"A Truly Extraordinary Slump": Reports of Robust Recovery Premature, James Galbraith Says. I know, I know. The sky is falling is what I will be accused of; but it is not what I am espousing. I'm just saying that we all need to be prepared for some extraordinarily rough times.
This is my opinion. The realization of what is already known by many will be brought to fruition in March 2010. At that time is when the numbers will be reported for the last quarter of 2009. Retail Sales for Christmas season will be reported and they will be horrid. The third leg down on the Adjustable Rate Mortgage collapse will take place, as these rates are reset and more people default on these loans. Finally, the first wave of the Commercial Real Estate bubble will hit, because of the retail slump brought about by the terrible Christmas sales, which is the time of year when most retail stores come to profit.
It doesn't make sense that the U.S. treasury has printed all of this cheap money that the people of this nation aren't getting any of. All we hear about is this Healthcare bill that you better come to understand is going to go through. It will be passed in this Senate this Saturday (or after a show, at least by the end of the weekend), then it will be reconciled into a monstrosity, by agreement of both Houses of Congress, and it will not be good.
Where is the bottom in the Real Estate market? If there are 10 houses for sale around me and I decide I need to move to a place where there are jobs -or- I decide I can't afford my house anymore, how do I sell it? What do I get out of it? Look at Detroit and some of the places out West. They are selling houses for pennies on the dollar. It is a buyers market, but the banks aren't lending. A true conundrum indeed.
The worst part is that the Financiers are able to take the money that has been printed and borrow it at artificially low rates of interest, set by the Federal Reserve, and invest it in foreign countries for a profit - (From Reuters: the Carry Trade). So the Wall Streeters and Foreign entities are profiting on free money that we, the American people, are going to have to pay the price for. Will the Financiers pay the price for the collapse of this bubble? Do they ever?
I ain't no Chicken Little, the sky is not falling. But American Consumerism is on its death bed. I honestly believe that whatever way you can be thrifty, you better start practicing those habits, because we are in for a ride.
