fencerider2
03-10-2008, 09:51 PM
I think a lot of people are screwed, most people laughed about the housing bubble. Well we have some serious problem's and things are going to get a lot worse before they get better.
Some of you are going to loose your income, how many are worried now?
I didn't post the complete article, open the link for remainder of link.
http://firedoglake.com/2008/03/08/how-this-economy-is-going-to-play-out/
How This Economy Is Going To Play Out
By: Ian Welsh Saturday March 8, 2008 4:00 pm
Back in November, I wrote a brief article describing how I expected the financial meltdown underway to continue, and how I expected it to impact the real economy. Below I'm reprinting the 10 predictions I made and I've put in italics those which have already occurred.
Housing prices and sales will continue to decline. Expect 3 years before the bottom, as a very optimistic best case scenario.
Commerical real-estate will suffer a steep decline as well.
Consumer demand will drop. Unemployment will rise.
The US will go into a recession at best, a depression at worst. Expect first stagflation (high inflation and high unemployment), both because of the increased price of imports and deliberate pump priming by the Fed, then deflation, as asset prices collapse so hard they take everything else with them. The other likely scenario is stagflation followed by hyperinflation. Formal inflation numbers put out will become not just a joke amongst market-watchers, but amongst the actual population. Same thing with unemployment numbers.
The Asian economies are not going to "decouple", they are going to have their own financial crises and recessions. Yes, this includes China.
China's stock market will collapse some time next year. China will go into a recession. There will be huge amounts of violence and the Chinese government will redirect anger towards the US and Japan.
Multiple banks will probably go insolvent. They are simply holding too much crap paper. There will be an extreme tightening of consumer debt of all kinds, including consumer loans, credit cards and mortgages (this is already beginning, but you ain't seen nothing yet). Even people with good credit will start having difficulty getting loans.
Protectionism is going to get stronger. Even if Clinton, a free trader, is put in power, by the time the 2010 Congressional elections are over no "free trade" bill will be able to pass Congress and in fact actual tariffs are likely to be put in place.
I wouldn't be surprised, at some point, to see capital controls put in place to stop money-flight from the US.
When the full extent of how bad things are hits Joe Public, expect a move for reregulation of Wall Street and to reinstitute something similiar to Glass-Steagall.
Bonus Predictions:
The government will have to bail out Fannie Mae and Freddie Mac because they are insolvent. Minimum 500 billion dollars. Possibly much more.
Large waves of government layoffs at the municipal and state levels as the inability to raise money cheaply and the reduced property taxes cascade through the system. (Yes, this is already starting to happen, so it's kind of a safe prediction. But it's going to get magnitudes worse. Many many municipalities are going to go bankrupt, and many states will be unable to maintain any but the barest of services.)
The price of oil will actually drop as there is an actual demand reduction for oil. Don't expect this to necessarily be reflected in pump prices, which are constrained by refinery capacity.
The federal government will become the largest holder of mortgages, and in effect, owner of houses, in the country. By far. The Fed, which has been accepting sub-prime paper already, is going to wind up stuck with a lot of it, because some of the banks using it as "collateral" are not going to survive absent huge government bailouts.
A serious collapse of the US stock market, probably by September at the latest. Maybe within a couple months.
Some of you are going to loose your income, how many are worried now?
I didn't post the complete article, open the link for remainder of link.
http://firedoglake.com/2008/03/08/how-this-economy-is-going-to-play-out/
How This Economy Is Going To Play Out
By: Ian Welsh Saturday March 8, 2008 4:00 pm
Back in November, I wrote a brief article describing how I expected the financial meltdown underway to continue, and how I expected it to impact the real economy. Below I'm reprinting the 10 predictions I made and I've put in italics those which have already occurred.
Housing prices and sales will continue to decline. Expect 3 years before the bottom, as a very optimistic best case scenario.
Commerical real-estate will suffer a steep decline as well.
Consumer demand will drop. Unemployment will rise.
The US will go into a recession at best, a depression at worst. Expect first stagflation (high inflation and high unemployment), both because of the increased price of imports and deliberate pump priming by the Fed, then deflation, as asset prices collapse so hard they take everything else with them. The other likely scenario is stagflation followed by hyperinflation. Formal inflation numbers put out will become not just a joke amongst market-watchers, but amongst the actual population. Same thing with unemployment numbers.
The Asian economies are not going to "decouple", they are going to have their own financial crises and recessions. Yes, this includes China.
China's stock market will collapse some time next year. China will go into a recession. There will be huge amounts of violence and the Chinese government will redirect anger towards the US and Japan.
Multiple banks will probably go insolvent. They are simply holding too much crap paper. There will be an extreme tightening of consumer debt of all kinds, including consumer loans, credit cards and mortgages (this is already beginning, but you ain't seen nothing yet). Even people with good credit will start having difficulty getting loans.
Protectionism is going to get stronger. Even if Clinton, a free trader, is put in power, by the time the 2010 Congressional elections are over no "free trade" bill will be able to pass Congress and in fact actual tariffs are likely to be put in place.
I wouldn't be surprised, at some point, to see capital controls put in place to stop money-flight from the US.
When the full extent of how bad things are hits Joe Public, expect a move for reregulation of Wall Street and to reinstitute something similiar to Glass-Steagall.
Bonus Predictions:
The government will have to bail out Fannie Mae and Freddie Mac because they are insolvent. Minimum 500 billion dollars. Possibly much more.
Large waves of government layoffs at the municipal and state levels as the inability to raise money cheaply and the reduced property taxes cascade through the system. (Yes, this is already starting to happen, so it's kind of a safe prediction. But it's going to get magnitudes worse. Many many municipalities are going to go bankrupt, and many states will be unable to maintain any but the barest of services.)
The price of oil will actually drop as there is an actual demand reduction for oil. Don't expect this to necessarily be reflected in pump prices, which are constrained by refinery capacity.
The federal government will become the largest holder of mortgages, and in effect, owner of houses, in the country. By far. The Fed, which has been accepting sub-prime paper already, is going to wind up stuck with a lot of it, because some of the banks using it as "collateral" are not going to survive absent huge government bailouts.
A serious collapse of the US stock market, probably by September at the latest. Maybe within a couple months.