Is Americas reign as the economic hub really coming to an end?

degenerategambler · 05-22-2006, 10:33 PM

Is the house of cards that is the US economic policy really going to come crashing down? stevo, you follow the markets quite closely, what do you think?

stevo · 05-22-2006, 11:45 PM

Simply put no. I dont think our system is a house of cards.

I'm not going to get into any politcal or economic arguements on board and remember I am an in the middle guy concerning most things in life.

Things stretch to left or right and boom or bust and I'm OK with it all because I do OK reguardless so why care? I never get to upset either way reguardless of who is leading because it will always come back to the somewhat norm when things are done dabbling at the extremes.

We're a strong country with free trade. Will times always be good?.......nope. Will they turn so dismal our markets are unattractive? Possibly but it wont last for long.

Would I of made some different chioces reguarding our spending and economy now? Yes for sure. I never try to act like I know more than those that administer our financial system though.

I'm just happy buying and selling when I see value on longterm undervaluations on stocks. No real genius there and as long as things shift back and forth within limits its all good for me.

I'm sure some others will have some comments on out economy and where its heading.

I'm more worried about real estate prices than anything else and to be honest have much larger cash postions in my accounts right now than stock. I would like to see a bit of a correction before continuing on.

A nice buying opportunity would be nice but I have been waiting 6-8 months now for something I thought was coming and hasnt. So I may be the wrong person to ask[img]i/expressions/face-icon-small-happy.gif[/img]

degenerategambler · 05-23-2006, 12:45 AM

"I'm more worried about real estate prices than anything else"

Rightfully so, I'm amazed at what level people carry mortgages at. I think its dangerous in our country when people only have to put 5 or 10% down to buy a house. I was astonished when I 1st learned that you could borrow up to 120% of your homes value in the US.

George D · 05-23-2006, 05:47 AM

Mark my words. Real Estate will tank and Gold Stocks will rise. Goldcorp(Symbol GG).

stevo · 05-23-2006, 12:38 PM

<div class="FTQUOTE"><begin quote>Originally posted by: George D

Mark my words. Real Estate will tank and Gold Stocks will rise. Goldcorp(Symbol GG).</end quote></div>

Keep saying it and eventually you will be right.

The Actuary · 05-23-2006, 02:28 PM

<div class="FTQUOTE"><begin quote>Rightfully so, I'm amazed at what level people carry mortgages at. I think its dangerous in our country when people only have to put 5 or 10% down to buy a house. I was astonished when I 1st learned that you could borrow up to 120% of your homes value in the US. </end quote></div>

THe Japanese banks lent upto 10X the value of the underlying real estate in the late 1980's early 90's before their system collapsed.

It is OK we were do for the biannual US economy is going to fail and we are headed towards a depression-

since the last world is ending thread the Dow is up around 10%.

The Major · 05-23-2006, 02:36 PM

R/E is toast. No ifs ands or buts. I would love to know the percentage of people with mortgages who if the rate went up 2.5 percent would lose their house. I suspect that number is staggering.

R/E is the nasdaq of 2000's all because of the banks lending policies. When people have things they cant afford, they lose them. It's that simple.

victorygallop · 05-23-2006, 02:36 PM

massive boo ya to stevo.

Is it unwise to assume that current real estate prices will hold up?

A lot of us are counting on our homes as our retirement.

The Major · 05-23-2006, 02:42 PM

what is the dow up since 2000?

GoodKarmaGuy · 05-23-2006, 02:56 PM

Good bye US & hello China & (and soon to be) India as the new economic powerhouse.

Real Estate? I thought standing in line to buy a condo, that has even broken ground yet, was normal.

The fed keeps raising rates - the prices of the materials used to build the houses keep rising - housing prices continue to rise - consumer debt is at all time highs - yet wages remain stable.

The Major · 05-23-2006, 02:58 PM

<div class="FTQUOTE"><begin quote>The fed keeps raising rates - the prices of the materials used to build the houses keep rising - housing prices continue to rise - consumer debt is at all time highs - yet wages remain stable. </end quote></div>

Maybe alec could let us know if that is a balanced equation [img]i/expressions/face-icon-small-smile.gif[/img]

victorygallop · 05-23-2006, 03:16 PM

BRIC
Brazil - Russia - India - China

skyweasel · 05-23-2006, 03:36 PM

Economic forecasting is about as useful as calling Wayne Root for tonight's winner.

But it can be an interesting discussion. I don't think the Fed will raise rates to the point where they tip a lot of people into bankruptcy, it would be the equivalent of economic suicide for the bankers who own it.

The thing the U.S. has going for it is, inspite of the fact that foreigners have loaned us all this money, the old axiom is probably true: If you owe me a thousand dollars and can't pay, you have a problem. If you owe me several trillion dollars and can't pay, I have a problem. In this case the operative "I" is Japan, China and whoever else keeps buying tbills.

Beyond that I don't know much and will let the experts fulminate in their own time upon the subject... [img]i/expressions/face-icon-small-smile.gif[/img]

ParanoidAndroid · 05-23-2006, 05:07 PM

<div class="FTQUOTE"><begin quote>Originally posted by: skyweasel
The thing the U.S. has going for it is, inspite of the fact that foreigners have loaned us all this money, the old axiom is probably true: If you owe me a thousand dollars and can't pay, you have a problem. If you owe me several trillion dollars and can't pay, I have a problem. In this case the operative "I" is Japan, China and whoever else keeps buying tbills.</end quote></div>

WHA? [img]i/expressions/face-icon-small-shocked.gif[/img]

Your statements are wrong on so many levels it's amazing. The old saying is, "If you owe the bank 10K, the bank owns you. If you owe the bank 10 Billion, you own the bank". The way you wrote it makes no sense!

But all that doesn't matter because the bottom line is that T-bills are the least of our worries. The bigger worry is the US dollars (literal currency) that these countries, especially China, are hoarding. The estimates are that they can completely tank our economy by flooding the world market with USD throwing us into a scenario where we can't afford anyone else's goods and they can pay pennies for ours. Tie that in with China's refusal to re-evaluate the Yuan (something that the US has been requesting for years because of this very issue) and you have the makings of a perfect economic war.

Of course, that war will be one-sided because we, as Americans, have VERY little savings and don't really pay attention to worldwide currency issues.

Be afraid, be VERY afraid.

George D · 05-23-2006, 05:52 PM

The house & condo flippers are bailing out creating a tremendous surge in housing inventories.(as well as many other things like rising interest rates, 9 year housing boom, etc)

When the herd stampedes over a cliff, there is NO safe haven for those tucked in the middle.

Ahead · 05-23-2006, 05:53 PM

IF China does things right..no one will be able to compete with them.

Johnny Detroit · 05-23-2006, 06:28 PM

Here is the main problem MANY people will be facing. I have friends who work at some of the largest mortage companies in the country. Not some broker with 3 or 4 workers, but large scale. When all the rates were super duper low, rather than taking the amazing 30 year rate people took 3-5-7 year interest only arms. Many fo those people than maxed out equity on a variable 2nd because prime was close to nothing. Few years later and it is time to pay the piper. They are coming out of these loans with rates ALOT higher and prime moving up .25 multiple times after being on the "no increase" from the fed stretch for a while. So now people have to refi again, thus coming out of more money. If they did an 80-20, they maxed out the equity and with housing prices not exactly being steller, some people have to come out of pocket to get into something fixed. Those 2nd prime loans are now alot higher so to go fixed the rate is higher than they could of imagined. Toss in the fact they paid nothing on principle over the past 3 years and now are spending money on the refi a 2nd time they saved nothing. Those classic int only commercials where they show you saving $4000 ot pay down other debt leave out the fact you have to spend a few k in cost to refi than again within a few years. Toss in the fact you payment could almost double now, people are going to be in for a rude awakening.

stevo · 05-23-2006, 06:32 PM

When the herd stampedes over a cliff, there is NO safe haven for those tucked in the middle.

WTF does this mean George? You have been saying this or something similiar for a couple years. We know this is what you WANT to happen because you sold your home and are waiting......LOL

The ones tucked in the middle are the ones who have mortgages they can afford no matter what happens to the price of their house or the surrounding ones. All it means is the people who got in late and overpaid are the foolish ones.

The majority will sit with their homes and pay off their mortagage and lead normal lives.

Just like they did in the 70's under Carter and the bust before him etc......

If the housing bubble were to burst it will mean nothing to me at all except the two homes I own wont be worth as much and I'll probably look for a third cheap. I'll hardly be looking for a safe haven. I'm in it and in it at a good price.

BJKPMP · 05-23-2006, 07:17 PM

go outside today. walk into a random store...any store. look at the label. Go to the mall, anywhere, look at labels. 80-90% M.I.China. The US will have no one to blame but itself for the mass destruction of this economy and the exponential growth of China, of all a communist country. I wouldnt mind paying $5 more for a tshirt, or $3 more for a toy for my kids, if it meant jobs stay here and people spend money for economy here. Problem is, immigrants and penny-pinchers empty shelves at walmarts and this trend will get worse (can you tell i live in L.A.?) If you dont have kilos of gold stashed away somewhere good luck for middle class.
Do you know the government has stopped disclosing amount of bills printed? Because if everyone knew the amount of worthless greenbacks we are printing to pay for wars, aid, deficit interest, etc. The dollar would be less valuable than the peso. They have the most people soon China will rule this world with ease, they just have too much money to count now.