March 20, 2013 in mortgage by jedwan
3 Comments »
If a person were to sit and watch the markets, listen to the news and read the information on the popular media websites, they would think the great depression is going to happen all over again. News channels and the markets tend to overreact when it comes to financial information. There are two sectors right now that are dominating all of the coverage out of Wall Street. These two sectors are financial and housing. Turns out that nearly every other sector is reporting gains and doing relatively well.
Most analysists predict by the end of the year, once all the writedowns from high risk loans are over, the market will be back near 13,500 – 14,000. That is not a recession. A recesion is defined by two straight financial quarters of declining GDP. GDP numbers dont even come out until nearly a full quarter after the reporting quarter is over. In other words, we could be in a recession for about 3 months and not even know it.
No, I dont think we are heading towards a recession, I think Mr Market and the media has put the thought into people’s (and investors) minds for unnecessary reasons. Everyday there are many companies that report earnings that top Wall Street estimates. You dont hear much about those companies right now. Everyone wants to talk about the doom and gloom of the mortgage meltdown.
1.The entire global financial and monetary system is hopelessly, irreversibly bankrupt, and must be put through a bankruptcy reorganization to begin a process of global reconstruction.
What’s on is a complete financial and banking crash, and a bubble of roughly $ 20 trillion in inflated values is collapsing, so the losses will be much greater–the financial system is going to be lost, and must be replaced with a new system of credit.
2. American taxpayers will feel the financial consequences of the war for at least a decade. The war in Iraq could ultimately cost well over a trillion dollars — at least double what has already been spent — including the long-term costs of replacing damaged equipment, caring for wounded troops, and aiding the Iraqi government, according to a new government analysis. The U.S. Treasury is paying out more each month to sustain the war in Iraq than it did during the Vietnam War, according to a new report that calls the ongoing conflict “the most expensive military effort in the last 60 years.
3.The fact that is silenced laboriously the external debt of the the U.S.A. exceeds 37 trillones of dollars.
4.The commercial deficit of the USA with all the regions of the world (Europe, Asia and even Latin America) and their particular form to cover it with emission with paper money has finished flooding of dollars the world, doing that its excess, as any student inexperienced of Economy knows to it, finishes lowering its price. The tendency of the dollar to fell down is difficult to revert.
5. The oil countries appraise their exports in dollars, therefore with the reduction of that currency their relative income is less- To compensate, the oil countries increase the price of the crude one, creating a circuit. Nevertheless, it is clear that this fact not is in itself mechanism original of rise of crude, since structural aspects play there as the maintained increase of the demand (fundamentally by the growth of the consumption of China and India). In addition, there is a phenomenon that the analyst Michael T. Klare calls “the era of difficult petroleum”, it means that we have entered a stage of exploration and moved away deeper petroleum operation or more of the coasts or heavier (that is, more expensive to refine). Thus, two phenomenas of different structural origins, the fall of the dollar and the rise of petroleum, end up and become explosive.
6. In addition, the excesses of currency in the world have finished creating the calls “bubbles”, that are not another thing that sobreinvestments in some industries. It was the case of the technological sector between 1997 and 2001, which crisis was known like the crisis “com.”.The most recent crsis was in the real estate sector. This sector was reactivated by the low interest rates and the relaxation of the conditions of the loans. This decision finished sinking the insolvency to the holding banks of the mortgages of high risk. The manifestation of those crisis is the inflation of assets generalized. The possession of financial papers is uncertain and the sobreinvestments are concentrated in physical assets like gold, or in raw materials like iron and coal. Therefore the prices of those materials are bullishing.. But like such merchandise is also part of the productive process, the prices of the final goods are being impelling. This process accelerate the inflation, which reached a level of 4.3 percents in the United States, while in countries like China and Chile, considered stable macroeconomically, it surpassed the 6 percent. Therefore a dark panorama of recession is the future, plus an increasing and generalized inflation.
Yes we are heading towards recession. The main reason is our huge foreign debt.
Housing crises, dollar fall, stock market crises, Hike in gas and gold are just indications of recession.
Today we have only 11% prodution units compared to post WW I I. More imports and less exports developed foreign debt. As on today we have 9 trillion dollars ( 9,000,000,000,000=00) of foreign debt. Again we are adding about 2 billion dollars every day. So our dollar is going down. This is beyond control. Now there is no choice. .
Its easy to understand in the year 2000 we were getting 1.21 euros for dollar. But right now we are getting only 0.68 euros. Means If we have 100 dollars in year 2000 right now that become worth only 56.19 dollars. Means we lost so much wealth already compared to other nations.
No economist can predict the exact results of recession. Because this is recession of all world driven by US. Countries like China, Japan, Canada, Mexico and German may suffer more next to our country.
now china currency is almost fixed ( pegged) with US $ . If in case china take out the pegging means if their currency keep floating, we start to feel more sever depression. we may not afford to buy made in china goods. We have to start our closed prodution units back. As per me this date may fall in 2008. Because of weak dollar china is loosing a lot. It buy raw material and oil for more money and sell goods to us for less money . Its loosing money to keep their own and US economy running.
Now everything is beyond control. Nobody can control or prevent us from going depression.
We dont have any chance to escape from this. As we are super power the exact impact of depression is getting postponed.
The only way left is to save yourself.
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