People think that the housing crisis is half way done. It is just getting started. Many of the prime mortgages are going to start defaulting within the next 12 to 18 months. Why would someone keep paying on an asset that has lost 20 to 50 percent of it's value. Fannie and Freddie are going to have to become government programs.
Not only is housing in a world of hurt if energy stays high people are not going to be able to heat and cool these brick ovens. I would like to propose a massive effort to start building underground houses. They are very energy efficient and could cause builders to stay in business.
Friday, August 22, 2008
Saturday, July 19, 2008
The Slowdown
The economy is really putting the breaks on. We were tapping for about a year, with the thought that the price of oil couldn't keep going up. Well it did. Now that Americans have tapped their 401ks and maxed their credit cards things are starting to slowdown. The airlines and the big 3 automakers don't have time to adjust strategy. They are laying-off thousands. There has finally been enough slowdown to cause the price of oil to subside. I would expect the economy to continue downward for at lease 24 months, possibly leveling off after that. Wide economic expansion may never come again, unless oil falls below $75 or another energy source starts to compete with oil.
Tuesday, June 24, 2008
The Storm
I don't like to write about negative topics, but they seems to be the only things happening these days.
We now are faced with crop damage to thousands of the nations most productive acres. Flooding along the mighty Mississippi has caused much damage. Tornadoes have swept thought our land and we are now heading into hurricane season.
High gas prices are about to bring the country to it's knees. The pain has been gradual, primarily due to credit cards and the economic stimulus package carrying the burden. Billions if not trillions of dollars turning into CO2 will cause many businesses to go out of business very soon.
To advert the Second Great Depression the US citizens need to make some drastic changes to their lifestyles. Get rid of the the gas guzzler as soon as it makes sense financially to do so. Don't eat out as much and buy groceries that will keep your family healthy. Start or keep working hard at your job to increase productivity, even if your pay is the same or lower.
The sad realty is that these things will be done by 5 maybe 10 percent of the population, but most citizens will continue down the same road. The scary part is that I think foreign investors are going to catch a fire sale pretty soon and we won't own our country anymore.
We now are faced with crop damage to thousands of the nations most productive acres. Flooding along the mighty Mississippi has caused much damage. Tornadoes have swept thought our land and we are now heading into hurricane season.
High gas prices are about to bring the country to it's knees. The pain has been gradual, primarily due to credit cards and the economic stimulus package carrying the burden. Billions if not trillions of dollars turning into CO2 will cause many businesses to go out of business very soon.
To advert the Second Great Depression the US citizens need to make some drastic changes to their lifestyles. Get rid of the the gas guzzler as soon as it makes sense financially to do so. Don't eat out as much and buy groceries that will keep your family healthy. Start or keep working hard at your job to increase productivity, even if your pay is the same or lower.
The sad realty is that these things will be done by 5 maybe 10 percent of the population, but most citizens will continue down the same road. The scary part is that I think foreign investors are going to catch a fire sale pretty soon and we won't own our country anymore.
Wednesday, May 14, 2008
The Parties
The two party system that we have is failing us. The U.S. is faced with some of the biggest challenges of our short existence. These include - social security, healthcare, and peak oil.
The government has failed to address any of these problems. The nation faces a collapse from any one of these problems, much less all of them. These issues should be the main topics of conversation for all political figures and the nation as a whole. We are headed down a path that leads to destruction. The solutions are not easy.
Social Security - Raise the age that benefits are recieved. Don't give benefits to the rich. I realize that this is not what the people who paid into this scheme signed off on, but this is the only option.
Healthcare - Limit the care that the elderly recieve. Cut back on procedures that have a low percentage of success. Make prevention a priority.
Peak oil - Aggressively raise the miles per gallon requirments for cars in the U.S. Invest in alternative fuels. Invest in public transportation ugrades. Invest in a better railroad system.
At this point, no one would get elected if they ran on these issues. U.S. citizens don't react until things get bad. We are on the verge of things getting really bad, if action is not taken soon.
The government has failed to address any of these problems. The nation faces a collapse from any one of these problems, much less all of them. These issues should be the main topics of conversation for all political figures and the nation as a whole. We are headed down a path that leads to destruction. The solutions are not easy.
Social Security - Raise the age that benefits are recieved. Don't give benefits to the rich. I realize that this is not what the people who paid into this scheme signed off on, but this is the only option.
Healthcare - Limit the care that the elderly recieve. Cut back on procedures that have a low percentage of success. Make prevention a priority.
Peak oil - Aggressively raise the miles per gallon requirments for cars in the U.S. Invest in alternative fuels. Invest in public transportation ugrades. Invest in a better railroad system.
At this point, no one would get elected if they ran on these issues. U.S. citizens don't react until things get bad. We are on the verge of things getting really bad, if action is not taken soon.
Food & Terrorists
Food prices are soaring.
The reasons:
1. Ethanol Production
2. Australian Drought - poor crops
3. Oil prices at $125 per barrel
Most of the world lives paycheck to paycheck, if they get a paycheck at all. Many of the poorest people in the world spend 50 to 75 percent of their paycheck on food.
When food prices double that means that they cannot afford to buy enough food to keep a healthy diet or it means that all their money goes to food. There have already been food riots in many countries and the World Food Bank been working overtime to try and ease some of the pain.
One of the problems associated with this crisis is the ablility of terrorists to recruit these starving people into their organizations. A person that is faced with death is easily swayed to join an organization that they feel might bring about change for their people. It is an easy sell to say "Come fight with us against the infedels that are putting your grain into their big SUVs.
The reasons:
1. Ethanol Production
2. Australian Drought - poor crops
3. Oil prices at $125 per barrel
Most of the world lives paycheck to paycheck, if they get a paycheck at all. Many of the poorest people in the world spend 50 to 75 percent of their paycheck on food.
When food prices double that means that they cannot afford to buy enough food to keep a healthy diet or it means that all their money goes to food. There have already been food riots in many countries and the World Food Bank been working overtime to try and ease some of the pain.
One of the problems associated with this crisis is the ablility of terrorists to recruit these starving people into their organizations. A person that is faced with death is easily swayed to join an organization that they feel might bring about change for their people. It is an easy sell to say "Come fight with us against the infedels that are putting your grain into their big SUVs.
Tuesday, April 22, 2008
Corporate Greed
I am for free markets. I am not for individuals who conduct business in an unethical manner. There are plenty of opportunities out there for many people to have success. My theory is that the charter that corporations abide by "increase shareholder's wealth" is not clear enough. In order to increase shareholder's wealth over a long period of time, a company must be prudent and conduct business in a ethical manner. If you want quick returns, which is what many corporations strive for, you will have corruption and greed. That is why you see the CEO turnover, out of control executive salaries. and the mass layoffs in many corporations.
The people and the government have the responsiblity to keep these corporations in check through purchasing power and regulations.
The people and the government have the responsiblity to keep these corporations in check through purchasing power and regulations.
Sunday, April 13, 2008
Economy
The world economy is in peril. The banking system got too greedy and it is going to cost everyone a great deal of hardship. It doesn't help that oil is now at $110. This is causing food prices to soar and that spells trouble for the bottom third of the US population and a great deal of trouble for many second and third world countries. The Fed has stepped in and is making large sums of money available to the banks. What it boils down to is that they made very bad investments and the banks are in trouble of going bankrupt if they don't write down their losses and find infusions of capital. Many people are trying to blame the borrowers who to on these mortgages that they couldn't afford. There was fraud on the part of some borrowers, but I place the blame more fully on the lenders. The "American Dream" of owning a house has been engrained into the public’s consciousness and the banks took advantage of low interest rates to get people into homes they couldn't afford, thinking that the price of homes would continue to rise and everyone would win. Well, as we have learned so may times before, what goes up must come down. I believe that there should be a full investigation into the lending practices and the packaging of these mortgages into funds that were incorrectly rated. There are people that knew this thing was going to blow up and continued to pump it up.
The banks are in a position where they don't know how much they could lose, which is a very bad thing for public confidence in the financial system. I have been talking to some of my banking friends on Wall Street and they say that this situation resembles the 1890s and that it could get really bad.
As I said earlier if it was just the financial sector that was in trouble, we might be able to recover in a couple of years. With oil prices soaring we are headed for a very rough ride that could result in an economic depression.
The banks are in a position where they don't know how much they could lose, which is a very bad thing for public confidence in the financial system. I have been talking to some of my banking friends on Wall Street and they say that this situation resembles the 1890s and that it could get really bad.
As I said earlier if it was just the financial sector that was in trouble, we might be able to recover in a couple of years. With oil prices soaring we are headed for a very rough ride that could result in an economic depression.
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