Quote:
Originally Posted by kwflconch
1. Home prices are going to keep declining until 2012.
2. People are going to continue losing their homes, with record numbers going up each year. There will be 4-5 million foreclosures in a year around 2011 or 2012.
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2024
Things related to interest rates are affected by Fiscal Inflation. Cheap credit, but you also have to factor in Supply & Demand. That's why auto prices are not affected, because Supply far and above exceeds demand (hence Rebates plus Cash Back plus Customer Loyalty Bonuses and now new gimmicks like Employee Pricing).
When you have Cost Inflation, there's nothing you can do except stop consuming, which causes a recession. You can force people do reduce consumption by raising interest rates, which the Federal Reserve did in the late 1970s when the rate jumped to 13%. That would shrink the credit pool and drive housing prices down.
Plus as things get worse starting in 2015, you'll have families sharing living space in order to make ends meet and have the extras like cable, internet and cell-phone.
Quote:
Originally Posted by kwflconch
3. Gas prices are going to shoot up to $5-$7 a gallon.
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Hard to say.
I think Ethanol is dead, because the E85 standard is going to collapse. There are currently 11 plants under construction that have shut down because of no credit.
If you remember back in June, Heartland Ethanol walked away from 7 proposed plants because they couldn't get financing. Those 7 plants were supposed to come on-line in 2011/2012.
Here's the thing, Citigroup is backing 123 plants.
There's 160 now operating or under construction (plus the 11 that have ceased construction).
I would mention that so far, John McCain is the only one calling for a reexamination of the bio-fuels mandate. If we are in a Maunder Minimum, it'll ruin corn and soy crops for ethanol and bio-diesel and leave consumers paying through the nose for fuel and food. Figure around 2012-2015 the growing season north of I-80 is only going to be about 3-4 months and that will gradually shrink to 6-8 weeks within 10 years after that.
If Citigroup collapses or needs a bailout (and even if they don't it's still possible that) most of those 123 ethanol plants will close or cut production, and according to the Renewable Fuels Association, we'd lose about 5 Billion gallons of ethanol production which would drive up the price of gasoline unless Congress eliminates the ethanol mandate altogether.
Quote:
Originally Posted by kwflconch
4. The value of the US dollar is going to collapse.
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The US Dollar will not collapse, at least not any time in the next 10 years. If you want to see anything close to the hyper-inflation in the Weimar Republic, the government would have to pump over $1000 Trillion into the economy, and that ain't gonna happen.
In 1921, a standard daily newspaper in Germany cost 30 pfennings. 2 years later it cost 70 Million marks. That's an increase of 23 Billion%. Your average German was earning about 12 Billion marks
per day in wages.
If the US doesn't invade Iran to get control of Central Asia, or otherwise can't get control of Central Asia, you can worry about the US Dollar collapsing in about 12-15 years, when $1 = 0.24 Euros.
Quote:
Originally Posted by kwflconch
5. Income will start declining.
6. People are going to eat out less, go on less vacations, and start saving more money.
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Incomes won't decline, rather prices will continually increase. That's the difference between Cost Inflation and other forms of inflation like Wage Inflation or Monetary Inflation.
When Cost Inflation occurs, prices continually rise will wages remain stagnant. Sure, people claim they get raises, but price increases outstrip the wages.
The other day downtown at lunch some secretaries at a law firm apparently got their salary reviews, and while they all got raises, they were commenting that the price of parking and a few other things had just increased. So not only did the price increases negate their pay raise, they'll be paying additional costs out of pocket to park.
Quote:
Originally Posted by kwflconch
7. Millions of people are going to lose their jobs.
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That's one way to stop Cost Inflation. 50 Million permanent lost jobs when all is said and done. It'll take a long time to get there.
Quote:
Originally Posted by kwflconch
8. "Tent cities" will start appearing.
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Not likely, as Americans are too vain. They'll end up sharing space (they already do in some markets but for different reasons mainly housing costs).
Americans aren't just going to give up their cable/satellite, cell-phones and internet. They'll share space. Two families can rent a house/apartment or take a mortgage together on a house or condo (again they already do that in some markets because of housing costs) and two adults can take the one bedroom, the other two can take the 2nd bedroom and the 2-3 kids can share the 3rd bedroom. There are Millions of people walking around the US today who shared a bedroom with 2 or 3 siblings so we know it isn't a death sentence, and besides, Americans could learn to use a little humility.
Now they can share cable/satellite, internet and cell-phone family plans and save money, plus they'd save on day-care expenses since none are needed.
53% of American families have two-wage earners now, but that will drop to 10%-13% and I can't realistically see more than 3%-5%. The government would have to restructure the tax brackets to severely penalize two income families as a matter of good public policy. It wouldn't be fair if the Butt-hole family had two wage earners while you and your spouse collect ultraviolet rays. One of them can give up their job so that you or your spouse can work.
Quote:
Originally Posted by kwflconch
9. Wall Street is going to go chaos.
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Probably not.
If you look at the Great Depression, when the economy was declining, the stock market was soaring. When the economy rebounded (it did several times) the stock market collapsed.
When the economy started to rebound in 1938 for the final time, they were actually running out of workers to hire, yet that was
the worst market crash in history, right there between 1938 and 1942.
Quote:
Originally Posted by kwflconch
10. People are not going to be able to go to college and get an education and a degree, due to people cutting back on money and colleges getting more expensive.
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College costs are increasing for the same reason public education costs are increasing: IT.
We spent $Millions to wire the campus with co-ax then $Millions more to re-wired with ether net, and now we're spending $Millions more wiring with fiber optics so the can have the goddam internet in the stadium. That stuff ain't cheap and it ain't cheap to maintain either.
Same with public schools. Yeah, Saint Gates gives free computers to the schools because he's ramming it up their asses with a $30 Million annual IT contract, and the students are dumber than ever.
Quote:
Originally Posted by kwflconch
I see a repeat of the 1930s Great Depression.
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The US got out of that because of WW II. If it hadn't been for that, it could have lasted past 1945 into the early 1950s.
I only mention that because after the Allied success in North Africa, the Brits, Free French and Bulgarians begged the US to invade the Balkans.
The Bulgarians were willing to help by providing intelligence plus troops to tie down the Germans. Two Romanian army groups were out of the country and the 3rd was scattered about with a small German group. All it would have taken was a pincher move from Vindin across the Dunarea and Vama Veche, and they could drive up the middle to Ploiesti while another group does an amphibious landing and encircles Bucharesti.
Instead, the US insisted on invading Italy even though the Italians were already surrendering and it offered nothing to shorten the war.
If they would have captured the oil fields, the war would have ended in 6-12 months, but it seems the US wanted to prolong the war for economic reasons.
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