps laid off first, government data still positive.
4. Mortgage lending impacts/layoffs; ARMS start resetting; foreclosures rise.
5. R/E home prices fall, inventory builds and bank raise reserves to compensate.
6. Credit tightens and financial paper assets fall as liquidity in the system contracts.
7. Tight credit impacts small businesses and consumers putting more loans at risk; more layoffs
8. Consumer’s tapped out; consumer discretionary spending impacts; sector BK’sand layoffs.
9. Business spending contracts
10. Commercial R/E vacancy rates rise; increase in commercial loan defaults
11. More layoffs, more home foreclosures, more bank failures; credit tightens even further.
12. Income, property and sales tax revenues decline; local government layoffs
13. Muni-bond defaults
14. More layoffs, foreclosures, small business closings, contracting businesses & govt.

We're currently around #7 or #8.

 

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[hakrjak]

Re: Interesting Economic Times - What is going on with the econom

I just heard on CNBC that today Treasuries got to the point where people were paying to own them with no yield what-so-ever, the flight to safety was so crazy....

Does anybody know if this means mortgage rates will fall? If so, I need to get a bunch of houses under contract this week! I'm watching right now and I see 5.75% national average on Yahoo finance, but it usually only updates once daily. I see 5.73% on bankrate.com

There are going to be some OPPORTUNITIES to make a lot of money for people who have cash and can move quickly here!

I see $50 gold eagles are averaging around $950 right now on Ebay...

- Hakrjak

 

[Sid23]

Re: Interesting Economic Times - What is going on with the econom

So what happens if you have $30k in an ING Direct savings account if ING goes belly up? They say your deposits are FDIC insured up to $100k. Is this true even if ING folds?

 

[Russ H]

Re: Interesting Economic Times - What is going on with the econom

If the accounts you have the $$ in are FDIC insured and the bank folds, the FDIC guarantees you it will pay you up to $100,000 ($200,000 for couples where the $$ are held jointly):

FDIC:When a Bank Fails - Facts for Depositors, Creditors, and Borrowers

-Russ H.

 

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[randallg99]

Re: Interesting Economic Times - What is going on with the econom

I just heard on CNBC that today Treasuries got to the point where people were paying to own them with no yield what-so-ever, the flight to safety was so crazy....

Does anybody know if this means mortgage rates will fall? If so, I need to get a bunch of houses under contract this week! I'm watching right now and I see 5.75% national average on Yahoo finance, but it usually only updates once daily. I see 5.73% on bankrate.com

There are going to be some OPPORTUNITIES to make a lot of money for people who have cash and can move quickly here!

I see $50 gold eagles are averaging around $950 right now on Ebay...

- Hakrjak

a banker friend called me in borderline hysterics as people were pulling cash out all day and the investment desk had his treasury trades frozen because they were overloaded with trades...

I am buying gold.... despite the huge jump today, it is disproportionately low versus the reality of the economic times.

This is what I have been bitching and moaning about the past several months. It took a REALLY big shake out for gold to actually show its worth in value

it won't be 1929 again... too much world economy at stake to prop up US treasuries for as long as we need to sustain the crisis.

I hope I don't eat my words, tho... I'll post more of my thoughts tonight... too much going on at once.... a very, very uncertain market with a lot of uneasy trading/investing indeed

 

[randallg99]

Re: Interesting Economic Times - What is going on with the econom

So what happens if you have $30k in an ING Direct savings account if ING goes belly up? They say your deposits are FDIC insured up to $100k. Is this true even if ING folds?

if ING is FDIC insured, then yes.

 

[Z5 FILMS]

Re: Interesting Economic Times - What is going on with the econom

I don't know what all this "sky is falling" talk I hearing is about. I'm up 4.9% for the year as of today. I'm up 5 figures just this month. I have been doing so good lately, I'm going to Hawaii tomorrow morning to relax and play golf and booked a trip to Peru in November.

All my friends who gave me crap for my "very conservative" portfolio are sitting at home right now trying to not throw up.


ALOHA!

 

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[MJ DeMarco]

Re: Interesting Economic Times - What is going on with the econom

So what happens when your $90,000 in gains can't be redeposited or withdrawn because it's really only "funny money" ... a digital mirage on a computer screen?

 

[randallg99]

Re: Interesting Economic Times - What is going on with the econom

I don't know what all this "sky is falling" talk I hearing is about. I'm up 4.9% for the year as of today. I'm up 5 figures just this month. I have been doing so good lately, I'm going to Hawaii tomorrow morning to relax and play golf and booked a trip to Peru in November.

All my friends who gave me crap for my "very conservative" portfolio are sitting at home right now trying to not throw up.


ALOHA!

have a great trip - can you share your portfolio and trades with us?

 

[randallg99]

Re: Interesting Economic Times - What is going on with the econom

So what happens when your $90,000 in gains can't be redeposited or withdrawn because it's really only "funny money" ... a digital mirage on a computer screen?

or how about depositing 100k into a money market account only to find out that it lost 3% in value!!!?!?!??


the big investors in stocks are not day traders... but people with large retirement sums who depend on conservative approach to preserve capital.... can you imagine the feeling of being secure and then finding out you've been robbed of 3%!

by the way, MJ - it was FIDO that royally screwed up today...

very unique era we are living through... what was once a bulletproof system is showing terrible cracks

 

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[CactusWren]

Re: Interesting Economic Times - What is going on with the econom

Cool thread!

Having grown up in an inflationary country (Mexico) I guess I'll vote for real estate. That is mostly how people retain their wealth there as money can and does disappear with devaluations and inflation in front of your very eyes. Gold is also popular.

Having said that, taxes are what makes this country IMO what it is. It is how this country is actually different from many others. The reason behind the good old saying "nothing is certain except death and taxes." The tax part is a certainty here and not in many other places...obviously we know there are loopholes, but still.

That brings to mind the "new" tax changes regarding RE investment which Diane Kennedy does such an awesome job explaining to us in this board. The situation is not similar to the RTC situation mentioned above in this thread. How I understand it, Diane is recommending biz building over RE for a while now.

However, this thread makes me think of a book called "American Theocracy" by Kevin Phillips. I DO NOT recommend this book (where are the good editors when you need them?). I actually ended up reading it just because it was my responsibility for a book club I belong to. It was a huge struggle to stay awake. The reason I think about it is that in that book one finds historical examples of the world's super powers.

Basically, looking at the big picture how reasonable can it be to assume that the USA will be a world leader for long? Where's Spain now? Where's England now?

 

[Russ H]

Re: Interesting Economic Times - What is going on with the econom

So what happens when your $90,000 in gains can't be redeposited or withdrawn because it's really only "funny money" ... a digital mirage on a computer screen?

Not sure what kind of instrument you have this in?

Can't you sell whatever and transfer just the gain to another account?

We did all of our CDs for LESS than 100K, so that the interest would not put them over. You could reinvest to do the same if this is what you're talking about-- when they mature.

Again, not sure what ya have, so not sure what to suggest.

-Russ H.

 

[Z5 FILMS]

Re: Interesting Economic Times - What is going on with the econom

So what happens when your $90,000 in gains can't be redeposited or withdrawn because it's really only "funny money" ... a digital mirage on a computer screen?

Then I better have a couple safe deposit boxes stuffed with a few million or I will be SOL.

 

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[china]

Re: Interesting Economic Times - What is going on with the econom

Not yet, but that looks like the safest place to have millions. Sitting around in banks and money funds now seems like a huge risk.

Physical metal in large quantities is hard to get. How would you purchase millions of dollars in gold or silver? Buy Comex futures? Buy coins on the internet or at a local coin shop?

Tulving.com is one of the best for larger orders -- but even he is out of a lot of things right now:
http://tulvi.com/goldbull.html

The physical market isn't that deep. It could take a long time to accummulate over $1 million in gold.

 

[hakrjak]

Re: Interesting Economic Times - What is going on with the econom

That was a great link -- Speed for that. A lot cheaper than Ebay!

- Hakrjak

 

[max momo]

Re: Interesting Economic Times - What is going on with the econom

Hi,

If anyone really wanted to shelter a significant amount of their net worth into gold, physical bullion provides the safest and most logical starting point for these reasons:

[ok, since I don't post that often I cannot provide a link. So, you need to load my site address into your browser, coinmine dot com. Once there, click on the right side of the page on: Why Buy Bullion and Coins.]

As always, one should consider scaling into a position, not going all-in at one entry point. For example should one want to shelter 1M$, three purchases of $330,000 provides easier entry and averages the purchase price.

Now, physical gold currently has a premium above paper quotes. That is - just as folks stop trusting their bank, wall street, the government etc (one reason to move into gold) they stop believing the 'official' price of spot gold.

Hence, the largest bullion dealers are no longer able to supply demand. The US Mint stopped production of one ounce silver eagle and platinum rounds twice in the past two years for this reason.

If you look at the home page of another major North American dealer, Kitco dot com you will see this note at the top of their page:

 

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[max momo]

Re: Interesting Economic Times - What is going on with the econom

In order to reflect the current strong demand for Silver Maples and Silver Eagles, Kitco is temporarily increasing its current bid (buyback) price for these particular products. Please visit our selling to Kitco page for more details.

As such, it could take a while to put toge the a few hundred ounces of gold since EVERYONE is scrambling for physical metal right now. Nevertheless, my local supplier purchased 350 ounces Au last week and offered any part of it to me. (Not sure how much would even be left one week later, I am curious and should check.)

Beyond the reasons to buy physical, here is my primer on HOW to purchase metals:


[coinmine, How To Buy Bullion and Coins]

I have spent a fair amount of time researching and experiencing these various methods. You will notice I specifically do not recommend COMEX or MONEX, as a previous poster reference, for reasons I won't go into here.

What I do recommend is that you spend a reasonable amount of time in how to PROTECT your net worth since you certainly took a great amount of time archiving your wealth. There is no shortage of scammers in the gold markets, online scams, or wall street. Defend your nest egg with information first, gold second.

Best thing I can recommend is this:

1. Bullion first, ever other method of owning metals second [Future, options, ETF are just paper promises- not tangible wealth. Much of the population learned this tough lesson just this week].

2. Become familiar with two or three bullion dealers first. Get to know their faces and names, scale into positions. You may want to sell back the metals at some point. Develop a relationship that will allow you to do so most judiciously.

Always proceed according to YOUR plan. Let me know if you need more information on this market. - max

 

[Starsky]

Re: Interesting Economic Times - What is going on with the econom

Countrywide announced that they (again) will do 100% financing for home loans as long as the buyer is purchasing a foreclosed home that is owned by Countrywide. (In other words, Countrywide is the lender and the seller). I hear that Citi is about to roll out a program that giv

Hey Streets, can you direct me as to if this was announced by Countrywide in a press release or something? Id like to find out more info on this since I deal with them

Thanks

 

[AroundTheWorld]

Re: Interesting Economic Times - What is going on with the econom

Basically, looking at the big picture how reasonable can it be to assume that the USA will be a world leader for long? Where's Spain now? Where's England now?

I couldn't agree more... for people that are concerned, now is the time to look at the big picture - - - the really big picture.

Markets go up.
Markets go down.
The farther they go up, the harder they crash.

World powers come.
World powers go.

While these recent bail outs have averted an immediate desaster / depression - - what is going to happen as a result of these bail outs. What will the consequence be?

How will the government cover all of this money?
And - - - the money for social security?
And the money for the huge national deficit?

Where will it come from?

2 places: taxpayers and perhaps more significantly - a devalued dollar. They will have to print money which will drive inflation through the roof.

It is pretty easy to get lax and complacent in our comfort - - - living and thriving in the world's powerhouse. These events are a "larger" wake up call about the overall state of our country's economic health and what could happen in the future. Most of us (on this board) did not live through the great depression. Many of us have never lived outside of the US. We have not experienced first-hand tough economic times, and so somehow, we are lulled into thinking they don't happen, or that they won't happen to us.

 

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[hakrjak]

Re: Interesting Economic Times - What is going on with the econom

What gets me is the people who, understanding how financially strapped this country is right now -- want to spend more money on more programs. Isn't that part of what got us here in the first place? Spending way more money than we take in....

If we're ever going to get the countries financial house in order, it needs to start with balancing the budget ASAP, and cutting all of these programs that are spending us into the poor house.

If the country had all this money sitting around in an emergency fund for this financial bailout, that would be one thing -- But we didn't, and again it had to be borrowed -- and again we're just defering the pain.

- Hakrjak

 

[hakrjak]

Re: Interesting Economic Times - What is going on with the econom

It is pretty easy to get lax and complacent in our comfort - - - living and thriving in the world's powerhouse. These events are a "larger" wake up call about the overall state of our country's economic health and what could happen in the future. Most of us (on this board) did not live through the great depression. Many of us have never lived outside of the US. We have not experienced first-hand tough economic times, and so somehow, we are lulled into thinking they don't happen, or that they won't happen to us.

p.s.

This is exactly what I was thinking a couple of days ago when it really hit the fan. I was thinking about the reality that we could just wake up one morning and find out the US Dollar is worth 1/10th what it was worth yesterday, and we were living in a Banana Republic. We wouldn't be able to afford to buy food to feed our families, and we'd all go from living in the lap of luxury to living in the poorhouse in 1 night. I was getting such a bad feeling about the reality of that happening that I spent the afternoon hording rice & canned goods to give us a month supply of food if anything bad happened, so we could ride it out. I also bought 1000 rounds of ammo in case we got in a situation where we had to protect our stocks from less prepared people. I mean, would any of you feel secure walking down the street if your government failed, and there were no longer any police or emergency personel? Grocery stores completely empty? No gas at the gas stations? Not me...

- Hakrjak

 

[AroundTheWorld]

Re: Interesting Economic Times - What is going on with the econom

If the country had all this money sitting around in an emergency fund for this financial bailout, that would be one thing -- But we didn't, and again it had to be borrowed -- and again we're just defering the pain.

- Hakrjak

... magnifying the pain....

I don't want to get too carried away on these forums - - - I am definatly NOT wanting to be an alarmist, etc... but, I am finding it nice to be able to "talk" about this topic.

This is something that I have been really thinking about since the beginning of the year. I generally stayed away from the topic on this board - - - as it "could" rank right in there with the government staging 9/11. etc. But, IMO the risk is very real that this is just the beginning of a very difficult economic time for our country.

I'll stop now.

 

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[andviv]

Re: Interesting Economic Times - What is going on with the econom

I'll stop now.

Thanks soooo much!!!!

I keep thinking of ways of moving forward and progress.

Falling in the mass hysteria is easy these days.

Keeping a positive, problem-solving state of mind is not.

I'm just trying to go in the opposite direction than the masses... ya'll know why.

I started feeling down when I only read doom and gloom in here, my haven for optimistic, can-do attitude.

If I can't rely on you guys to support me during the darkest economic hours of our generation, then on who should I rely?

If we all can't put on out thinking hats and look for more opportunities and find ways to answer the question: How do we profit/benefit from the current situation then I think the fate of the group is sealed.

or maybe I'm just too naive and you guys all are correct and this is the end of the world. But I will resist a little bit longer.

Oh, and Sonya, you are 105% correct... the conversation is starting to sound too much alike to the RD forums.


....


This morning I saw in the Today show the news. We will probably owe $3500 each MORE per person in the country, to pay for the bail out. And it is very clear that another RTC is coming.

We all know the history lesson. RTC made millionaires to many, many back then.
It will happen again.

My wife and my brother got all excited about it... and their optimism was contagious... when I'm usually the optimistic one. Their question slapped me hard on the face:
HOW DO WE PROFIT FROM THIS?

The government will sell those properties for pennies on the dollar. They did it before.
Today show interviewed the guy that led the RTC and he said loud and clear: it will happen again.

I remember reading about Trump buying a Manhattan building for $1 million and selling it for what? $40M? $100M? (don't remember the exact number right now). I've read in Robert Kiyosaki's book that he bought RE durign the RTC liquidation and made a killing out of it. My friend who works in construction talked to his boss, ol' guy that went bankrupt during those times and come back stronger by buying from the liquidation (his compnay went bankrupt a year before the RTC and bought during the two or three years it took to liquidate everything).

So, the question stands... YOUR household will have to pay $3,500 per person as part of the bailouts, and it sucks big time... how are YOU going to claim YOUR money back and make it into millions?

There is still time to prepare for it. It will not happen overnight. But it will happen. RTC part 2 is coming. Millions will be made. Where will you be in 10 years from now?

andviv -- the optimist.

 

[AroundTheWorld]

Re: Interesting Economic Times - What is going on with the econom

hubby and I go 'round and 'round on topics like this....

I tackle it like this:

Define the Problem
Brainstorm the Solution

Hubby tackles it like this:

(Don't talk about the problem - we know it is there and talking about it only brings us down)
Just "do" the solution - no reason talkin!

lol.

I agree Andres... a part of the conversation MUST be the solution.

I'm still trying to define the problem (in my mind) so that I understand the best way to tackle the solution.

As I think I've stated elsewhere - my mind is circling around:

Get some assets out of country
real estate (that will do well in tough economic times),
gold,
silver, and
commodities
internet biz

For those of us w/ businesses.... how can we draw in $ in a tough economic time?

for the motel, we are advertising internationally - - - a MAJORITY of our guests these days are not US citizens. For self storage - - we are doing some target advertising. Some business owners have the impulse to cut back on expense - and advertising is the first to go.... that is in the wrong direction. Keep the advertising going strong.

 

[tbsells]

Re: Interesting Economic Times - What is going on with the econom

- I think Real Estate will be impacted by tighter lending, but values shouldn't decrease.

- Hakrjak

I wish I could agree with this statement. But, I think its a simple supply and demand equation. Demand for homes has been reduced (and will continue to be further reduced) because people can't buy them. Its not that people suddenly do not want to buy homes- its that they cant. For various reasons there are many people who were qualified under the old rules who are no longer qualified to buy. The pool of "qualified" buyers is much smaller than it was 18-24 months ago. So demand goes down, inventory goes up, days on the market increase, people begin to lower prices to attract buyers, others follow suit to compete with the first group, etc., etc. It leads to lower prices. To throw some extra fuel on the fire sale add in a bunch of foreclosures, some tighter lending standards, higher unemployment, and widespread FEAR. To me, it sounds like a substantial price correction. I hope I'm wrong. I have almost all my eggs in the SFR basket and am not to comfortable with it at this point. Thats just how I see it.

 

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[AroundTheWorld]

Re: Interesting Economic Times - What is going on with the econom

Think a little into the future...

Gen Y is coming of age. They need housing and the population numbers rank right up there close to the baby boomer's population numbers.

 

[tbsells]

Re: Interesting Economic Times - What is going on with the econom

Andviv-

How do we take these lemons and make lemonade?

I am doing this. I'm selling what I can and reinvesting at lower entry points. There are still buyers out there. I'm working with them to sell my houses. Then I am taking the profits and reinvesting at lower purchase prices. There are definitely good buys out there. I am making real sure that anything I buy will cash flow if it don't sell. Also, I am avoiding houses with fuel oil furnaces. It seems to be a big negative in this market.

I guess my plans haven't changed much. Its a harder than it used to be, but buying low and selling high still makes money in any market. Buying now feels a little like trying to catch a falling knife. Its scary and even the experienced need to be real careful. But there is definitely money to be made.

 

[tbsells]

Re: Interesting Economic Times - What is going on with the econom

Think a little into the future...

Gen Y is coming of age. They need housing and the population numbers rank right up there close to the baby boomer's population numbers.

These are good points. In the long run we'll all be fine. The present and near future is what is unsettling.

 

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[china]

Re: Interesting Economic Times - What is going on with the econom

I wish I could agree with this statement. But, I think its a simple supply and demand equation. Demand for homes has been reduced (and will continue to be further reduced) because people can't buy them. Its not that people suddenly do not want to buy homes- its that they cant. For various reasons there are many people who were qualified under the old rules who are no longer qualified to buy. The pool of "qualified" buyers is much smaller than it was 18-24 months ago. So demand goes down, inventory goes up, days on the market increase, people begin to lower prices to attract buyers, others follow suit to compete with the first group, etc., etc. It leads to lower prices. To throw some extra fuel on the fire sale add in a bunch of foreclosures, some tighter lending standards, higher unemployment, and widespread FEAR. To me, it sounds like a substantial price correction. I hope I'm wrong. I have almost all my eggs in the SFR basket and am not to comfortable with it at this point. Thats just how I see it.

I have to agree with you. Demand for houses has dried up because people simply can't afford them. Real estate prices need to come down a lot before most people can afford to buy a house. In my area (Los Angeles) home prices are still way above average income for the area. Seriously, if home prices fall to a reasonable price (for the area), the average home in LA needs to be around $150K or less.

 

[unicon]

Re: Interesting Economic Times - What is going on with the econom

The individual can only go to zero (no big deal) you need food and shelter. The govenment can only take so much from you. They could make a law to put you in prison and up the current 1% of the population (1 out of every 100). What else can they do to you?

If there is certainty you can always make it back, it does not stop your brain gain. The individual is a builder and searcher, if you are building on a solid base with reserves you are in control. In tuff time assets are people going back to basics. Make a list, have it covered.

Best policy has always been to starve the government, giving them money is like feeding welfare with predictable results.