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Hmm, funny how the mind works. Here's a glimpse into a thought process I had today.
The $700B bailout passed today. Surprisingly the stock market didn't react as favorably as anticipated. People are realizing the economy is in bad shape no matter how you slice it. Many are nervous about dumping a lot of money into their 401k's, etc.
Now . . . here's my really strange thought . . .
What do people usually invest in when the stock market looks bleak? Isn't it tangible things such as gold . . . and REAL property????
Wouldn't it be surprising if the uptick of this whole economic mess is that real estate started popping again?
Would be a nice thought..but there is still too much debt out there with lending tightening up.
I just don't see it popping again due to the debt people are carrying.
But the purpose of the bailout was to get the bad debts off the books to free the banks to make more loans. Granted it's not going to be subprime loans and borrowers will need to be credit worthy now. But the bailout should mean more loans will be made, and if you couple that with the FHA mortgage restructuring available for many others, I think there may be a very dim light at the end of the tunnel when it comes to real estate.
Location: Moved to town. Miss 'my' woods and critters.
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Hi Gretchen....I really think things will open up very soon. Around here in mid Missouri we have seen some positive signs. A few more listings and some very good sales. Granted not in every price range, but it is a start. Good luck to you and actually, all of us.
The bailout is not going to create stability unless more people understand it and have confidence.
Lacking confidence, many people just wanted to pull their money off the table for the weekend.
Confidence would be a decision that $700 Billion will create inflation, deflation or stagflation, and there are voices from all sides of the fence.
If you believe it creates inflation, even hyper-inflation, then now may be the time to go into debt, debt that you are objectively confident you can service. With a fixed interest rate. Pay tomorrow with cheaper dollars.
If you believe it will create deflation, cash is not a bad place to be. That cash will gain in value.
If it creates stagflation, well, there will be tons of theories how best to handle that. A mix of cash and stocks, debt and property, diversity to spread the pain? I don't know the strategy for the malaise of stagflation any better than Jimmy Carter.
Right now, the dollar is strong because money is going into Treasuries. I believe this will be short lived. It'll flow back into commodities and precious metals as well as farmland, making the first bull run look like a warm up. McMansions on tiny lots are going to continue to freefall nationwide.
Take your money out when the stocks are bad and dump it into a money market account until things are better. You won't make a ton of money but you won't lose it either. I know lots of people that pulled their 401k money out 6-12 months ago and dumped it into a money market account. Not sure this is the best/right thing to do, but that is all I know.
Location: Georgia, on the Florida line, right above Tallahassee
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IF things get so bad that you have to pay for things with gold....
...You better have a firearm.
And no, I'm not a doom and gloomer. I am a realist. Imagine that you have gold. You wish to purchase something. You must carry this gold, somehow. You wish to purchase something from me, perhaps...or from someone else. I kill you and take your gold. Now you have no gold, and I have gold. Gee, that was easy.
When society breaks down, so do the artificial norms that are a part of that society. The weak lose. The strong survive. Sometimes strength is a matter of physical power. I work out. I have that in spades. Doesn't matter if you shoot me and take my gold. Muscle vs. bullet = FAIL.
IF things get so bad that you have to pay for things with gold....
...You better have a firearm.
And no, I'm not a doom and gloomer. I am a realist. Imagine that you have gold. You wish to purchase something. You must carry this gold, somehow. You wish to purchase something from me, perhaps...or from someone else. I kill you and take your gold. Now you have no gold, and I have gold. Gee, that was easy.
When society breaks down, so do the artificial norms that are a part of that society. The weak lose. The strong survive. Sometimes strength is a matter of physical power. I work out. I have that in spades. Doesn't matter if you shoot me and take my gold. Muscle vs. bullet = FAIL.
Not really.
People sold hooch underground during the depression, when society was doing A-OK even thought the economy was not. Gold was used during Argentina's and Weimar's hyperinflation, as well as by a few smarties in Zimbabwe, and the former two societies were operating within the norm. Even with Zimbabwe, society is relatively stable (compared to Congo or Sierra Leone)
Also, do you honestly believe I as a prudent holder of gold would begin huge quantities of stuff with gold on a whim? Nope. Trust relationships is the name of the game. I know Y is good for not having deals go bad because X and Z do business with him/her regularly, and I also have bartered with X and Z.
Plus I'd likely bring along a handgun/AK-47/whatever and probably would retain hired and armed goons as the cost of business for anything that I would consider sinister.
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Good luck to you and actually, all of us.
