How to survive the Great Depression of 2008

Deerfield Beach Florida – In 2004 and 2005 I suggested to people to sell their homes immediately and to rent. I told them the prices of homes were not true, they were not real. I implored them and even wrote a few articles about the coming land bust.

Omens of the coming Real Estate Bubble? December 2005 - Predictions of real estate bursting after the new bankruptcy laws came true. Sell your home now, or risk the coming real estate crash May 2005 - Get out, get out now. Talk of great depression like lending.

It was a bit worse than I thought it would be. No other TV, online writer, or business entity was even in the ballpark back then. My articles were correct and the bust started in 2006, shortly after the last article. At the time I wrote those pieces, people were standing in line for days to buy a condo.

A note: Home values never went up, only the prices. By lowering the interest rate like they did is basically like printing money and giving it to everyone. Throughout our history this has been done and always has the same results. The ability for you to buy a higher loan increased, not the value of the property. No one's income went up, in fact many are going down. 2001 prices here we come.

So, enough of 'I told you so'. Now I want to help those in need. What do you do now that you are screwed? The bankruptcy laws have changed for the worse (thank you congress) and you are in deep financial trouble. I am here to help you see what to do. Based on the fact that I was the only one to foresee what is now happening, I will give you my advice for the next year.

Your house – lose it. Give up on it (assuming you are having problems paying for it.) You can buy the same house in 2 years for 2001 prices and get it for a few hundred thousand dollars less. If you are in duress and having problems with the payment, stop paying it. Stay in the house as long as you can. Fight the foreclosure at every turn. Doing the 'right thing' by paying your bills until you go broke and lose everything anyway is not good economic sense for you and your family. If you continue to try to keep up you will not only lose the house but you will be destitute and heading towards homelessness. Pride destroys finances.

Fight the foreclosure – Answer any papers sent to you by the bank. You will have 20 days to respond, wait til 18 go by and overnight it. Complain about the loan and the company and the mortgage broker. They will have 20 days to respond. And so on and so on. This will give you 3 to 12 months in your house rent and mortgage free.

The bank is overwhelmed with properties. Law forbids them from owning too much property. Due to this, the foreclosure could be pushed off for a long time. You can even try to ‘fake’ sell it with a realtor for some real high price or some 'never going' to happen short sale.

These methods, depending on the lender could give you 2 years or more in your house with no payments. Why go broke? Save your money in a hole in the ground. Help your family survive and forget your 'honor.' The lender could not care if you lived or died. They knew what they were doing. Until someone else owns it, it is your property.

Plan for your bankruptcy- Don’t go nuts on your credit cards, but use them up if you cannot pay them. Do not go bankrupt until the month your house is going to foreclosure sale. This will give you an additional three months. Even more if you can work something out with the attorney to delay the proceedings. That is at least 3 more months of living free. Watch excessive spening on cards or huge items going back 12 months before bankruptcy. Hide your cash.

This is especially important if you lost your job. The bank will not go under if you do not pay them, but your family will starve if you feel honor bound to pay the crooks, I mean lenders and credit card companies, til you are really broke and destitute.

Learn how to send cease and desist orders to creditors you are going to bankrupt so they leave you alone.

Realize you are talking about surviving here. You need your car and a roof over your head. You need money to live and eat for you and your family. Don’t worry about breaking the hearts of the crooks that made this mess or the credit card companies (read: loan sharks.) Worry about you.

Feel bad, like you are using the system? These scumbags have received 100s of billions of dollars of our taxpayers money for being crooks. And the CEOs made millions more. So, !#*> em, burn em back. Worry about you and your family not some billionaire. They borrowed the money to lend to you. They got it at 0.25% interest (that is a quarter point) and sold it to you on some screwed up plan that is going up to 8% or more. They will (and are) being bailed out by our loving congress and the lender still made tons on the interest they earned from you over a few years.

After your bankruptcy move into a nice rental and relax. You should have little or no debt. If you still have your job you may be on a small repayment plan, but you will be fine.

Before you rent, you may want to read this article to protect yourself from making a bad rental choice. http://www.politicalgateway.com/news/read/141364

In two years from now the prices will have hit real rock bottom and stay there. 2001 prices. Now you can look into buying a house, maybe even the same one, at less than half of what you had originally bought it for. Yea, you will have a bankruptcy, but so will everyone else. You have some credit, maybe a card or two, a car loan.

Best of all, your family is well fed, safe roof over their head, and you still have a lot of money in that hole somewhere.

In other words, survive and let the multi billionaires who have ripped everyone off for so long get some heat. You and your family come before any crooks like the lenders. Your family first, lenders last.

Wisdom – you did not get out when you could have. The experts, who have a vested interest in making you spend your money, told you it would be fine. They lied. Take care of yourself, the next year is going to be a bitch.

-Home prices will flip around but continue down. Drastic drop when the Dem president takes over in January (you will almost think it was timed).

- After the Dems take the whitehouse the supports trying to hold up the economy will finally buckle. It's not personal, its politics. Perfect planning to ensure a Republican ticket win in 2012. Look for 2009 to be a bad year financially. Gotta love top level political strategy.

-Prices on condos will drop and be close to 2002/3 levels on their way down to 2001 levels. Many small condo complexes will be bought as apartments or most likely timeshares.

-Home prices will fall and keep falling, then stagnate for at least 4 years. Bargain hunting time (in about 2 years). Loans will suck as 7% will be the new ‘good fixed rate.’ But your total debt will be a few hundred thousand less if you buy during the stagnate period.

-A whole bunch of fake baloney will happen on capitol hill regarding the lending industry but nothing will happen, other than your taxpayer money making sure the lenders did not lose a penny.

-All those bankrupt sub prime lenders? Wow, hey, they all started new companies. Wow, amazing how that worked out. Look for that beginning next year.

-Wall street and major news outlets will continue to talk about ‘downturns’ and other things to make you feel rosey. That is mostly to suck the money out of those people who can still be gullible enough to fall for it. Remember who they work for. It ain't you.

- Gold, silver, and Oil will bankrupt many as it drops to the floor, bringing dumb investors to their knees. Oh yea, oil is gonna go to two hundred you say. Hey, it is your money, go ahead and gamble it like a moron. It will start dropping back down on its way to 34 bucks a barrel by year's end (it will eventually get to 34, not at years end, but heading towards it on its way down.) As for gold and silver, if you buy it now you are really stupid.

Don’t believe any of this? Look me up next year. You did not believe me in 2004/2005 either.

- Iraq - Now that the 'nuclear peace' is over, things are going back to the way they were (and have always been) pre- 1945. Big countries make puppets of little countries. Iraq no longer exists. Many dictators want it for different reasons. Saudis want a buffer state, or part of one, to make sure Iran is not their next door neighbor. Syria and the other little countries want a spot at the table and part of the spoils. Iran wants a piece of the action and will be part of the political process (read: puppet) in Iraq. America will not leave Iraq, America will have a small 'American Iraq' in there somewhere. Iraq as a country on the world stage is over. And it will be a long time before it will really be one again, if ever. The question is, which country will it be a part of in 2020? Or will it be split into other countries? No matter which it is, the war in Iraq is over Iraq and nothing else. Greedy dictators are wringing their hands with excitement over owning something new.

Some Understanding - RIght now it is hard to get an adjustable rate mortgage, the lenders are not pushing them. During the boom, when interest rates were lower than ever, they pushed adjustable rate loans. The reasons are simple. They make money charging you more for loans. Selling you fixed rates when interest is low is not good for their pockets. Selling fixed when rates are high is great for their pockets. You see how this works?

If you bought an interest only or adjustable rate mortgage in the last 6 years you made a mistake. The bank is happy though and that is all that matters, at least in congress.

Okay, so much mail and comments have come in over this. Let me try to clarify things for you.

1- I am not Jewish, so all you racist/religionist types can just stop the hate mail. Just beat your wife and leave me alone. I hope she calls the cops on you.

2- Yes, other people talked about the ‘bubble.’ If you read the original stories you would see I talked about the great depression, credit crisis, and much more than a bubble. NO ONE wrote about that back then. If you can find an article, I would love to see it.

3- You are not committing fraud by staying in a house you legally own. Foreclosure is a legal action and until it is finished it is your home. Everything in that home is yours, you can take it with you. Lenders do not want empty houses and cannot go to foreclosure sale very easy right now, so stay in it as long as you can.

4- Paying your bills while knowing that you will be unable to keep up with them means you spend all your money every month and still fall behind. Lenders do not care how honorable you are. You are late, you are screwed. If you do not see a way out, stop paying now.

5- Until the day of the foreclosure sale or bankruptcy discharge it is your house. You can paint it, modify it, even sell it. You own it.

6- Realizing you are in financial trouble, it is better to start clean with a bankruptcy. You will get credit and can buy cars and homes within a very short time, even a day. Depends on your situation.

7- Renting is cheaper. You pay a monthly rent and nothing else. No insurance, principal, interest, inflated taxes, major repairs, etc. You will probably save 100 to 1500 a month depending on your situation.

House prices go along with the income level of the neighborhood and the price a rental can get. In 2001 prices it all made sense. Now your neighborhood is unaffordable by that same income class and no investor can make money renting a property for less than they pay per month on a mortgage. This is a long and involved are of discussion and it could take pages to explain. Suffice to say until the homes in your neighborhood are affordable to the people who would be happy living there or renting there, it is over priced.

Interest rates, after the presidential election will finally start rising without being artificially held down over and over by the Fed. This is more political than logical. Powerful people do their own things their own way.

The amount of loans written at a time the lenders were able to borrow money from the government at the lowest rate in history is a not a coincidence. By allowing prices to artificially rise like they did, it started speculation. Lenders were able to borrow untold billions and immediately put that cash into play. They pay a quarter of a percent, per year, to borrow it and then made half of it back over two years of interest and principal payments on those crazy loans, along with a third year of raised interest payments before someone sells or loses the house. This is how it is done. None of them lost anything on any loans as they can sell a house at half the mortgage cost, get the write off, get the bail out, get the mortgage insurance, and then get the higher fixed rate (6% to 9%) for the next 30 years….all this on money they are paying a quarter percentage point per year on.

Condo prices will drop, and they already are. In a bubble, the first type of homes to rise will come down the slowest (they are the most desirable.) The last to go up will fall the fastest (least desirable.) This is common knowledge. The last time this happened was in the late 80s early 90s. People walked away from condos because they could not even give them away. Look for massive investor interest in taking over small complexes in duress for commercial entities like apartments and time shares.

Home prices will fall to a level that accommodates the buyers of that economic class. But, due to the end of a bubble bursting they will fall a bit lower before adjusting to the real level of 2001 + 1% to 3% per year prices.

Gold and silver. These things are not stocks. They do not get high and split. They go up when inflation is here. They go up, way up. Commercials will tell you to buy gold. Then it is over and they drop down to the normal 100 or 200 for gold and 3 to 7 dollars for silver. It is your money, piss it away if you wish, but my advice is to stay away from gold or silver.

Oil- Oil has always kept pretty steady prices over the years (adjusted for inflation). The only times it has spiked post world war II was due to war (sound familiar?). The 70s, bad time. Oh, the wars in the middle east at that time did a lot of that. Then it dropped again. Whenever you see a commodity climb in value uncharacteristically, it is artificial. It is driven by the people who really make a lot of money off it, and that ain’t you. Eventually it falls, and quite drastically, shortly after it hits it’s high spike. Research it if you need to, but putting money into anything that is on the top of the hill and about to drop is stupid. Stay away from investing in anything to do with oil.

Your news and ‘expert’ advice are all from people, or represent others, that have a vested interest in making you feel good about spending your money. When the stock market was crashing in the 20’s big business was pushing in the papers how it was just a ‘bump’ and many big companies did everything they could to make it look good. Some of the ‘high profile’ rich men would walk into the market and loudly proclaim how it was to rebound and would buy 100,000 shares of some stock. It was all BS.

Iraq- This will be known as the war that ended ‘nuclear peace’. When China takes over Taiwan, that war will be known as the beginning of the new era. I can only tell you to read history and see how things were before 1945 and then it may make sense to you.

Partitioning of Iraq- This war was about control and still is. It was never about the supposed ‘War on Terror’ against the 100 people that may have been part of the 2001 attack. America will finally have a ‘colony’ in part of Iraq. Other countries like Syria will get richer by being a middleman..well..I could go on. Suggest you read history to understand why wars happen and where those countries are afterwards. (pre 1945 rules apply here). It was never about ‘freeing people from dictatorship’ as every country that is our ally over there is a dictatorship (cept Israel.) So that argument is BS too.

Final comment – No lender will lose a penny on any loan. The reason for 2 year ARMs is not coincidental. Add up your P & I for the two years. Assume a worst case scenario where you can only pay for the third year at the new interest rate before not being able to pay. Now add up all this cash and see that 30 to 50% of the money they put out is paid back already in some form. This allows them to sell the house at 20 to 50% loss and still break even. Coupled with write offs and bail outs they still make money. Now they also get to loan this money back out at an even higher interest rate for 30 years (remember they borrowed from the government at 0.25% interest.) They are going to make so much money in the next ten years.

His original article appears to be written on April 4th, so he was correct about quite a lot of things. Gold, Silver and Oil were peaking back then. Now collapsing. I got a feeling a lot of the people who took his advice and stopped paying their mortgages back in April are also not paying their credit cards that they maxed out. You can rent with bad credit, but you will need to pony up first, last and a security. And thats to the hurting rentals that will take the risk. Not a great situation to be in, but apparently a lot of people are there now. From what I see within my commercial rented business unit, the Sheriff has no problem booting deadbeats out of their units. We get one booted about every month here now.

While driving across rural southern Arizona, it appeared to me that the number one housing unit was the trailer or the motor home. We probably have tiny Trailer Cities and Motor Home Cities sprouting up all over the country now that people are losing their homes. Do we even have enough rental units to house everyone ? I have no clue as to how people are living in their storage units. They track when you enter and leave through the security gate. They may stay there a few hours during the day and spend the night in their cars. Unless they have an arrangement with the storage unit manager. I have been down and out in the past. When my first business failed. And I can tell you from experience that government is not your friend when you are down and out. They expect everyone to have money to pay all their fees or else. And the police hate squatters. Gonna be a lot of down and out people hating the Gmen.

Some? I got 2/3 of the way through it and started to see red at the author's propensity to villianize anyone he owes money to.

I did go through all that, lost the house & everything in it, no need for my skills in the state I was in so left the wife and kids with her dad, went north where there was work, had a job 10 hours from crossing the border, stayed with a friend for 1 1/2 months and went down and got my family. I had hopes for the house, and was current in my payments when I left, but I couldn't make two payments, so told the bank what was going on, and the bank sold it for 2/3 the previous year's price. They never came after me, no bankruptcy, just quite a few years of end to end 7 day work weeks to regroup.(We did pay off the credit cards, eventually, and never missed a payment)

I checked my fico score a few days ago and it was 792.

I doubt this guy has ever been in a situation he couldn't justify shirking his responsibility on.

Sounds like Obama's Daddy.

Yes, other people talked about the ‘bubble.’ If you read the original stories you would see I talked about the great depression, credit crisis, and much more than a bubble. NO ONE wrote about that back then. If you can find an article, I would love to see it.

Sure, Bob.

From July 19, 2004, Business Week Online, "Is A Housing Bubble About To Burst? As rising rates send mortgage payments higher, demand may cool":

[...] A downturn in housing would squeeze recent buyers who overleveraged themselves to pay top prices -- and risk slowing the entire economy by cooling consumer spending as well as housing construction, lending, and the real estate business.
[...]
A downturn in housing, if it comes, is likely to chill the economy. People will feel less wealthy, hence more reluctant to spend. Goldman, Sachs & Co. (GS ) economist Jan Hatzius, among others, argues that a decline in housing wealth dampens consumer spending at least twice as much as a same-sized loss in the stock market. Even homeowners who still feel like spending would have a harder time qualifying for home-equity loans or cash-out refinancings -- a major source of consumer liquidity for the past few years.
[...]
Federal Reserve Chairman Alan Greenspan has downplayed the danger of a national housing bubble, arguing in part that housing is a local market. [...] But bubbles are appearing in enough markets that their impact, if they were to pop, would be felt nationally.
[...]
The most troublesome aspect of the price runup is that many recent buyers are squeezing into houses that they can barely afford by taking advantage of the lower rates available from adjustable-rate mortgages. That leaves them fully exposed to rising rates. In fact, the rise in one-year adjustable rates since late March has already raised annual borrowing costs for new buyers by 25%. And data from the Federal Housing Finance Board show that the most expensive markets tend to have the highest share of buyers with adjustable-rate mortgages.

Today's housing prices are predicated on an impossible combination: the strong growth in income and asset values of a strong economy, plus the ultra-low rates of a weak economy. Either the economy's long-term prospects will get worse or rates will rise. In either scenario, housing will weaken. Caveat emptor.

--By Peter Coy in New York and Rich Miller in Washington, with Lauren Young in New York and Christopher Palmeri in Los Angeles

To make money, boilerroom yaks and newsletter writers have to exude confidence. Brassiness grabs attention and marks flock to them.

Newsletters that are quietly right, year after year, need somone like Mark Hulbert, the Consumer Reports of market-advice letter writers, to score their advice over time, otherwise they'll never get much attention -- and few subscriptions.

(Ignore Hulbert when he descends into punditry and high-concept number-crunching ["does the 'Santa Claus effect' work? the 'sell in May' rule?"], something MarketWatch demanded of him after he sold them his newsletter. Just read him for ratings and for facts culled from his data and fashioned into factual articles, which he still produces.)

There are some pretty good guides out there yet. Among them: Bob Brinker, Dan Sullivan, Bob Stovall. Stan Weinstein still gets hot streaks. Most of the old Rukeyser panel of guests were pretty good and can be listened to: Liz Ann Sonders, for instance, and Stovall and Weinstein. Gail Dudack is still around -- she was dropped from Rukeyser's group right at the end of 1999 because her value indicia for something like 18 months kept saying "sell, don't buy". Gail was right, the Elves were wrong, big wrong, that time.

" ... I heard some dufus on one of those public broadcasting radio stations, the other day, lamenting the fact that no one knows what kind of home loan they could honestly qualify for. What a crock! ... "

Correct.

It was ... about 25% of your gross income, with other variables tossed in such as time on the job, job security, etc. etc..

Now it seems that the "children" running the country have been dumbed down to thinking it's anything they want it to be.

Isn't that new math fun?

Thank GOD my farm is paid for. All I pay is $680 a year property taxes.

Personally, I think all money lenders are crooks. We didn’t have any choice but to finance the farm when we first bought it. We had only been married four years at the time but managed to pay if off in less than 10 years.

We have since been beseiged by banker “crooks” wanting us to mortgage it with one of those “home equity line of credit” loans so that we can have money to buy whatever we want. I always tell them to get lost. The last straw came when my husband bought his current truck. He had a good trade-in so the loan wasn’t that much but it didn’t qualify for a low interest auto loan since it was slightly past the age limit. They wanted him to buy it with a home equity loan at a low interest rate. When the loan officer mentioned it I almost came across the desk at her. My husband actually thought we should do it. I told both of them, in NO uncertain or ladylike terms, that I would not put up a $300,000 farm to buy a $12,000 truck in order to save 3% interest. I told the loan officer that no bank would take my home if something happened to my job, etc. She said “oh we wouldn’t do that” and I just laughed at her. We ended up with a personal loan at 9% interest but the farm was safe from those leaches.

Banks and other lending institutions are legal crooks in my book. My husband and I have different ways of managing money because I would prefer to never borrow money for anything. I will not sign away our home for any reason though.

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