recession 08 - how does it affect the common man/woman? (2 Viewers)

[aoboa]

The stockmarkets are losing money that never actually existed in the first place. It's all a farce. And a conspiracy, probably.

This is what pisses me off most. Nail on head and all that.
If everyone stops believing in it it'll disappear.

 

[billygannon]

I thought this was a good article.

"This is the future, the future is frugality"

Indeed it is. And it was Minyanville Professor Kevin Depew who coined the phrase It's Cool to Be Frugal.

The US has been on a consumption binge of epic proportions all on the misguided belief that real estate prices would keep on rising forever, at a clip of 8% or more a year. No one ever bothered to do the math as to how anyone could possibly afford to pay the projected prices. Real wages were shrinking but somehow everyone could get rich selling houses to each other.

The "Housing Prices Always Go Up" dream has finally crashed on the rocks of reality. However, while the party was still going on, consumers were willing to go deeper and deeper in debt, buying new kitchens, taking expensive vacations, buying boats, buying SUVs "needed" to haul all the junk around they were buying, etc. And as long as home prices kept rising, everyone ignored the debt side of the balance sheet.

Now, the party has ended, and asset prices are crashing but the debt still remains. Consumers are now very concerned (finally), about the debt side of the balance sheet. It is going to take an amazing shift from consumption to savings to pay down that debt. And a secular shift from consumption to saving is now underway. "Cool To Be Frugal" is actually an understatement.

Forward earnings estimates in the stock market have not remotely factored a secular shift from consumption to savings in. The implication on the stock market should be obvious. Furthermore, many who are out of a job, will not be able to pay down their debt. And what cannot be paid back, will be defaulted on.

Others will default on purpose, simply choosing to walk away. I have written about "walking Away" on many occasions. most recently in Walking Away: The Next Mortgage Crisis.

And that was some massive change in attitude. Three short years ago people were camping out overnight for the chance to buy a Florida condo. Now there are virtually no bids on some condos, and many are walking away from single family homes.

 

[magicbastarder]

http://www.b3ta.com/questions/nicethings/

 

[Reets]

This is what pisses me off most. Nail on head and all that.
If everyone stops believing in it it'll disappear.

so the economy is being destroyed by the Nothing, i see. . where's falcor when you need him?

 

[aoboa]

so the economy is being destroyed by the Nothing, i see. . where's falcor when you need him?

One of the main reasons it's all falling apart is that it's SO fake that no one actually knows the scale of the problem.
It's gonna be a long long time before they unravel the trail of debt rapped up in the insurances etc.

 

[Wheels]

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[ann post]

Only the crunchiest, flakiest credit, tastes like credit never tasted before

 

[D0njo]

I'm going to get a new graphics card and a hundred tins of beans and i'll just stay here and it'll be grand