A long view of where we are economically

[NW-Bound]

...have the reduced total be transformed into worthless dollars too!.

A sobering thought! Just as I tried to inject some positive spin into the situation.

 

[Grep]

A sobering thought! Just as I tried to inject some positive spin into the situation.

Sorry. We're all in this together. I vote for that proverbial "V"-shaped recovery, even if it's a little tardy, with governments and nations world-wide coming out ahead. Yes, that will do just fine!

 

[FIREd]

True. People still working are accumulating cheap equities. Then, as you will live into your 80s and 90s, chances are you will see another downturn like this one. So, be prepared. Will you know to go to all cash next time?

But of course!

The way I figure it out, if you go by the secular bull/ secular bear market cycle trend, then I'll accumulate cheap equities until say 2020, then retire, enjoy a nice bull market until say 2035. By then I'll be 60 and so rich that most of my money will be in bonds, so by the time the next secular bear market rolls around the corner, I'll be mostly out of the market! No need to time the market exactly... Voila!

 

[NW-Bound]

Being a bit older than you, I don't know if I will be around when you turn 60 to see your market maneuvers. Do we know if this thread can still be looked up to reference, or if this Web site still exists?

YouTube - Kansas Dust in the Wind live unplugged

 

[Rustic23]

I read most if not all the threads on the economy and such on here. Seems like the figure for total Mortgages outstanding is $10 trillion. The delinquency rate for mortgage loans on one-to-four-unit residential properties stands at 6.99 percent of all loans outstanding.

Now it seems that it was delinquencies in Residential properties that got us into this problem. With the $1 trillion dollars government is proposing to spend, seems like we could buy up all the properties in trouble, and then a few more just for fun! I hear that this is the worst depression since the Great Depression..... well I don't hear any economist saying it but hey, all the talking heads are so it must be true! We have a 7% unemployment rate... worst since... well the 1980! Not even as bad as 1974 yet.

IMHO, this is a reason for Congress to do what it likes to do. SPEND MONEY, not your and my money, no your and my grand kids money! For me the major problem is consumer spending stopped, because they got scared! What is going to start them spending again? I don't know. My guess, is we will start seeing 'Good' news in six months to a year and things will turn. All ready reports in the Houston paper about how oil companies are beginning to get credit back.

 

[Architect]

Compare the total credit deflation to the federal spending. Hint, imagine Ben Bernanke as a boyscout peeing into a forest fire.

I think that if the Federal budget deficit really does approach the 2 trillion people are suggesting, we are going to see that inflation sooner rather than later.

 

[Bikerdude]

I think that if the Federal budget deficit really does approach the 2 trillion people are suggesting, we are going to see that inflation sooner rather than later.

It's already there (2 trillion), you can take that to the bank....umm..bad choice of words.

 

[shotgunner]

For me the major problem is consumer spending stopped, because they got scared! What is going to start them spending again? I don't know. My guess, is we will start seeing 'Good' news in six months to a year and things will turn. All ready reports in the Houston paper about how oil companies are beginning to get credit back.

A summer of $4 a gallon of gas and $5 a gallon diesel fuel might have had something to do with slowing or stopping consumer spending. We seem to forget that prior to fall's market race to the bottom we had an oil shock.

Seems to me there is a trend here '73 - '74 oil shock followed by hard times, '79 - '80 oil shock, followed by hard times, 2008 oil shock followed by hard times. I am not much of a market timer but I think next time there is an oil shock that should be an indicator to go to cash.

 

[Rustic23]

I agree, however, the consumer was still spending. They were just spending on transportation, rather than entertainment. They were not, as I remember, fearful of loosing their jobs.

I do completely agree that the oil shock of the 70's was a primary cause for the slow down in the economy and high inflation that followed. The oil shock of 08 was fairly short but may have led to the financial crisis as it could have been one of the causes for the bad real estate mortgages. However on that thought, I can't help but go back to the guy in CA that made less than $25,000 a year and bought a $750,000 home, no money down. There was certainly something more going on there.

 

[TromboneAl]

The CW would tell us that the older you are, the more devastating any loss. Why? Because the recovery time is short.

Just griping about the writing here: if "...the recovery time is short" then that's good. If the market recovers in a short period of time, the retiree will be fine.

Does Burns mean "Because the retiree only has a short period of time available to wait for a recovery?" I think that's what he means, but that's not what he says.

 

[TromboneAl]

Ok I'll bite. So does this mean we can expect about 14% return in the next four years, per the article? Is that annually or total for the 5 years?

Annually.

 

[Amethyst]

Sigh.

I'm of a mind that there are too many random, interconnected influences, from the tiny to the gargantuan, on the world economy, to allow generalization from the 1930's, the 1970's, or any other period. The time we are in is unique to itself, and will play out accordingly.

I wish I could believe otherwise, since that might allow me to grasp at some theory that'll tell me what to do next about my family's finances. The fact is, I have no more clue than I did at age 21. All I can do is hope the time-honored strategies that I already knew about back then (work hard, LBYM) and learned about years later (DCA) won't be undone by some unpredictable event, or set of well-meant policies.

Wait, they already have been undone to some extent.

Amethyst, feeling discouraged. (I think I need chocolate).

 

[Hal3]

6.99 percent in default could mean just a few payments missed!

I read most if not all the threads on the economy and such on here. Seems like the figure for total Mortgages outstanding is $10 trillion. The delinquency rate for mortgage loans on one-to-four-unit residential properties stands at 6.99 percent of all loans outstanding.

Now it seems that it was delinquencies in Residential properties that got us into this problem. With the $1 trillion dollars government is proposing to spend, seems like we could buy up all the properties in trouble, and then a few more just for fun! I hear that this is the worst depression since the Great Depression..... well I don't hear any economist saying it but hey, all the talking heads are so it must be true! We have a 7% unemployment rate... worst since... well the 1980! Not even as bad as 1974 yet.

IMHO, this is a reason for Congress to do what it likes to do. SPEND MONEY, not your and my money, no your and my grand kids money! For me the major problem is consumer spending stopped, because they got scared! What is going to start them spending again? I don't know. My guess, is we will start seeing 'Good' news in six months to a year and things will turn. All ready reports in the Houston paper about how oil companies are beginning to get credit back.

Your math is correct. Remember also that just because a mortgage is in default does not mean that the value of the mortgage is now $0.

If someone gets sick or loses a job they may be five payments behind. The mortgage is in default. Let's say it is a $500,000 mortgage with a $4,000 monthly payment. It would only take $20,000 to bring everything back to OK.

The "bailout" has nothing to do with sub-prime mortgages.

[Insert Kool-Aid comment here]

 

[Meadbh]

Amethyst, feeling discouraged. (I think I need chocolate).

What's a girl to do?



Here, no calories!

 

[Bestwifeever]

What's a girl to do?



Here, no calories!

Hmmm, could be a good time to buy some shares of HSY (Hershey)!

 

[Amethyst]

Hmmm, could be a good time to buy some shares of HSY (Hershey)!

You gals are too much. Chocolate, chocolate....and red wine to go with it....and there goes my Wednesday weigh-in....will have to get under the old chair and hide but hey, at least I'll feel better, temporarily, about the economy.

 

[Meadbh]

Hmmm, could be a good time to buy some shares of HSY (Hershey)!

Or cosmetics! The Lipstick Index:

Spotting a recession: The lipstick index | This is Money

Leading Lipstick Indicator

Economist: The "lipstick index" -- cosmetic sales in ugly times

 

[RonBoyd]

What's a girl to do?



Here, no calories!

 

[NW-Bound]

Sigh.

I'm of a mind that there are too many random, interconnected influences, from the tiny to the gargantuan, on the world economy, to allow generalization from the 1930's, the 1970's, or any other period. The time we are in is unique to itself, and will play out accordingly.

I wish I could believe otherwise, since that might allow me to grasp at some theory that'll tell me what to do next about my family's finances. The fact is, I have no more clue than I did at age 21. All I can do is hope the time-honored strategies that I already knew about back then (work hard, LBYM) and learned about years later (DCA) won't be undone by some unpredictable event, or set of well-meant policies.

Wait, they already have been undone to some extent.

Amethyst, feeling discouraged. (I think I need chocolate).

I recently ran across this ballad from Scorpions, "Send me an angel", with soothing lyrics to me.

"The wise man said just find your place
In the eye of the storm
Seek the roses along the way
Just beware of the thorns

Here I am
Will you send me an angel
Here I am
In the land of the morning star"

Curiously, the German band's songs were all in English and the band was known in the 80s as a heavy-metal hard rock band, not at all my style. However, the lead Klaus Meine is older than myself (60 vs 52), and has now mellowed to the point where I can enjoy his music.

YouTube - Scorpions-Send Me An Angel (Acoustic version)


PS. Not being a religious type, I also found out that Lucifer is the Latin word for the Morningstar.

 

[W2R]

Sigh.

I'm of a mind that there are too many random, interconnected influences, from the tiny to the gargantuan, on the world economy, to allow generalization from the 1930's, the 1970's, or any other period. The time we are in is unique to itself, and will play out accordingly.

I wish I could believe otherwise, since that might allow me to grasp at some theory that'll tell me what to do next about my family's finances. The fact is, I have no more clue than I did at age 21. All I can do is hope the time-honored strategies that I already knew about back then (work hard, LBYM) and learned about years later (DCA) won't be undone by some unpredictable event, or set of well-meant policies.

Wait, they already have been undone to some extent.

Amethyst, feeling discouraged. (I think I need chocolate).

I couldn't agree more. It seems like we have been waiting forever for the economy to recover and sometimes I wonder if we will ever have another strong bull market.

We aren't guaranteed that future market behavior will resemble past market behavior... but it is all we have to go on. So, we wait, and hope, and wonder if our faith in the market is justified or not. We quietly move articles on the Efficient Market to the bottom of the stack of investing articles we have collected, and say nothing. We stay up late trying to figure out what will happen, only to conclude that we don't have sufficient information.

Two certainties occur to me.

First, after economic events unfold, they will seem like the obvious consequences and we will wonder why we ever doubted and wondered.

Second, we will get through this, no matter how formidable the challenges. So, might as well enjoy life along the way. Let's hear it for stopping to smell the roses, and/or a "party on" mentality along the way! Mardi Gras is February 24th this year.

 

[Rustic23]

I heard a talking head say something like this. The economy will recover. The consumer will start spending. Cars wear out. Newlyweds wed. Kids grow. As the layoffs taper off, and those with jobs feel more secure, they will begin to spend.

I still think the price of oil is a major factor. If it stays low or reasonable then I think we will have a somewhat normal recovery. It it spikes back high, then I don't think it bodes well for a recovery. I think oil acts just like the feds fund rates as far as clamping down on the economy. However, currently, I don't see anything on the horizon that changes my current outlook.