The Greatest Depression Is Coming

Financial Sense ^ | 11 Mar 2003 | John Finger

[valkyrieanne]

In the 90's, the population of the US increased by some 30 million. Our birth rate remains above replacement and immigration continues. All of those people have to live somewhere. Housing isn't going to collapse. There will be problem areas, but there always is.

Do some searching through the archives of the San Jose Mercury News. Immigrants in CA are living in garages and 3-4 families in a house. They're not building new houses.

[supercat]

Even in your chart, an investor who bought in 1929 would have had to wait 20 years just to break even--not counting trading commissions, taxes, inflation or opportunity costs.

True. And a more reasonably-defined "break-even" would be 30-40 years. On the other hand, if someone isn't expecting to retire for 30-40 years, that may not be so much of a concern. Obviously for people who will need their money sooner than that, having enough invested in other things to last until the cyclical bear is over is a very good idea.

[JNB]

Truth be told, people like Buffet and Sir Tempelton, who do know more than most of us, are not too thrilled about the economys prospects in the next few years. Again, I do not think we are headed for a depression, but I think the enxt few years will be worse than the 70s. It will combine asset inflation with financial deflation.

[valkyrieanne]

Looks like most are still in denial so I guess we have a long way to go yet.

I don't agree w/ the parts about deflation (WHAT deflation? Has he priced health insurance lately?) However, the part about housing is spot on. The economy *is* being fueled by home equity loans. There *is* an insurance problem with buying shells & fixer-uppers. The middle class *is* being squeezed into higher & higher-priced markets (meaning they're taking on big mortgage debt, even if the borrowing rates are low), and at some point there is going to be a housing correction. Coming on top of unemployment / underemployment, it is going to hit some people very hard, and will reverberate through the whole economy.

[dljordan]

Kind of like my dear wife. I keep saying "buy gold" and she keeps saying "golds not worth anything". I've given up.

[Grut]

Gold, for example, gained strongly during the Great Depression, as it has since 2001.

I knew that was where this article was going!

[templar]

Wow!!! This sounds worse than Y2K was gonna be. And about as likely.

[BlackJack]

Auto sales are going down, Ford has trouble with $44 billion debt
plus unfunded pensions. If auto manuf lays off thousands, that
could further hurt real estate. We could see a depression if
real estate prices fall and defaults continue to increase.

[narses]

HAHAHAHAHAHA.....


Jesse Livermore died BROKE.

His (in)famous quote? "It's easy to time the market"

HAHAHAHAHAHA..........

[Libloather]

We’re seeing deflation for the first time since the 1930s. That’s right: downright deflation. Look at the list compiled by Comstock partners: women’s underwear...

Judging by recent Oprah and Springer watchers, we're in pretty good shape. (And growing!)

[clamper1797]

It has already started

[octobersky]

bttt

[narses]

Buy spam and generators. Quick, use paper money. Hoard your gold. Move to Montana. Cash in your 401k and ignore the taxman, he won't find you. Move to Montana. Set up a REAL trust (not one done by a liar lawyer, get the super-secret "MONTANA" trust) and never pay taxes again.

[LenS]

That's because in CA environmentalists have made new housing too expensive. Elsewhere, immigrants are buying/renting houses and apartments at all price levels.

[narses]

See:

Personal Accounts in a Down Market: How Recent Stock Market Declines Affect the Social Security Reform Debate
Executive Summary

by Andrew Biggs

Andrew G. Biggs is a Social Security analyst at the Cato Institute.

The S&P 500 stock index is down almost 40 percent from its peak value in 2000. Where does that leave the case for personal retirement accounts, which would allow workers to invest their Social Security payroll taxes in stocks and bonds through accounts similar to individual retirement accounts or 401(k)s?

The evidence shows that long-term market investment for Social Security, while hardly risk free, bears little resemblance to the "meltdown" scenarios painted by many account opponents. Opponents of personal accounts implicitly assume that workers with accounts would be short-term investors without any nonstock diversification. In the real world, the combination of asset diversification between stocks and bonds and time diversification over long time horizons reduces the risks that a short-term market drop could substantially affect workers' retirement incomes. Even in today's bear market, workers with personal accounts would retire with higher total retirement incomes than the current pay-as-you-go program is able to pay.

Moreover, personal accounts would allow individual workers to take on only as much market risk as they are comfortable with. The public realizes this, and support for personal accounts is higher today than it was at the market's peak.

If personal accounts would be a good policy even today, and if they retain public support even today, it is hard to imagine a circumstance in which they would not. Today's stock market declines do not contradict the case for personal accounts. In fact, they confirm it..

http://www.socialsecurity.org/pubs/articles/bp-074es.html

[LenS]

First of all, birth rates drop more with prosperity and increase with poverty. Second, making immigration more difficult means that the US only grows by 35 million in the next decade instead of 40 million. Net result is still more people to house.

[Dave S]

The only person I know that was laid off was a 50 year old woman doing research for a firm that specialized in consulting services for telecommunications companies. After three months of networking she received in a little over one week, four offers, three of which were for more than $100,000. She had two more opportunities where people wanted her to interview including her former employer. So things are that bad, huh? Depression? I think not.

My business has been so busy the last two months that I've been working sixty-seventy hours per week. The entrepreneurs that I work for have also been busy working with their Fortune 500 clients. Depression, I dont see it. But then I dont work for state government, the airlines, a telecommunications company, or as a programmer.

[narses]

Birth rates, in the US, rose throught the bull market.

[Saturnalia]

Buy more gold k?
THX!

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