Recession now official, but its not over..

[LADoc00]

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Well they dropped the bomb today, we are in full blown recessionary mode.

But is that enough? Im actually hearing the 'D' word now from my economists friends....DEPRESSION. Great Depression, the YOY housing prices maybe the single greatest decline in 2008 in recorded US history.

Folks BUY GOLD.

3 Gs for a Depression: Gold, Guns and Grub.

I will be buying 250K in gold bullion in 9K untraceable increments this year.

And no, Im not joking.

 

[etf]

I will be buying 250K in gold bullion in 9K untraceable increments this year.

And no, Im not joking.

what's your address again?

 

[bbaker]

Why not buy silver? It's cheaper and the profit margins are usually better.

$250K in silver- you will need somewhere to keep it!

Ben

 

[773 doc]

How do you buy into the actual commodity, gold? My "gold" mutual fund has done quite well for me and that is somewhat of an understatement (and yes, I already rung the register and took handsome profits)....

Market sucks. I sold the majority of my investments (mutual funds).

Kudlow is hilarious. Watching hinm durin these times is comedy IMHO.

Cramer is still the man, IMHO (I don't take everything he says as gold)...

http://www.cnbc.com/id/15840232?video=624755222

 

[Lesley]

http://www.msnbc.msn.com/id/22770304/

http://articles.moneycentral.msn.co...ToBudget/YourTalesOfTheMiddleClassCrunch.aspx

This economic downturn will be serious, persistent and will effect everyone, one way or another. Keeping incomes steady and secure may prove very challenging. Lliving expenses and debt, school loans, consumer debt, mortgages, car payments etc that many carry, for this potentially very long period ahead, may prove difficult to manage. There looks to be some rainy days ahead for almost everyone. On a bright note, the fed may cut an additional 50 basis points at their upcoming meeting, but considering that the last emergency rate cut was in 2002 and that the last rate cut of this significance was in 1984, I'm afraid the fed knows something that we don't know. Unfortunately, I don't believe that they acted to quell market fears; they are trying to prevent something they perceive to be a serious economic threat, and it's not just market fear. It may just be some very difficult economic reality.

 

[LADoc00]

Buying actual gold bullion on the open market is tricky. Ownership of gold is tricky issue also given that many believe the US Govt actually forbids personal ownership and indeed gold hoards were siezed by US Marshalls in the Great Depression.

The key is buying sub10K increments with cash. You can do this safely in a variety of ways but do a google search and make some calls.

DO NOT buy gold certificates, gold mine stocks or other such nonsense. It will not be a safe haven in a true depression.

Do NOT buy nusmatic/collector value crap either. Pure BULLION.

In terms of metals, yes buy a spread of silver, gold and platinum. The best thing to do is monitor which bullion (US, Aus, Euro, UK, Canadian etc) is most closely mirroring the market bullion price (least mark up).

 

[southerndoc]

This is exactly why I'm not buying a house when I start my attending job in a few months. Despite wasting $15-20,000 on renting an apartment for a year, I will be better in the long run and will save money when housing prices drop drastically and interest rates drop in an attempt to spur the economy back from a recession.

 

[Lesley]

This is exactly why I'm not buying a house when I start my attending job in a few months. Despite wasting $15-20,000 on renting an apartment for a year, I will be better in the long run and will save money when housing prices drop drastically and interest rates drop in an attempt to spur the economy back from a recession.

Considering the market now and the potential for a home to appreciate at or faster than inflation, unless you plan to stay in a home at least 5-10 years, I 'm not sure if it's worth buying at all. However, contrary to many, I believe this is a good time to buy, if you feel you are getting value for your dollar. This is a buyer's market. In many markets owners are selling for 10-20% of their asking price. Interest rates are low and look to even get a little lower. Mortgage rates of 5-6% are as low as they historically get. In 1983, our mortgage rate was 12.5% and that was significantly lower than some who had rates of 15%+. Although asking prices will drop, today people are actually paying well below asking price. If you know you want to stay in the area you are doing a residency, look around every once and a while, if you see something you really like, make an offer that you are comfortable with. You never know what will happen, the worse they can say is no. Plus it will give you a better idea of when a bargain does become available. Good Luck.

 

[773 doc]

...Unfortunately, I don't believe that they acted to quell market fears; they are trying to prevent something they perceive to be a serious economic threat, and it's not just market fear. It may just be some very difficult economic reality.

Spooky. I'm holding a lot of cash right now. I'm goign to sit on the sidelines (for the most part) for now.

Can't wait for the turn around though.

..watching quite a few stocks that are coming down "nicely".

 

[LADoc00]

Considering the market now and the potential for a home to appreciate at or faster than inflation, unless you plan to stay in a home at least 5-10 years, I 'm not sure if it's worth buying at all. However, contrary to many, I believe this is a good time to buy, if you feel you are getting value for your dollar. This is a buyer's market. In many markets owners are selling for 10-20% of their asking price. Interest rates are low and look to even get a little lower. Mortgage rates of 5-6% are as low as they historically get. In 1983, our mortgage rate was 12.5% and that was significantly lower than some who had rates of 15%+. Although asking prices will drop, today people are actually paying well below asking price. If you know you want to stay in the area you are doing a residency, look around every once and a while, if you see something you really like, make an offer that you are comfortable with. You never know what will happen, the worse they can say is no. Plus it will give you a better idea of when a bargain does become available. Good Luck.

I just got off the phone with local real estate office telling them Im willing to look at property they want to move if the price is right, which for me is around 60% current appraised value/list.

You HAVE to build in the fact RE is going to get a 40% haircut MINIMUM regardless of where you live by the time this thing is done.

 

[SexPanther]

This is actually good for youngsters like me who have a very long investment horizon and are comfortable with an aggressive asset allocation. I'll continue to invest monthly as prices continue to fall, buying more for less and when the market turns around in however many years, I will reap the benefits. I'm comfortable with the fact that my portfolio is going to tank in the coming days/months/?years.

 

[LADoc00]

When FDR took over in 1933, he had a similar problem. Thousands of very rich buying super cars cannot generate enough demand to employ millions of workers. The problem was not unique to the U.S. but was global, just as housing and other related credit bubbles today are not unique to the U.S. Both eras’ stock market and credit bubbles produced wealth inequality. The economic crisis that followed turned this inequality into a political nightmare. The way it was addressed in parts of Europe was the wholesale redistribution of wealth in Communist movements. There was a period in the early 1930s when many were convinced that a Communist movement was all but inevitable in the U.S. In his memiors, Alistair Cooke noted that he came to the U.S. from the UK to cover the Communist revolution that was at hand, seeing this as a once in a lifetime career opportunity for a young journalist.

Political developments overseas made FDR’s solution an easier sell to the wealthy elite in the U.S. when he came into office. The U.S. president that follows the administration that follows the Bush II administration, take note.

FDR offered the top 1% in American society a better option than Communism: "Turn in your gold and the government we will pay you in currency which we will then inflate. The impact will be that your money will be put back into circulation to get the economy moving and we’ll get the banking system working again. Everyone wins, and it’s a better deal than the creditor class is getting in, say, Hungary. This will cost you only 30% of the purchasing power of your wealth."

Most responded by voluntarily turning in their gold to the government in exchange for currency. To take care of stragglers, Executive Order 6102 was issued in April 1933 making private gold ownership illegal in the U.S. This law was intended to keep bankers from cutting deals with their wealthy clients. Once the government had the gold, they marked it up from $20 to $35 an ounce. At once, a 30% inflation occurred to halt the deflation that had been crippling the economy.

 

[Lesley]

When FDR took over in 1933, he had a similar problem. Thousands of very rich buying super cars cannot generate enough demand to employ millions of workers. The problem was not unique to the U.S. but was global, just as housing and other related credit bubbles today are not unique to the U.S. Both eras' stock market and credit bubbles produced wealth inequality. The economic crisis that followed turned this inequality into a political nightmare. The way it was addressed in parts of Europe was the wholesale redistribution of wealth in Communist movements. There was a period in the early 1930s when many were convinced that a Communist movement was all but inevitable in the U.S. In his memiors, Alistair Cooke noted that he came to the U.S. from the UK to cover the Communist revolution that was at hand, seeing this as a once in a lifetime career opportunity for a young journalist.

Political developments overseas made FDR's solution an easier sell to the wealthy elite in the U.S. when he came into office. The U.S. president that follows the administration that follows the Bush II administration, take note.

FDR offered the top 1% in American society a better option than Communism: "Turn in your gold and the government we will pay you in currency which we will then inflate. The impact will be that your money will be put back into circulation to get the economy moving and we'll get the banking system working again. Everyone wins, and it's a better deal than the creditor class is getting in, say, Hungary. This will cost you only 30% of the purchasing power of your wealth."

Most responded by voluntarily turning in their gold to the government in exchange for currency. To take care of stragglers, Executive Order 6102 was issued in April 1933 making private gold ownership illegal in the U.S. This law was intended to keep bankers from cutting deals with their wealthy clients. Once the government had the gold, they marked it up from $20 to $35 an ounce. At once, a 30% inflation occurred to halt the deflation that had been crippling the economy.

What is happening socially and economically in this country and the world right now is very interesting. It is history in the making. In reality, things should of started changing after 2002, but with very low interest rates and a lack of economic understanding or naivety, people still kept making purchases on credit. It seemed as if everyone we knew after 9/11 bought or leased new cars and/or continued remodeling their homes with cheap car and home equity loans. Low interest rates and high appraisals of homes propped up the economy at a time when reality should have been sinking in. Jobs were leaving this country, lower paying jobs were taking it's place, the unemployment data is almost a worthless piece of information because it says nothing in regard to the number of jobs available to maintain "an American way of life." Things are changing, but the thing that seems to be changing the least are people's mind set. My parent's are European, and were born before WW11, and when we came to this country in the early 60's, I can not tell you how much the lingering effects of the depression and the war in Europe influenced them and in turn me. My parent's would not have anything they didn't own outright in their home, including their home. They were so afraid of it being taken away from them. If that meant we ate soup till the mortgage was paid in full, that's what we did. I wanted piano lessons. It meant that my parent's would have to "lease" a piano. Never would they consider having something in their house that was borrowed on credit. So, no piano lessons. Today, I do not regret one lesson I have learned. Debt will come back and bite you; in honestly, there is no good debt; unfortunately, there is just some debts we do have to tolerate for as long as we choose to carry them, and we do have a choice about how much and how long we are burdened by them. What's so wrong about a smaller house and older cars. Do they really take away from anyone's piece of mind or ability to enjoy life? Debt robs you of sleep, security and your future. Unfortunately today, this affects many people and maybe more tomorrow. History is in the making.

http://money.cnn.com/2008/01/23/new...etdeficit.ap/index.htm?postversion=2008012310

http://money.cnn.com/2008/01/23/news/economy/how_bad/index.htm?postversion=2008012405

http://www.nytimes.com/2008/01/24/us/politics/24change.html?_r=1&hp&oref=slogin

 

[773 doc]

What is happening socially and economically in this country and the world right now is very interesting. It is history in the making. In reality, things should of started changing after 2002, but with very low interest rates and a lack of economic understanding or naivety, people still kept making purchases on credit. It seemed as if everyone we knew after 9/11 bought or leased new cars and/or continued remodeling their homes with cheap car and home equity loans. Low interest rates and high appraisals of homes propped up the economy at a time when reality should have been sinking in. Jobs were leaving this country, lower paying jobs were taking it's place, the unemployment data is almost a worthless piece of information because it says nothing in regard to the number of jobs available to maintain "an American way of life." Things are changing, but the thing that seems to be changing the least are people's mind set. My parent's are European, and were born before WW11, and when we came to this country in the early 60's, I can not tell you how much the lingering effects of the depression and the war in Europe influenced them and in turn me. My parent's would not have anything they didn't own outright in their home, including their home. They were so afraid of it being taken away from them. If that meant we ate soup till the mortgage was paid in full, that's what we did. I wanted piano lessons. It meant that my parent's would have to "lease" a piano. Never would they consider having something in their house that was borrowed on credit. So, no piano lessons. Today, I do not regret one lesson I have learned. Debt will come back and bite you; in honestly, there is no good debt; unfortunately, there is just some debts we do have to tolerate for as long as we choose to carry them, and we do have a choice about how much and how long we are burdened by them. What's so wrong about a smaller house and older cars. Do they really take away from anyone's piece of mind or ability to enjoy life? Debt robs you of sleep, security and your future. Unfortunately today, this affects many people and maybe more tomorrow. History is in the making.

http://money.cnn.com/2008/01/23/new...etdeficit.ap/index.htm?postversion=2008012310

http://money.cnn.com/2008/01/23/news/economy/how_bad/index.htm?postversion=2008012405

http://www.nytimes.com/2008/01/24/us/politics/24change.html?_r=1&hp&oref=slogin

I feel you. My parents are the same way! They don't want anybody trying to come and take their house.

I've never owned a new car (cash for what I can afford), student loans only debt, etc.

... to each their own

 

[WatchaMaCallit]

What is happening socially and economically in this country and the world right now is very interesting. It is history in the making. In reality, things should of started changing after 2002, but with very low interest rates and a lack of economic understanding or naivety, people still kept making purchases on credit. It seemed as if everyone we knew after 9/11 bought or leased new cars and/or continued remodeling their homes with cheap car and home equity loans. Low interest rates and high appraisals of homes propped up the economy at a time when reality should have been sinking in. Jobs were leaving this country, lower paying jobs were taking it's place, the unemployment data is almost a worthless piece of information because it says nothing in regard to the number of jobs available to maintain "an American way of life." Things are changing, but the thing that seems to be changing the least are people's mind set. My parent's are European, and were born before WW11, and when we came to this country in the early 60's, I can not tell you how much the lingering effects of the depression and the war in Europe influenced them and in turn me. My parent's would not have anything they didn't own outright in their home, including their home. They were so afraid of it being taken away from them. If that meant we ate soup till the mortgage was paid in full, that's what we did. I wanted piano lessons. It meant that my parent's would have to "lease" a piano. Never would they consider having something in their house that was borrowed on credit. So, no piano lessons. Today, I do not regret one lesson I have learned. Debt will come back and bite you; in honestly, there is no good debt; unfortunately, there is just some debts we do have to tolerate for as long as we choose to carry them, and we do have a choice about how much and how long we are burdened by them. What's so wrong about a smaller house and older cars. Do they really take away from anyone's piece of mind or ability to enjoy life? Debt robs you of sleep, security and your future. Unfortunately today, this affects many people and maybe more tomorrow. History is in the making.

http://money.cnn.com/2008/01/23/new...etdeficit.ap/index.htm?postversion=2008012310

http://money.cnn.com/2008/01/23/news/economy/how_bad/index.htm?postversion=2008012405

http://www.nytimes.com/2008/01/24/us/politics/24change.html?_r=1&hp&oref=slogin

thanks for sharing...

it wasn't 7 months ago, that I had noticed everyone was so "wealthy" and so off. I live in an upper middle class neighborhood, but everyone around me regardless of their profession, had a bmw, or a benz. From real estate agents, to teachers, to even plumbers. Granted, I've always lived meager and had the same toyota crapola for 10 years now. I was like, how the **** do these people afford their lifestyle, expenses? Ate at expensive restaurants etc.

Turns out they were all buying everything on credit, their cars were leased, and everything else was on their credit cards. Now it's coming back to haunt everyone, one by one. 60 minutes reported that the town of Stockton california is now near 55% bankruptcy/foreclosure, and some towns in ohio now are like ghosttowns! People refinanced to get cash from their equity, to spend beyond their means! Now we are all paying the price for it...

 

[Doctor Bagel]

thanks for sharing...

it wasn't 7 months ago, that I had noticed everyone was so "wealthy" and so off. I live in an upper middle class neighborhood, but everyone around me regardless of their profession, had a bmw, or a benz. From real estate agents, to teachers, to even plumbers. Granted, I've always lived meager and had the same toyota crapola for 10 years now. I was like, how the **** do these people afford their lifestyle, expenses? Ate at expensive restaurants etc.

Turns out they were all buying everything on credit, their cars were leased, and everything else was on their credit cards. Now it's coming back to haunt everyone, one by one. 60 minutes reported that the town of Stockton california is now near 55% bankruptcy/foreclosure, and some towns in ohio now are like ghosttowns! People refinanced to get cash from their equity, to spend beyond their means! Now we are all paying the price for it...

Yeah, I've always wondered how people pay for the things they paid for. I worked with people who made $60k/year yet drove $35k cars and had all designer clothing. Of course, they probably had nothing in their retirement accounts and huge credit card balances. I used to think my parents had less money than everyone else because they bought modest cars and drove them for a long time and own a not so fancy house. It was a shock when I realized that most of the people who lived better than my parents actually earned less money than them.

 

[mgdsh]

Yeah, I've always wondered how people pay for the things they paid for. I worked with people who made $60k/year yet drove $35k cars and had all designer clothing. Of course, they probably had nothing in their retirement accounts and huge credit card balances. I used to think my parents had less money than everyone else because they bought modest cars and drove them for a long time and own a not so fancy house. It was a shock when I realized that most of the people who lived better than my parents actually earned less money than them.

Yep, most American's are addicted to credit and everytime we seem to have problems and face a potential recession (which might actually teach people to save) the government steps in and will do everything they possibly can to meek the recession as short and mild as possible.

IMO, it'll end up leading something much worse down the line. When that happens remains to be seen. I do sometimes ponder what type of creative credit instruments they'll continue to come up with.

Most of those people who bought houses over the last 5-6 years had no business in buying houses, and now that lending standards are starting to tighten (in a country where people have next to no savings), I don't see how we'll put in a bottom in housing anytime soon.

How can people with out savings put any $$ down for housing in order to make those purchases? To make things worse, housing inventories will continue to rise as these builders continue to mindlessly crank out houses, even though they aren't selling the houses they have.

Personally as someone who saves and lives well with in his means, I feel betrayed by our government.

 

[supercut]

Well they dropped the bomb today, we are in full blown recessionary mode.

Ummm.....Who is "they"? And how did "they" define recession?

The actual definiton of recession is 3 consecutive quarters in which the GDP shows negative growth.

GDP= Gross Domestic Product = value of all goods and service produced in the USA.

For December 2007, the most recent month for which we have the numbers, the GDP still showed postive growth. It grew by a smaller percentage than it did in previous months, but it grew nevertheless.

We are months away from being able to say we are in a recession. One quarter= three months. So two consecutive quarters = 6 months. Let's say, for example that the GDP does show negative growth (ie it gets smaller) in Jan, then it still has to get smaller in Feb, Mar, April, May and June before we can say we are in a recession.

Just because the media is screaming recession doesn't mean there is one if you look at the facts.

 

[supercut]

Yeah, I've always wondered how people pay for the things they paid for. I worked with people who made $60k/year yet drove $35k cars and had all designer clothing. Of course, they probably had nothing in their retirement accounts and huge credit card balances. I used to think my parents had less money than everyone else because they bought modest cars and drove them for a long time and own a not so fancy house. It was a shock when I realized that most of the people who lived better than my parents actually earned less money than them.

If you read books like "The Millionaire Next Door", following your parents plan is exactly how most millionaires become millionaires. Which is exactly the plan I am implementing.