Is the music stopping?

[BigB]

Stats are just stats if you don't understand what they mean. If you go back to the U.S dept of Labor website, your going to see that unemployment is near 5%! That's super low....
So on a financial obligation scale, the American consumer is an alright standing.

Yes, stats are just stats, if you don't understand what they mean. Do you? Look again at the US Dept of Labor numbers. 5%, historically, is not super low! Where are you surmising that they are? With the exception of the late 70's-mid 80's, US unemployment figures have consistently hovered in the 5% range. What is financial obligation scale? Unless you're talking about the Financial Obligation Ratio (FOR) used by The Fed. Notice how it has been steadily increasing since the early 80's. As you probably know, it only takes into account servicing debt, or in other words making minimum payments on the outstanding debt.

http://www.federalreserve.gov/releases/housedebt/

The problem is that, Americans finance everything! With low interest rates over the years, it was better to borrow then to spend your own money. Now it's causing a problem....thanks to Greenspan...
Wait till the end of 08....the rate cuts are going to kick in & your gonna start seeing improvement!

Is it just me, or do you not see a contradiction in this paragraph? On one hand you blame Greenspan for lowering rates to an excessive amount, and in the same breath rely on the rate cuts (albeit to a lesser extent) to correct the problem. That action only prolongs the inevitable.

Why would you even consult Satscan? We are talking abou the U.S...

Yes we are talking about the US. Why not, while we're at it, talk about Canada. You'll notice that Canadian Charter Banks' mortgage exposure had doubled from 2001-2006.

FastFlyBy, I agree. I'm quite sure that the financial/lending sector has already come up with creative vehicles in which to turn a profit. I cringe every time I see a "Leons....don't pay a cent till 2012" commercial, basically because it applies to a large segment of consumers. That consumer philosophy not only applies to buying a couch, but to homes as well.

[THEICEMAN]

Is it just me, or do you not see a contradiction in this paragraph? On one hand you blame Greenspan for lowering rates to an excessive amount, and in the same breath rely on the rate cuts (albeit to a lesser extent) to correct the problem. That action only prolongs the inevitable.

Ooh God!

Just like airturd said......Greenspan kept the rates low for too long. Because of that, many people took out 2nd & 3rd mortagages on properties. In 2005, the federal reserve raised rates by a lot because they were worried about inflation. Today in 2008, after 12-15 months, home owners are facing the problems of higher interest rates! This is clear proof that supports my claim!

Recently, the federal reserve lowered the rates in order to prevent the economy from deflating!
THE MARKET ALWAYS TAKES 12-15 MONTHS TO ADJUST WHEN MONETARY RATES ARE CHANGED!
Like I said above.....after the feds raised the rates in 2005, the market began deflating only until late 2007, which led to the sub prime mortagage crisis!
Now they have to lower the rates to balance the economy! That is why many analyst anticipate the maret to improve by late 2008......This is the basic principle of government intervention!

Yes, stats are just stats, if you don't understand what they mean. Do you? Look again at the US Dept of Labor numbers. 5%, historically, is not super low! Where are you surmising that they are? With the exception of the late 70's-mid 80's, US unemployment figures have consistently hovered in the 5% range. What is financial obligation scale? Unless you're talking about the Financial Obligation Ratio (FOR) used by The Fed. Notice how it has been steadily increasing since the early 80's. As you probably know, it only takes into account servicing debt, or in other words making minimum payments on the outstanding debt.

The markey is constantly changing so you cannot compare historical figures with today!
I don't where you come from, but 5% unemployment rate is great! In fact it is soo good that it is close to the maximum utlization rate of the labour market!
The federal reserve's defines full employment in the low 4% range....somewhere like 4.2/4.3/4.4......That's only 0.06-0.8 away from being perfect!

& yes, I do know what these numbers mean! I spend all day in auditoriums studying this stuff!

Unemployment figures will be going up. We're just at the tip of the iceberg now.

Agreed Kelowna! The next few months are gonna be difficult!

[Four1oh]

so they lower interest rates. So the people who were on the verge of bankruptcy can now barely scrape together a mortgage payment. Now how do you fight the inevitable inflation?

The thing is, they HAD to raise interest rates because things were getting out of hand, and you're right Greenspan just put off the inevitable and dumped the problem on his successor. But, if you think that just lowering the interest rates again is going to make everything happy, you're dead wrong. The sh1tstorm is brewing Mr. Leahy... category 3!!!

[Kelowna Pilot]

Agreed Kelowna! The next few months are gonna be difficult!

I think years would be more accurate. The US is in a deep financial mess. And today they just approved some toxic band-aid stimulus package where they're going to give everyone $600 in mad money (this is money basically borrowed from China). It's almost like they're trying to destroy their own currency

Contrary to what the self-serving interest groups want to tell us, there will be no "soft landing" for this one.

A couple of the major airlines in the US are now talking 'merger' due to the impending slow down... they tell workers that no one will loose their jobs, but anyone with a brain and a history book knows that is total bull sh*t. You can be assured though that the senior executives will be getting big bonuses, etc., while the poor working men on the trenches (the pilots and the mechanics and the front end staff) get pink slips.

The sh1tstorm is brewing Mr. Leahy... category 3!!!

Well, with the way real estate is going in the US, I think we'll all be living in Sunnyvale trailer park soon.

Know what a trailer costs in Kelowna now? It's over $100,000. And people say there's no bubble.

[BigB]

Just like airturd said......Greenspan kept the rates low for too long. Because of that, many people took out 2nd & 3rd mortagages on properties. In 2005, the federal reserve raised rates by a lot because they were worried about inflation. Today in 2008, after 12-15 months, home owners are facing the problems of higher interest rates! This is clear proof that supports my claim!

Perhaps you're misunderstanding my argument. If you are arguing that is takes 12-15 months to have a positive impact on the economy, have at it, if that's your claim. I'm not disputing it. We all know what happened with the artificially low rates.

Recently, the federal reserve lowered the rates in order to prevent the economy from deflating!
THE MARKET ALWAYS TAKES 12-15 MONTHS TO ADJUST WHEN MONETARY RATES ARE CHANGED!
Like I said above.....after the feds raised the rates in 2005, the market began deflating only until late 2007, which led to the sub prime mortagage crisis!

I'm quite sure there are many that would claim the sub-prime crisis was due to systemic lending problems and practices. The crisis was inevitable IMHO. By the way, the Fed was raising rates regularly from Jun 2004 to Jun 2006, and rates were not lowered until Sep 2007.

Now they have to lower the rates to balance the economy! That is why many analyst anticipate the maret to improve by late 2008......This is the basic principle of government intervention!

There is still one factor that you are not considering....debt load. I mentioned in a previous post. Did you look at the trend (FOR & DSR)? Look beyond your 12-15 months. The debt will still be there. BTW, The Fed is independent of the Gov't

The markey is constantly changing so you cannot compare historical figures with today!

I challenge you to prove that in your economics class.

I don't where you come from, but 5% unemployment rate is great!

Yes, compared to Honduras' 27%, it's mighty fine. However, one must take into context that the 5%, was for the most part a constant, even through past economic downturns. According to your logic, the US economy would not have had downturns with 5%. To say 5% is "super low", you must compare it to something, ie: historical data, within a closed economic context. I'm still not sure what your premise is with regards to the unemployment rate.

In fact it is soo good that it is close to the maximum utilization rate of the labour market!
The federal reserve's defines full employment in the low 4% range....somewhere like 4.2/4.3/4.4......That's only 0.06-0.8 away from being perfect!

I agree.

& yes, I do know what these numbers mean! I spend all day in auditoriums studying this stuff!

My perception is that you may not know what those numbers mean. Look outside the box, because that's what the MBAs and PHds did to create this sub-prime mess. Not everything is textbook. Perhaps you personally have to experience a recession or two, to know what I mean. By the way, I've had a few days in an auditorium myself. Wow, we have something in common.

[Kelowna Pilot]

I don't where you come from, but 5% unemployment rate is great!

Also remember that a lot of official gov't stats are spun and really not that accurate.

It's like statistics... lies, damned lies and statistics...

Let's just close the argument by saying this: They're now talking about "reverse-immigration" in the US now.

Basically a good chunk of the Mexicans are heading back to Mexico due to the poor job scene.

Now that's telling.

It would be quite comical to see them jumping over fences and swimming through rivers to get back into Mexico...

[Four1oh]

but... but... where would the democrats get their votes if the mexicans go home?

[JohnnyHotRocks]

Well, with the way real estate is going in the US

I'll be buying a winter home in Florida this time next year

[Dust Devil]

I hope this doom and gloom attitude sticks around a little longer. It's doing a nice job of driving the stock price of some good companies lower into an incredible buy position. These are the times that rich people are made. You remember the stock you buy in times like this not the stock you buy when things are booming.

[Kelowna Pilot]

I'll be buying a winter home in Florida this time next year

Good plan, Snowbird Just don't plant a Quebec flag in front of the place or the locals may start shooting at you I hear the Hispanics really love "Los Tabernacos"...

I was thinking about buying some property in the US, too. I'm worried about these 'foreclosure ghetto subdivisions' that are popping-up, which are basically large developments that no one lives in. You can get one cheap now, but after a couple years of no upkeep the whole complex will look like a total ghetto.

I hope this doom and gloom attitude sticks around a little longer.

It's hardly just an attitude. Contrary to what the self-serving interest groups or the Fed say, the US is it very deep and the whole sub-prime mess is just the tip of the ice berg.

The ballooning US trade deficit, massive debt at all levels, stagflation that is ostensibly already here, and the fact that the US is now much more a service economy than a manufacturing economy are all much more serious than the fact that a bunch of low-income Latino Wall Mart workers were somehow able to get mortgages for $600,000 homes.

These are the times that rich people are made.

Bingo! Wouldn't invest in the US though.

[Dust Devil]

Bingo! Wouldn't invest in the US though.

I don't know. there is a lot of bargains on the U.S markets. If you invest in good companies they will weather this storm just fine. It all depends on the type of investor you are I suppose.

[Stinky]

Here's a few bargains if you have $6000 for a house. $100k can get you a mansion.
(check out the resales in the auction schedule)
http://www.hudsonandmarshall.com/faq.asp

[Wacko]

I hope this doom and gloom attitude sticks around a little longer. It's doing a nice job of driving the stock price of some good companies lower into an incredible buy position. These are the times that rich people are made. You remember the stock you buy in times like this not the stock you buy when things are booming.

Any leads?

As long as there are wars in Africa and Middle East and most East Asian nations keep their costs down Democratic countries will be Juuuuuuuuuuust fine!

[BigB]

.... These are the times that rich people are made.....

Spot on. The key, is to have cash, when most others don't.

BigB,

[BigB]

Found this as a link from another site. Just reinforces a few opinions on this thread.

http://www.thestar.com/Business/article/302615

[Dust Devil]

.... These are the times that rich people are made.....

Spot on. The key, is to have cash, when most others don't.

BigB,

Or be willing to risk it when most others won't

[Dust Devil]

I hope this doom and gloom attitude sticks around a little longer. It's doing a nice job of driving the stock price of some good companies lower into an incredible buy position. These are the times that rich people are made. You remember the stock you buy in times like this not the stock you buy when things are booming.

Any leads?

As long as there are wars in Africa and Middle East and most East Asian nations keep their costs down Democratic countries will be Juuuuuuuuuuust fine!

Personally I'm sticking to resources. I think China and Europe will continue to be a big driver. A company like BIM is targeting the European market with a large quantity of Iron. Gotta be long term with them though as full scale production isn't slated for a few years yet. Also VNX has taken a considerable hit over the last year because their oil reserves in Lybia are not being released by the government. Once those numbers come out I think you will see that stock price sky rocket as the exploratory wells they have been drilling have been unbelivable. (in the range of 10's of thousands of barrels of oil per day per well) None of the oil has been sent to market yet however I think they are in the planning stages of begining production.

Just a couple of my picks

[THEICEMAN]

Here is an article about Warren Buffet, who backs up my opinion. The market in the U.S will recover!

http://www.financialpost.com/creditcrun ... ?id=290358

The following Forbes article is a statement by the leading G7 economist, who say that the US will avoid recession in 2008.
http://www.forbes.com/reuters/feeds/reu ... r=moreover

Look, I have given up on this subject because everybody thinks that the market is going to bomb. Don't let the media's ascertation of bad news get to you.

Kelowna, I don't agree! The U.S market will take a hit in 2008. But it will recover by 2009.

Take it from Warren Buffet, who the Michael Jordan of the financial world.
& the G7 economist!

I also saw another article claiming that the G7 economist believe that Canada will have a bullish trend in the next few years. I will try & find it.

[Main Gear]

Buffett bullish on Canadian stocks

http://finance.sympatico.msn.ca/savings ... id=6219488

[THEICEMAN]

Don't listen to the bears. They have talking about crashes for the past 15 years!

[North Shore]

Here is an article about Warren Buffet, who backs up my opinion. The market in the U.S will recover!

*SNERK* how humble of you, Ice, to say that Warren Buffet backs up your opinion. I'm sure he's on the phone every single day asking for your advice...

[1000 HP]

You bet the music is stopping, or at least slowing down. I work in the oil-field in the winter. Normally, $10,000 per month is no problem. I even made $14,500 in 25 days back in September "05 But this year, It's tough to do 40 hours per week. The old 105 hour work weeks are out the window. I'm starting to eyeball a job flying Supercub powerline patrol

[Kelowna Pilot]

You bet the music is stopping, or at least slowing down. I work in the oil-field in the winter. Normally, $10,000 per month is no problem. I even made $14,500 in 25 days back in September "05 But this year, It's tough to do 40 hours per week. The old 105 hour work weeks are out the window. I'm starting to eyeball a job flying Supercub powerline patrol

Why are the Oil Fields slowing down? I thought Oil was the big thing...

Please explain.

[MrMerth]

Three Words. Canadian Bank Stocks.

That is all

[Wacko]

Because Alberta introduced a new royalty scheme... IMHO it's just a way for the oil companies to punish the government. At $90+ per barrel of oil they will come back soon... it's one of those; you push me so I push you back. If the Alberta premier wins the election coming up in a month or so, they will have no choice but to deal with it.