Updated: January 19, 2011
Economic Depression II
January 2011 - July 2014
The U.S. is in for a Long
and Protracted
Economic Depression
The entire global economic
system is now in a tailspin. No one knows where the bottom is
because no one knows exactly how extensive the financial losses are.
The sub-prime mortgage crisis which
triggered the stock market collapse is triggering economic problems
not seen since the last depression - the Great Depression of the
1930s.
Take a careful look at the
chart below. As you'll see the sub-prime mortgage mess will finally
reach a bottom some time very soon. But don't
celebrate just yet, there's a
bigger, nastier mortgage crisis in the works.
Alt-A mortgages were granted
to people who had credit ratings somewhat better than the horrible
ratings of the sub-prime crowd. But now they're also beginning to
default on their mortgages.
Most would like to refinance
their mortgages to the new lower rates but banks are not refinancing
on any home whose market value doesn't exceed 90% of the outstanding
loan balance. Since home values have fallen so much, few owners will
qualify for refinance. That leaves millions of homeowners out in the cold -
quite literally.
Then you have those
adjustable rate mortgages - the dreaded ARMs. The payments on these
mortgages will in many cases double during the next five years. (and
in some cases even triple!) That will inevitably trigger yet another
new wave of foreclosures.
When will all this madness
end? When will we finally start to rebuild our damaged economy? The
chart makes it clear. The end begins during the summer of 2014.
And none of this takes into
account the millions of large family homes the baby-boomers are eager to dump to
raise money to supplement their sparse retirement savings. For
decades they've been planning to sell their larger homes and
exchange them for smaller low-maintenance retirement homes and bank
the difference to help pay for their retirement. That
overhang will insure that the real estate market doesn't recover for
many, many years.
We are tumbling into a major
world-wide depression. Despite claims to the contrary this is not a
routine economic recession. A recession is like a cold. It's a
temporary inconvenience, nothing more. When you come down with a
cold you can be confident that in a few days you'll feel better and life
will go on. No one dies of a mere cold.
A recession is very similar.
Corporate profits take a temporary dip. In response firms lay off employees
confident that in several months they will be rehired and everyone
can go back to business as usual.
Our current situation goes
well beyond recession. Several major economists have compared our
situation to a heart attack - an apt analogy.
When was the last time you saw a recession
that caused the U.S. auto industry to collapse? When was
the last time a recession forced our entire investment banking
industry to go belly-up? When did a recession last push government bond
rates down near zero?
This is no normal recession folks.
When the economic recovery finally appears (Around 2015), it won't be like
any economic recovery in the past. This one will be no barn-burner. Instead it
will be a much more gradual affair. It will probably run for several
years before you will see or feel it's effects.
One thing is crystal clear. The standard of living
of the average American is about to take a tumble. Survive and thrive during the coming bad
times. Get the facts -
there's no other book like it. Order today!
Disclaimer:
We are not in the business of providing financial advice or services
of any kind. Always consult with your personal financial and legal
advisors before attempting to use any of the tactics discussed on
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this site is intended to in any way encourage illegal acts either
now or at any time in the future. This information is for
informational and entertainment purposes only.
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