What Comes Next?

One of the best posts ever, at Michael Panzer’s Financial Armageddon, “Gone, Over, Toast.”

I’ve noticed recently the same phenomenon, that though all indicators say we’re in a severe economic meltdown, and entering a “greater depression,” life still goes on as before. The lights still work, the trucks still roll and in some cases, Black Friday was a success.

But, as we noticed last night, restaurants are empty, the airports aren’t madhouses, and there’s the palpable sense from those in the know that winter is coming.

Economy, Housing Bubble Credit crunch, Depression, Economy, Recession

Madness – US Confidence Plunges to a Record Low. Consumers aren’t confident about the future. What, they are surprised that real estate prices can’t rise forever? They’re surprised that interest rates on their adjustable-rate mortgage went up? Where have they been? What were they thinking? Madness of the crowd convinced them that there is no history worth reading.

Denial – No matter how bad things look, there’s always a bright spot. As in the article linked above…

S&P noted one bright spot as the acceleration in decline was only moderate in August from July.

Amazing.

Regrets – I regret that I bought the home in which I currently reside, purchased before things got ridiculous, instead of one way over what I could afford, because it looks like people who signed up for liar’s loans may well get bailed out and be allowed to stay in the homes they couldn’t afford. If that happens, how will you feel about paying part of that mortgage payment? That’s what you’ll be doing.

Economy, Housing Bubble Depression, Economy, housing, Housing Bubble, real estate

It’s an amazing time when the optimists among us are expecting only a severe recession. But that’s the case right now. Most observers know what is coming. It’s a Depression (capital “D” intended) that’s coming, called by some another Great Depression, and by others the Greater Depression. I think that’s accurate.

Why? We have built our house on the shifting sands of credit, not financially stable savings. We made the mistake of assuming paper profits that were so inflated they weren’t even taxed (how insubstantial must a type of profit be for even the U.S. Government not to recognize it?). Sure, Capital Gains on Real Estate used to be taxed when the property was sold, but no longer. That, as much as anything should have tipped us off that they weren’t real.

Over the next two years, Americans will learn some hard lessons. Among them:

• Real Estate prices cannot and do not go up forever.
• Houses and ATMs are two very different things.
• Our leaders don’t know nearly as much about the economy as they pretend to.
• Spending more than you make doesn’t work for individuals, businesses or governments.

So, Americans are left watching the spectacle devoted to what the government is going to do to fix this. Soon, maybe in the next 3 weeks, maybe in the next 3 months, we as a society will come to the conclusion that the government hasn’t the first clue about how to fix the problem. At that point, Americans’ attention will shift to what they can do individually to protect themselves. My suggestion is that you make that shift now.

Toward that end, I’m putting together a report titled “A New Great Depression: What you can do to prepare your family and yourself for economic disaster.” It’s going to be a free report, downloadable from this site when it’s finished, hopefully by the end of the week.

In it, I’ll lay out where we are right now as an economy, and some of the things I believe we’ll be facing as Americans over the next 10 years. The report will have a set of steps to prepare for the aftermath of the collapse we’re seeing unfold right now.

As soon as I have it finished, I’ll post the link to download the report.

Economy, Housing Bubble, Politics, Society Depression, Dow, Economy, Greater Depression, Market Crash, Recession

The fight for the economic survival of our nation continues as a day-to-day battle, rather than a war that’s either to be won or lost.

We’re down to a fighting retreat. My fear is even though we’ve still got lots of ground to give, we’re going to end up, to overextend the metaphor, on the beach at Dunkirk.

Another down day for the Dow today, closing down 189.01, with Gold closing over $900/oz and climbing after hours. Even more worrying for the non-Gold Bugs out there, is that the mining stocks came roaring back, racking up huge gains. They’ve been beaten down dramatically in the past few months, so there’s still lots of ground to make up, but it appears that recovery is on its way. And that’s a problem for the rest of the investment world. There’s no doubt now that money is fleeing to the safety of only true form of money – Gold.

What I’m still waiting for, is a sign that “Main Street” has woken up to the reality of the situation and understands that this is a situation that won’t just go away. That doesn’t seem in the offing, however. This very sentiment is echoed by Ira Glass on This American Life in the audio preface for Another Frightening Show About the Economy

Again, please heed this advice.

• Get enough cash in hand to handle 1 or 2 months living expenses.
• Store some water.
• Store some food.
• Be watchful and be safe.

Economy, Housing Bubble

This from the Senior Director of Strategic Planning at the Wharton School, University of Pennsylvania, as quoted on The Cutting Edge News:

The U.S. banking system is essentially insolvent. The Treasury, Federal Reserve, FASB, and Congress are colluding to keep the American public in the dark for as long as possible. They are trying to buy time and prop up these banks so they can convince enough fools to give them more capital. They will continue to write off debt for many quarters to come. We could have a zombie banking system for a decade.

How can our government lie to us like this? Well, unfortunately, we got the government we deserved. We put a higher priority on the pre-fab faux rich McMansion lifestyle, complete with 3 car payments, 4,000 square foot estate, 52 inch plasma tvs and lavish vacations, all on a family income of $65,000, than on electing a government that wasn’t interested in doing the political groundwork necessary for making millions of these pipe dreams a temporary reality.

The next several years (or decades) will be us paying for these mistakes. I’m afraid the good times are over.

Economy, Housing Bubble Bank crisis, Credit crunch, Depression, Economy, Mortgage Foreclosure, Recession