+32,800 (Pittsburgh: prices, to move, design)

[eschaton]

Originally Posted by Geeo

This market correction was way overdue. It would have been a bigger problem is the market had kept going up like it has. Corrections are healthy and should happen periodically. And the best thing to do if you have a long time horizon is to keep investing, especially now, because you're buying at cheap prices. People who held on and kept buying through the Great Recession are still way ahead.

Yeah. Not every bear market leads to a recession. Read up on Black Monday in 1987. It was absolutely horrible for the markets, but had virtually no effect on the U.S. economy as a whole, which kept chugging along at a pretty good clip for another four years.

[stburr91]

Originally Posted by eschaton

Yeah. Not every bear market leads to a recession. Read up on Black Monday in 1987. It was absolutely horrible for the markets, but had virtually no effect on the U.S. economy as a whole, which kept chugging along at a pretty good clip for another four years.

Yes, every bear market doesn't lead to a recession, but it's not the stock market that is causing economist to predict a coming recession.

[eschaton]

Originally Posted by stburr91

Yes, every bear market doesn't lead to a recession, but it's not the stock market that is causing economist to predict a coming recession.

I saw an article the other day that said the Economist has predicted a crash in the Chinese economy 34 times in the past 15 years. Obviously they're bound to be right eventually, but it's not as if they have great predictive power here.

[Goodjules]

Originally Posted by tyovan4

The causes and consequences of China's market crash | The Economist

Commodities prices are falling.
BRIC isn't in good shape. Chinese economy is slowing. Russian economy is getting pounded by international sanctions.
EU is a mess. Germany is becoming a welfare hotel for hundreds of thousands of people.
Japan is drowning in debt.
Australia is worried about recession due to fall in commodities prices and fall in Chinese demand.
Canadian property bubble is set to burst and their economy may already be on the brink of a recession, which is why Harper's re-election is threatened by the yahoos from the NDP.
Policy makers have few tools at their disposal, as the interest rates are already so low.

The global economy is certainly not in a very healthy state at the moment. And only a matter of time until the US sees more effects.

I am no expert by any stretch of the imagination, but I did hear an analyst recently saying that foreign investors often find shelter for their money in the US stock market during times like these. Hope she's right!

[Goodjules]

Originally Posted by tyovan4

Indeed, I don't think people are worried about China going into recession. But, there have been signs that China's breakneck growth is now slowing which will have a global ripple effect. I've been reading of that in The Economist for several months.

The Canadian economy is in a tough spot - with oil prices low and an overheated property bubble seemingly set to burst: How Canada's economy went from boom to recession so fast

The Canadian real estate market bubble is quite troubling to say the least. Being from SF, I worry about that bubble bursting as well. Although, in the long run I think it would be a good thing to have housing prices fall to more affordable levels.

[Goodjules]

Originally Posted by stburr91

Also add that oil prices are way down, and likely to continue to drop. Despite falling prices, OPEC is still pumping out massive amounts of oil. This is bad news for the one of the very few economic bright spots since the last recession, shale oil job growth. Some are predicting shale oil could go belly up, and lead to massive job loses in the energy sector.

There's a silver lining to just about everything. Lower gas prices give consumers more spending money and businesses that ship their goods have lower transportation costs. Only time will tell how this plays out.

[stburr91]

Originally Posted by Goodjules

The Canadian real estate market bubble is quite troubling to say the least. Being from SF, I worry about that bubble bursting as well. Although, in the long run I think it would be a good thing to have housing prices fall to more affordable levels.

I'm not sure we'll see much, if any real drop in real estate prices, especially in the places that already have high prices. As more nations move away from the dollar, we'll see even more foreigners dumping their dollars back into the US. It makes a lot of sense to trade dollars that are being devalued, for something that is a much better store of value, like real estate. The USD will not remain the world reserve currency forever.

Here's a video about the end of the Dollar. It's a long video, but it makes a pretty good case for the fact that the end of the dollar could come sooner than most think.


http://www.youtube.com/watch?v=OgNb83Y0CoY

Originally Posted by Goodjules

There's a silver lining to just about everything. Lower gas prices give consumers more spending money and businesses that ship their goods have lower transportation costs. Only time will tell how this plays out.

Unfortunately, prices at the pump aren't tied to the price of crude as much as they once were. We haven't seen a meaningful drop in price at the pump, and I don't think we've seen any downward trend in consumer prices. Also, remember that here in PA we pay the highest gas taxes in the country, and that taxes don't drop no matter what the price of oil is doing.

Gas Prices Are Not Tied to Oil Prices - Businessweek


If oil prices go any lower, shale oil here in the US is going to be in real trouble, and we could see a lot of good paying jobs lost. At the local level, these job loses would be much worse economically than the minimal benefit from lower prices at the pump. Of course in the long run, we would be much worse off if shale oil goes under, as oil prices would have to climb pretty high to justify rebuilding the shale oil industry.

[Moby Hick]

Originally Posted by stburr91

I'm not sure we'll see much, if any real drop in real estate prices, especially in the places that already have high prices. As more nations move away from the dollar, we'll see even more foreigners dumping their dollars back into the US. It makes a lot of sense to trade dollars that are being devalued, for something that is a much better store of value, like real estate.

The move away from the dollar as a reserve currency is a process that has been going on for literally longer than I have been alive. It's a necessary result of the general recovery from WWII plus the opening of more markets with the end of communism and the end of mass poverty in much of Asia. I don't think it has caused much of a move into real estate in the long term (i.e. not counting the run-up to 2008).

Also, if the drop in the value of dollar is that bad, it will increase domestic jobs as imports become more expensive and exports a better deal. It's two sides of the same coin.

[UKyank]

The dollar isn't going anywhere as the primary global reserve currency in any of our lifetimes.

[stburr91]

Originally Posted by Moby Hick

The move away from the dollar as a reserve currency is a process that has been going on for literally longer than I have been alive. It's a necessary result of the general recovery from WWII plus the opening of more markets with the end of communism and the end of mass poverty in much of Asia. I don't think it has caused much of a move into real estate in the long term (i.e. not counting the run-up to 2008).

Also, if the drop in the value of dollar is that bad, it will increase domestic jobs as imports become more expensive and exports a better deal. It's two sides of the same coin.

If you would have watched the video I linked, you would see the evidence that was presented to show the move away from the dollar is accelerating fairly rapidly. Keep in mind that there are more dollars in the world than any other currency, and when they come home, we'll see hyper-inflation. This inflation will bring the printing presses at the Fed to a screeching halt, and life as we know it in this country will cease to exist.

I have no idea what the time frame would be for any of this to happen, but when it does, we will see the greatest transfer of wealth the world has ever seen.

Also, many are saying we are starting to see a currency wars around the world, so we could see other nations taking steps to purposefully devalue their currencies. China recently did just that in an effort to improve their economy. If you are holding paper money, this race to the bottom is not a good thing.

Originally Posted by UKyank

The dollar isn't going anywhere as the primary global reserve currency in any of our lifetimes.

I hope you are right, because it won't be pretty when it happens. Again, watch the video I linked, the presentation makes a pretty good case that it could happen much sooner than you think.