Real Estate Market / Inflation / Recession / Depression (Alexandria, 2009, free market, debt)

[Bob from down south]

Some amazing words from Obama today in Albuquerque...sure to be relegated to the back pages if it will be printed at all:

Obama Says U.S. Long Term Debt Load 'Unsustainable.'

The punch line:

May 14 (Bloomberg) -- President Barack Obama, calling current deficit spending “unsustainable,” warned of skyrocketing interest rates for consumers if the U.S. continues to finance government by borrowing from other countries.

“We can’t keep on just borrowing from China,” Obama said at a town-hall meeting in Rio Rancho, New Mexico, outside Albuquerque. “We have to pay interest on that debt, and that means we are mortgaging our children’s future with more and more debt.”

Wow...this coming from the guy that quadrupled the deficit from Bush's worst in his first six months...the guy that's looking at an even bigger $3.6 TRILLION budget next year?

It's unsustainable...but let's do it anyway? We're mortgaging our childrens' futures...BUT LET'S DO IT ANYWAY???

As each day passes this just gets more surreal. But the message seems clear enough to me...the Chinese aren't playing any more--get ready for inflation (and massive tax increases). And the foreign flow of funds data supports that as ground truth.

What's a house going to be worth with three foreclosures selling on the same block, and mortgage rates at 8%, or 10%--or more? I still think that's just a matter of time...the Fed cannot print $trillions of dollars unbacked by any real production without that dynamic kicking in. And the guys in charge know it. They've got to be really worried as to how they keep a lid on things when that gets started.


Full Disclosure:
Long Position in Precious Metals
Blued steel, Brass, and Lead

[zenkonami]

I'm not happy with Obama right now for a variety of reasons, but you do realize that part of that "quadrupling" of the deficit is in accounting for spending that the Bush administration left "off the books", yes? Just in the interest of fairness.

I do agree that we can't borrow our way into recovery, but I also don't believe we should return to the old "hyper-consumer deregulated borrow and spend" paradigm, either. I think we, as Americans, need to take a long, hard look at our culture and our behavior of the past few decades (and kudos to those who wisely avoided the pitfalls and traps) and start to change not our perception as well as our behavior if we're going to be an important player in the world stage of tomorrow.

Unfortunately, I don't think we, as a nation, are going to take that long, hard look. As soon as it smells like recovery, we'll just forget it all happened until the next crisis.

[Bideshi]

Originally Posted by zenkonami

Unfortunately, I don't think we, as a nation, are going to take that long, hard look. As soon as it smells like recovery, we'll just forget it all happened until the next crisis.

Even if 25% or more of us are out of work? When are we going to wake up to the fact that we've been had?

[Shuffler]

Originally Posted by Bideshi

Even if 25% or more of us are out of work? When are we going to wake up to the fact that we've been had?

most folks still seem unwilling to accept a new reality that the game is over and the system is broke(n), hoping that this will come to pass so they can get on with consumption/complacency as usual

[Sockeye]

Here's more "change"...

Hot Air » Blog Archive » Your tax dollars at work: Teaching Chinese hookers to drink responsibly

[sterlinggirl]

Credit Card Defaults Reach Record Highs in April - Financials * US * News * Story - CNBC.com

[sterlinggirl]

The U.S. Postal Service has cut its staff by 25,000 this year.

http://www.nytimes.com/aponline/2009...Woes.html?_r=2

[Mike from back east]

Originally Posted by sterlinggirl

The U.S. Postal Service has cut its staff by 25,000 this year.

http://www.nytimes.com/aponline/2009...Woes.html?_r=2

Yes, and they've a bummer of a $6.5B deficit to close.

[jazzlover]

Most of us on this thread tried to keep it focused on Colorado and the Rocky Mountain region, but it is hard to do that without talking about the national economy and events. I disagree with it being moved to this forum and losing its regional focus, but I don't make the rules about that. I hope the "regulars" who have been posting to this forum will continue to do so.

Kunstler's blog this week makes for some pretty hard-hitting reading ( James Howard Kunstler ). This part, in particular, inspires me to ask the question--if these predictions come true (and I think they all will), how will your region fare in the new economic/political/social environment ahead? My answer for regions like Colorado, that have grown explosively, inefficiently, and wastefully in the last 30-50 years, is that they will fare very poorly. In other words, the areas that have seen most growth in the last couple of decades may very well be the areas that crash the most severely in the next few years. Read Kunstler's comments and think about it:

There are plenty of things you can state about the economy past and future with some confidence right now:
-- Cheap energy is over and our wishes for alt.energy are currently inconsistent with reality, meaning we have to live differently.
-- We have to downscale and re-localize our major economic activities: food production, commerce and manufacturing, banking, schooling, etc.
-- We can't hope to have a stable money system unless we allow a workout of unpayable debt to proceed.
-- Even if we can do this, universal easy credit is a thing of the past. From now on, we have to save for the things we want and run our businesses and households on accounts receivable.
-- Major demographic shifts are inevitable as it becomes necessary to let go of suburbia and reactivate our derelict towns and smaller cities (and allow our giant metroplexes to contract).
-- We have to face the truth that our major social contracts cannot be met, namely the continuation of social security as we know it and probably all pension arrangements. We'll probably have to change household arrangements to make up for these losses.
-- Health care will have to go through a revolution more comprehensive than just changing how we pay for it. Like everything else, it will have to downscale, re-localize, and become more rigorous.
We're not going to rescue the banks. The collateral for their loans is no good and it will only lose more value. All those tract houses on the cul-de-sacs of America and scattered on the out-parcels of our tragically subdivided farming landscape will only lose value, one way or another, in the years ahead. Right now they're simply losing inflated cash value -- and that has been bad enough to sink the banks. In the months and years ahead, they'll lose their sheer usefulness as the distances once mitigated by cheap gasoline loom larger again, and the jobs vanish and incomes with them, and the supermarket shelves cease to groan with eighty-seven different varieties of flavored coffee creamers, and one-by-one the national chain stores shutter, and the theme parks, and the Nascar ovals, and the malls, and the colossal superfluous cretin-cargo of consumer nonsense that we've been daydreaming in gets blown away in a hurricane of change that we were not ready to believe in.

[Bob from down south]

Japan's GDP release showed a crash dive at an over 15% annual rate last quarter, yet the Nikkei is up a half a percent. Par-teee!!!

And Californians are voting down virtually every budget initiative on their special election ballot tonight nearly 2-to-1. They want the problems from their years of insane excesses fixed, but apparently think someone else is going to pay for it.

CA Sec of State: California Statewide Special Election

The rope holding the anvil hanging over our heads continues to snap thread after thread, and I agree with Kunstler, we are in full-scale denial of the obvious.


The West Wasn't Won
With a Capitol One
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