100% Consumption....Zero Savings....

Quote from FireWalker:

for housing? yes. (who says they're going to hold on? their credit rating? you're joking)


fed enacted in 1913? or was it 1916?

since then (over 90 years) we've had 1 year of deflation (even with the contortions CPI goes through). that's ONE YEAR at 0.1% deflation.

and now suddenly we're in for deflation?

think again



i need more gold
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Yes, I know that the knee jerk reaction is to say "duh, its inflationary."

But stop for a second and think again. While the value of money decreases (inflationary), the prices of goods are also decreasing (deflationary). If "inflation" is under control, doesn't the deflationary arm of price decreases win out? And then what will confirm it will be wage decreases (technically occuring if you've been outsourced and moved to a mcjob)

I like gold too but would rather buy it at $200, when I know that its value is depressed. May not see that again for a while though. :D
 
My expenses in order of how much I spend each month:

1. taxes
2. food and entertainment
3. housing
4. insurance
5. gas
6. goods at Walmart (<$100/month)


I have a computer, a dvd player, pots and pans, towels, etc. You buy those once.

While I agree goods are deflating, the bigger items on that list keep getting more expensive every day.
 
Quote from telozo:

I don't seem to get it. If they can afford to pay the monthly PITI, why whould it matter if their house will go down in value? After all they buy it to live in it, not as an investment.
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Simple - many people will lose the incentive to do so.

Tell me - would you continue to pay a $500K mortgage for the next 20 years on a property that is now only worth $300K on the market? What happens if you need/want to sell (for example, being transferred to another city for work)? What happens if you need to perform significant repairs/renos on your property and you have no equity to borrow against to do so?

Also, I've only been employed in the mortgage industry while housing prices have been trending upwards, I'm not certain how mortgage companies will handle things like renewals when the property values are tanking. Perhaps some mortgage companies will require appraisals at the time of renewal, and call the loan if there is negative equity?
 
Quote from Chagi:



Tell me - would you continue to pay a $500K mortgage for the next 20 years on a property that is now only worth $300K on the market?
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Some will. I paid on a $70k mortgage for years while my property value had gone to zero. The reasons to do that: 1)everybody had moved so the hood was quiet 2) I liked the house and decided to ignore the investment aspect and just keep it for what it is, a nice place to live. 3) I felt like the value might return eventually, and it did, $250k currently. 4) I did not want to take the kids away from their familiar schools and their friends, that was the main reason actually.
 
Quote from lilboy716:

hey..

someone has to hold the bag.

banks are the best indiscriminate sellers when the floor is taken out underneith everyone.

5%? isn't that a bit high... anyway...

1929 bubble was built on 10% margin. (effected 2-3mill people out of 100mill population)

2000 bubble was built on 50% regT margin. (effected almost everyone. ppl w/mutual funds, 401k....)

200x bubble was built on 0-20% down payment (everyone that has properties & money in the bank)

and the bankrupcy law had just changed.

the eventual bag holders will have to pay off their debt even though the properties are no longer theirs (sold by the banks). if it does happen... there are going to be tons of poor people in deep deep holes.

how high can the fed go? nobody knows.

the difference between 5yr - 10yr bond is only about .17% it was .25% a few months back... it'll take 6-10 quarter point increases for it to invert. we'll see what happens then
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How does this new bankruptcy law work?

Are you saying that even if you have a bank foreclose on you,you still owe the full amount of your mortgage?
 
Quote from Vinny1:

Anyone?
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Here's how I think it works (from readings in the popular press)

Old law - You buy stuff & put it on credit cards. You go bk7. They don't bother to take the worthlesss stuff and you get your credit wiped clean with a nasty mark against you for 7 years.

New law - you buy stuff and put it on credit. you go bk7. You are not allowed to go bk7, so you are put into reorganization instead. For next 4 years you pay back either in whole or part (according to the judge) what you owed. Plus hefty court and legal fees. bye bye disposable income. Live in van down by the river and eat peanut butter sandwiches frequently while you miss your pf chang's. not so much fun anymore. Still nasty credit marks against you.

Homes get complicated because of different homestead laws between the states. Don't think you can buy a home and bk7 and keep it (unless you keep paying mortgage). If you do not owe on the home, things may be different after 40 months, but again I think its very state dependent. Check with your lawyer.
 
When the whole ponzi scheme falls apart, all of you gold holders are going to sell the gold mkt (back) into the ground just to buy a ham sandwich. Success, CB:D
 
savings rates correlate with savings account interest rates, generally. ppl look at a 1-2% return and compare it with the historical performances of the stock market and real estate. in fact, if you invested in either in the last 3 years, you probably have done pretty well. the problem, however, is that if we hit a rough patch, the low savings rate gives us no padding. money tied up in the market may lose value; money tied up in real estate may lose value and is illiquid. with consumer debt running so high, a slip in the value of those asset classes can be very destructive...without savings, the overleveraged in the real estate market may not be able to service their debts.
 
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