Interesting Economic Possibility...

[mrplunkey]

I sat down with someone yesterday who *really* knew their shit. He's a Washington guy who closely follows money, investing, consumer spending patterns, taxation policy, retirement planning... the works.

He started the conversation by explaining the most Americans have been building equity passively by counting on their home price to escalate. They've watched their "on paper" equity grow and neglected doing any real saving -- and have even gone into debt.

Here's the scenario he layed out:

1) Housing market tumbles... lots of on-paper equity is destroyed.

2) The existing base of debt combined with the shift in personal equity will lead to a dramatic loss of consumer confidence and much less spending.

3) Add-in a reduced or eliminated tax cut (which is just a clever way of saying increase taxes) and pull another chunk of money out of consumers' hands.

4) Intrest rates *will* go down in an attempt to stimulate the economy, but prices will continue to fall -- full blown recession.

This resonated with me because right now I can buy an 8-year tax-free AAA municipal bond for roughly the same rate I can buy a 20 or 25 year tax-free AAA municipal bond -- wierd, isn't it? So it makes you think other people think this as well.

So what's the guys message? Cash is king, and debt is death. We could see a *massive* recession under this scenario. Not just job loss... but also ripping apart people who rely on debt.

Anyone disagree?

 

[ksharp01]

to deep for me.....Lestat?

 

[jnevin]

to deep for me.....Lestat?

Lestat? LOL

 

[jnevin]

I sat down with someone yesterday who *really* knew their shit. He's a Washington guy who closely follows money, investing, consumer spending patterns, taxation policy, retirement planning... the works.

He started the conversation by explaining the most Americans have been building equity passively by counting on their home price to escalate. They've watched their "on paper" equity grow and neglected doing any real saving -- and have even gone into debt.

Here's the scenario he layed out:

1) Housing market tumbles... lots of on-paper equity is destroyed.

2) The existing base of debt combined with the shift in personal equity will lead to a dramatic loss of consumer confidence and much less spending.

3) Add-in a reduced or eliminated tax cut (which is just a clever way of saying increase taxes) and pull another chunk of money out of consumers' hands.

4) Intrest rates *will* go down in an attempt to stimulate the economy, but prices will continue to fall -- full blown recession.

This resonated with me because right now I can buy an 8-year tax-free AAA municipal bond for roughly the same rate I can buy a 20 or 25 year tax-free AAA municipal bond -- wierd, isn't it? So it makes you think other people think this as well.

So what's the guys message? Cash is king, and debt is death. We could see a *massive* recession under this scenario. Not just job loss... but also ripping apart people who rely on debt.

Anyone disagree?

I have never thought people should count on equity they have in their homes. I think people should pay as little as they can on their homes, keep other debt to a minimum, and stay as liquid as possible. People refinance ever 4 years, on average. That has them paying an effective rate of over 30% since interest is always paid up front. If the shit hits the fan and you lose your job, get hurt, whatever, you're going to have to sell your home to get that equity because you won't be able to qualify for a loan unless it's hard money, which would end up with you losing your house. Hard money = paying 15% when you can't afford to pay 6%. Not so good.

 

[katdav]

I have never thought people should count on equity they have in their homes. I think people should pay as little as they can on their homes, keep other debt to a minimum, and stay as liquid as possible. People refinance ever 4 years, on average. That has them paying an effective rate of over 30% since interest is always paid up front. If the shit hits the fan and you lose your job, get hurt, whatever, you're going to have to sell your home to get that equity because you won't be able to qualify for a loan unless it's hard money, which would end up with you losing your house. Hard money = paying 15% when you can't afford to pay 6%. Not so good.

or the other side of the coin, buy when prices hit bottom, only refinance to get a lower interest rate for 15 yrs, then you are sittin' pretty. Here in CA even when prices got really low in the mid 90's they never went down to what they were in the early/mid 80's.

 

[ksharp01]

Lestat? LOL

Well, he always seems to like a debate or two.

am I wrong?

 

[jnevin]

Well, he always seems to like a debate or two.

am I wrong?

Yeah, and he's a smart guy, but Bran is really the one to bring in to a financial discussion if you want some spring time fresh input.

 

[jnevin]

or the other side of the coin, buy when prices hit bottom, only refinance to get a lower interest rate for 15 yrs, then you are sittin' pretty. Here in CA even when prices got really low in the mid 90's they never went down to what they were in the early/mid 80's.

I think it would be better to take a 30 year term and pay heavy on it so you have a bit of breathing room if you get into a bind if paying your house off is your goal.

 

[ksharp01]

Yeah, and he's a smart guy, but Bran is really the one to bring in to a financial discussion if you want some spring time fresh input.

I haven't seen Bran as much. He must post more in the evening after I leave.

 

[medical]

debt is death to some and life to others. If you are the one holding paper then debt is your cash! Money is like water.....drought in one area equals flood in another.

 

[jnevin]

debt is death to some and life to others. If you are the one holding paper then debt is your cash! Money is like water.....drought in one area equals flood in another.

Profound

 

[medical]

Profound

Asoh, grasshopper!

 

[Lao Tzu]

This guy wasn't John Talbott was he? I read part of his book and he said the same thing. There are too many people who are invested too heavily in ARM home loans for houses whose value is going to burst.

http://www.amazon.com/Coming-Crash-Housing-Market-Investment/dp/007142220X

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/03/12/REGHHHM7MV1.DTL

 

[jnevin]

This guy wasn't John Talbott was he? I read part of his book and he said the same thing. There are too many people who are invested too heavily in ARM home loans for houses whose value is going to burst.

http://www.amazon.com/Coming-Crash-Housing-Market-Investment/dp/007142220X

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/03/12/REGHHHM7MV1.DTL

You do realize people can refinance out of an ARM as easily as they refinanced into one?

 

[Lao Tzu]

You do realize people can refinance out of an ARM as easily as they refinanced into one?

I hadn't thought of that. Nonetheless, there are alot of people who will be left with mortgages worth far more than their houses soon.

 

[mrplunkey]

This guy wasn't John Talbott was he? I read part of his book and he said the same thing. There are too many people who are invested too heavily in ARM home loans for houses whose value is going to burst.

http://www.amazon.com/Coming-Crash-Housing-Market-Investment/dp/007142220X

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/03/12/REGHHHM7MV1.DTL

This was a US Congressman who's doing a lot of work on the upcoming Farm Bill. He said both parties are fixated on two things:

1) Housing tanking, debt climbing, and full-blown recession

2) A roadmap to get the US off dependancy on foreign energy (that's why he and I were meeting)

Interestingly enough, he said there is talk of teeing-up a "Manhattan Project" (his words) style program to get us off foreign oil in a greatly accelerated manner.

 

[jnevin]

I hadn't thought of that. Nonetheless, there are alot of people who will be left with mortgages worth far more than their houses soon.

It won't be as many as some of these people writing the articles are saying. There's a good chance that a large number of people stuck with these homes committed fraud of some type to get them.

 

[jnevin]

I saw an ad for a Chase card that lets people defer interest. Not such a good idea IMO.

 

[medical]

This was a US Congressman who's doing a lot of work on the upcoming Farm Bill. He said both parties are fixated on two things:

1) Housing tanking, debt climbing, and full-blown recession

2) A roadmap to get the US off dependancy on foreign energy (that's why he and I were meeting)

Interestingly enough, he said there is talk of teeing-up a "Manhattan Project" (his words) style program to get us off foreign oil in a greatly accelerated manner.

The Manhattan project would solve 60-70% of our energy issues if we would get off our asses and start building more reactors! While I think Iran is a rogue nation I do believe part of their nuclear ambition is because they see the end of oil and want to be able to sell what they have rather than use it!

 

[gotmilk]

The only people who are losing home equity are the recent buyers. Long term owners are still sitting on decent gains in appreciation.

Part of the problem with low interest rates is that people borrowed more money than they could really afford to.

As for recession, we are heading for one regardless of home valuations. The rich are richer, the poor are poorer, and we keep allowing more immigrants into the country than we can afford. Health care is out of control, cost of living becomes more expensive than ever.

The law of basic supply and demand has been abused by our government and Congress needs to drastically stop financially covering foreign countries while investing in our infrastructure first. A temporary ban on immigration would help followed by a nationwide raise in the minimum wage.

Allowing more cheap labor into the country while also allowing companies to relocate to foreign countries for cheap labor is going to crush our economy. You can't increase your population while sending jobs overseas.

 

[mrplunkey]

The Manhattan project would solve 60-70% of our energy issues if we would get off our asses and start building more reactors! While I think Iran is a rogue nation I do believe part of their nuclear ambition is because they see the end of oil and want to be able to sell what they have rather than use it!

He didn't mean Manhattan project as in "nuclear"... he meant Manhattan as in "tee-up a big-ass program to make a technology leap in years that should take decades".

His roadmap for automobile fuel was: starch-based ethanol -> cellulose ethanol -> fuel cells.

 

[Lao Tzu]

Sweet, I hope we do get a manhattan project. There was the Energy act of 2005, but that was only 5 billion a year.

Do you know anything about Algae farming Plunkey? This seems to be a far more effective method of ethanol production than agricultural ethanol since algae reproduce so rapidly. You can get close to 20,000 gallons of ethanol and 20,000 gallons of biodiesel per acre of algae farms, if the farms are situated near a coal plant.

http://www.csmonitor.com/2006/0111/p01s03-sten.html

 

[mrplunkey]

Sweet, I hope we do get a manhattan project. There was the Energy act of 2005, but that was only 5 billion a year.

Do you know anything about Algae farming Plunkey? This seems to be a far more effective method of ethanol production than agricultural ethanol since algae reproduce so rapidly. You can get close to 20,000 gallons of ethanol and 20,000 gallons of biodiesel per acre of algae farms, if the farms are situated near a coal plant.

http://www.csmonitor.com/2006/0111/p01s03-sten.html

Don't know anything about it other than what's packaged on the interweb for consumers.

 

[medical]

He didn't mean Manhattan project as in "nuclear"... he meant Manhattan as in "tee-up a big-ass program to make a technology leap in years that should take decades".

His roadmap for automobile fuel was: starch-based ethanol -> cellulose ethanol -> fuel cells.

Well then he needs to go back to the original meaning of the term and start trere.

 

[Lao Tzu]

Don't know anything about it other than what's packaged on the interweb for consumers.

I don't see agricultural ethanol catching on as you can only collect the ethanol once a year. With single celled ethanol and biofuel production you can collect and drain the fuels daily or weekly if you have a rapidly growing organism. Plus this wouldn't require usage of topsoil that would be needed for farming. It is superior on many levels.

 

[mrplunkey]

A temporary ban on immigration would help followed by a nationwide raise in the minimum wage.

Allowing more cheap labor into the country while also allowing companies to relocate to foreign countries for cheap labor is going to crush our economy. You can't increase your population while sending jobs overseas.

You realize those two are linked, right?

Just how exactly do you not "allow" a company to relocate for cheap labor? Massive import tariffs? Maybe the US government "sues" companies for trying to leave? Make it illegal? Most larger companies are global... there isn't anything to "allow" or "disallow" -- they are just conducting business.

 

[gotmilk]

You realize those two are linked, right?

Just how exactly do you not "allow" a company to relocate for cheap labor? Massive import tariffs? Maybe the US government "sues" companies for trying to leave? Make it illegal? Most larger companies are global... there isn't anything to "allow" or "disallow" -- they are just conducting business.

I'm more targeting the non-global companies that simply pack up and leave. Shoe companies like Bass shoe is a good example.

 

[justinjones1963]

I sat down with someone yesterday who *really* knew their shit. He's a Washington guy who closely follows money, investing, consumer spending patterns, taxation policy, retirement planning... the works.

He started the conversation by explaining the most Americans have been building equity passively by counting on their home price to escalate. They've watched their "on paper" equity grow and neglected doing any real saving -- and have even gone into debt.

Here's the scenario he layed out:

1) Housing market tumbles... lots of on-paper equity is destroyed.

2) The existing base of debt combined with the shift in personal equity will lead to a dramatic loss of consumer confidence and much less spending.

3) Add-in a reduced or eliminated tax cut (which is just a clever way of saying increase taxes) and pull another chunk of money out of consumers' hands.

4) Intrest rates *will* go down in an attempt to stimulate the economy, but prices will continue to fall -- full blown recession.

This resonated with me because right now I can buy an 8-year tax-free AAA municipal bond for roughly the same rate I can buy a 20 or 25 year tax-free AAA municipal bond -- wierd, isn't it? So it makes you think other people think this as well.

So what's the guys message? Cash is king, and debt is death. We could see a *massive* recession under this scenario. Not just job loss... but also ripping apart people who rely on debt.

Anyone disagree?

I agree 100%.

I was a micro hedge fund manager prior going to law school and I saw this happening back in 2003. I thought the crash would happen much sooner though (I was wrong) but there is a huge dark cloud on the horizon and it is going to be very nasty.

IMHO a long, miserable recession is being optimistic. Furthermore, cash, i.e. the U.S. dollar, will not be a refuge either.

 

[solidspine]

You sound like you have been reading Warren Buffets report.


I think we will see a slight decline in housing, nothing much else,

Unless the democrats get in then we will have mild recession until 2008

 

[Lestat]

I sat down with someone yesterday who *really* knew their shit. He's a Washington guy who closely follows money, investing, consumer spending patterns, taxation policy, retirement planning... the works.

He started the conversation by explaining the most Americans have been building equity passively by counting on their home price to escalate. They've watched their "on paper" equity grow and neglected doing any real saving -- and have even gone into debt.

Here's the scenario he layed out:

1) Housing market tumbles... lots of on-paper equity is destroyed.

2) The existing base of debt combined with the shift in personal equity will lead to a dramatic loss of consumer confidence and much less spending.

3) Add-in a reduced or eliminated tax cut (which is just a clever way of saying increase taxes) and pull another chunk of money out of consumers' hands.

4) Intrest rates *will* go down in an attempt to stimulate the economy, but prices will continue to fall -- full blown recession.

This resonated with me because right now I can buy an 8-year tax-free AAA municipal bond for roughly the same rate I can buy a 20 or 25 year tax-free AAA municipal bond -- wierd, isn't it? So it makes you think other people think this as well.

So what's the guys message? Cash is king, and debt is death. We could see a *massive* recession under this scenario. Not just job loss... but also ripping apart people who rely on debt.

Anyone disagree?

I agree bro.

Right now is a good time to eliminate any and all debts and get liquid. Should the worst happen, those who have cash on hand will be able to make our handsomely just as many did in the 1920s.

 

[Testosterone boy]

I sat down with someone yesterday who *really* knew their shit. He's a Washington guy who closely follows money, investing, consumer spending patterns, taxation policy, retirement planning... the works.

He started the conversation by explaining the most Americans have been building equity passively by counting on their home price to escalate. They've watched their "on paper" equity grow and neglected doing any real saving -- and have even gone into debt.

Here's the scenario he layed out:

1) Housing market tumbles... lots of on-paper equity is destroyed.

2) The existing base of debt combined with the shift in personal equity will lead to a dramatic loss of consumer confidence and much less spending.

3) Add-in a reduced or eliminated tax cut (which is just a clever way of saying increase taxes) and pull another chunk of money out of consumers' hands.

4) Intrest rates *will* go down in an attempt to stimulate the economy, but prices will continue to fall -- full blown recession.

This resonated with me because right now I can buy an 8-year tax-free AAA municipal bond for roughly the same rate I can buy a 20 or 25 year tax-free AAA municipal bond -- wierd, isn't it? So it makes you think other people think this as well.

So what's the guys message? Cash is king, and debt is death. We could see a *massive* recession under this scenario. Not just job loss... but also ripping apart people who rely on debt.

Anyone disagree?

Paranoid conspiracy

Cheap products and free trade with China is our salvation.

 

[mrplunkey]

Paranoid conspiracy

Cheap products and free trade with China is our salvation.

That's exactly the response I'd expect from someone who juxtaposes reality with his own little conspiracy land.

Dude, clean your skylight -- our spy sattelite can't see clearly into your den.

 

[Razorguns]

they proclaimed the end of the world on 9/12 too. Same with hurricaine katrina.

did it happen? nope.

weath is unlimited. jobs will always be there. the only thing correct is: hte middle class will shrink, and people will have less disposable income. To offset this - the population grows at leaps and bounds - so Walmart and Starbucks will stilll have the same revenue/profit levels.

So all will stil be well. Just think of it as 'same amount of money, spread over more people'. That's how the economies of other countries work. Mexico has a huge economy - they just have 120 million people sharing in it, which is the problem.

r

 

[Testosterone boy]

That's exactly the response I'd expect from someone who juxtaposes reality with his own little conspiracy land.

Dude, clean your skylight -- our spy sattelite can't see clearly into your den.

Ever thought about purchasing a sense of humor?

 

[mrplunkey]

Ever thought about purchasing a sense of humor?

No can do -- it's explicitly banned from the Mean-Spirited Conservative Covert Spy Operations Manual in Section 3 Paragraph IV.

 

[mrplunkey]

I don't see agricultural ethanol catching on as you can only collect the ethanol once a year. With single celled ethanol and biofuel production you can collect and drain the fuels daily or weekly if you have a rapidly growing organism. Plus this wouldn't require usage of topsoil that would be needed for farming. It is superior on many levels.

The annual continuity issue isn't as big as you'd think. The US is quite expert at stockpiling and storing grain.

I do think the idea of an ethanol-producing bug would be great though. My guess is some company like GE/Amersham or Invitrogen will bioengineer us one at some point.

 

[mrplunkey]

I'm more targeting the non-global companies that simply pack up and leave. Shoe companies like Bass shoe is a good example.

You may be able to specifically target US-based companies that onle serve the US market, but my guess is it would only force them to truely globalize.

That's the real problem with all the "stop the export of jobs" arguments. When you look at companies like GE, Boeing, J&J, etc. etc. they are truely global anyway. If you squeeze in one place they'll only shift their emphasis onto another market.

 

[justinjones1963]

Check the national debt levels - once foreign countries stop buying debt the whole house of cards is going to go down.

Look at the UDS compared to the EURO. The fall of the USD is just the beginning.

The only thing that has kept the US economy running is US debt. Things have gotten so out of control the Fed stopped publishing M3, and this is America, the greatest free-market economy on the globe – people have no clue what we are in for.

 

[mrplunkey]

You sound like you have been reading Warren Buffets report.


I think we will see a slight decline in housing, nothing much else,

Unless the democrats get in then we will have mild recession until 2008

Well the guy I was working with yesterday was a Republican (gasp... who would have thought! ). Funny thing is, he was telling me his Democratic counterpart on the farm bill was teasing him about how the Dems will have to "repackage" the tax cuts after they win the house. I thought the "win the house" assumption was just as entertaining as "repackaging" the cuts.

 

[mrplunkey]

I agree bro.

Right now is a good time to eliminate any and all debts and get liquid. Should the worst happen, those who have cash on hand will be able to make our handsomely just as many did in the 1920s.

I'm kinda banking on that. If we do get hit super-hard, I may stay liquid (I am very liquid now) and wait to see what happens with the stock market.

 

[gotmilk]

Paranoid conspiracy

Cheap products and free trade with China is our salvation.

We should send 10 Million Mexicans to China.

 

[mrplunkey]

And oh oh oh!

I learned one other thing from the meeting.

In the meeting, the congresman said the consensus behind closed doors was that oil suppliers were "experimenting" (his word) with the world all summer. The experimenters wanted to know two things:

1) At what price point does China/India curtail their use of oil? The assumption is that those economies are going to grow great guns regardless. So, if oil gets overpriced they may try to look longer-term and find alternatives.

2) At what price poitn does US consumption actually change? They know we bitch about gas prices, but when do consumers actually say "uncle".

And after this summer's experiment they got their answer -- $75/barrel. He said we should expect prices within $5-$10 of that from now-on.

 

[anthrax]

It is not the first time that we would encounter a bursting of the housing bubble
and debt is an ongoing problem

Why would it lead to a major recession this time?

On a side note, would lower interest rates translate in a bearish stock markets?

 

[mrplunkey]

It is not the first time that we would encounter a bursting of the housing bubble
and debt is an ongoing problem

Why would it lead to a major recession this time?

On a side note, would lower interest rates translate in a bearish stock markets?

Here is what has changed:

Home appreciation has been increasing net personal equity and consumers have counted on this appreciation to justify virtually no real savings and used it to justify taking-on record debt levels. Home appreciation has contributed to net personal equity before but in the past it was done in concert with at least *some* personal savings as well.

And you are correct. Lowering interest rates is supposed to stimulate the market. It's like a defibrilator for the Dow Jones. In the scenario I described, even cheap money won't restart the heart. That was my point (sorry if it was unclear).

And good lord I love your signature.

 

[Lao Tzu]

So was all that oil at $70/barrel we went through just OPEC testing to see how high they could get gas prices to go w/o any major investments in alternative energies popping up?

Realistically, alternatives are going to pop up. Supply can't meet the growing demand, most oil countries already produce at 100% capacity.

 

[anthrax]

So the whole World is fucked?

In your scenario the USD will, I guess fall
That with less US spending and Europe will soon follow
Only China who may rely on its interior market would potantially escape the demise

On the other side Cheap housing market + lower interest rate = good opportunities if you have readily available $

 

[Testosterone boy]

And oh oh oh!

I learned one other thing from the meeting.

In the meeting, the congresman said the consensus behind closed doors was that oil suppliers were "experimenting" (his word) with the world all summer. The experimenters wanted to know two things:

1) At what price point does China/India curtail their use of oil? The assumption is that those economies are going to grow great guns regardless. So, if oil gets overpriced they may try to look longer-term and find alternatives.

2) At what price poitn does US consumption actually change? They know we bitch about gas prices, but when do consumers actually say "uncle".

And after this summer's experiment they got their answer -- $75/barrel. He said we should expect prices within $5-$10 of that from now-on.

They will likely wait a bit after the elections I should think.

 

[mrplunkey]

So was all that oil at $70/barrel we went through just OPEC testing to see how high they could get gas prices to go w/o any major investments in alternative energies popping up?

Realistically, alternatives are going to pop up. Supply can't meet the growing demand, most oil countries already produce at 100% capacity.

Well I think this is the logic:

China and Inda are going to grow like crazy regardless.

If oil is fairly abundant and relatively inexpensive, they'd rather invest in their growing economy instead of thier own energy capabilities.

If oil gets more expensive, China and India will think: "We're not going to stub our toes on oil" and look for alternatives.

It really does make sense. Why would an economy growing a near double-digit rates want to waste time and capital building their own refineries or other conventional energy infrastructure? Just put a frigging oil boiler in the plant and keep stamping-out Tickle Me Elmo Extreme dolls.

 

[anthrax]

I thought OPEC didn't control shit!?

The low gas is due to high stocks combined with more rafineries capacities as well as no major hurricanes

 

[mrplunkey]

So was all that oil at $70/barrel we went through just OPEC testing to see how high they could get gas prices to go w/o any major investments in alternative energies popping up?

That's the theory at least. They were trying to titrate the price point.

Realistically, alternatives are going to pop up. Supply can't meet the growing demand, most oil countries already produce at 100% capacity.

Oh, I don't think anyone isn't interested in alternatives. It's more an issue of degree. Here's an example in the US. If corn jumped to $3.20/bushel and gasoline dropped to $1.80 a gallon, people sure wouldn't invest $190M in a 100M gallon ethanol plant. The deal still wouldn't lose money, but the capital dollars would be redeployed in more profitable areas.

China and India have so many investment opportunities that OPEC would like to price oil as high as possible, but not so high that either country considers their own energy infrastructure a financially appealing project.

Again... it realld does make a lot of sense.

 

[justinjones1963]

Here is an excellent article. This is the US's GAO's Chief sums up this entire debate in one nice article.

Read it and plan for the crash...

http://apnews.myway.com/article/20061028/D8L1OC5G0.html

 

[CO B-man]

I sat down with someone yesterday who *really* knew their shit. He's a Washington guy who closely follows money, investing, consumer spending patterns, taxation policy, retirement planning... the works.

He started the conversation by explaining the most Americans have been building equity passively by counting on their home price to escalate. They've watched their "on paper" equity grow and neglected doing any real saving -- and have even gone into debt.

Here's the scenario he layed out:

1) Housing market tumbles... lots of on-paper equity is destroyed.

2) The existing base of debt combined with the shift in personal equity will lead to a dramatic loss of consumer confidence and much less spending.

3) Add-in a reduced or eliminated tax cut (which is just a clever way of saying increase taxes) and pull another chunk of money out of consumers' hands.

4) Intrest rates *will* go down in an attempt to stimulate the economy, but prices will continue to fall -- full blown recession.

This resonated with me because right now I can buy an 8-year tax-free AAA municipal bond for roughly the same rate I can buy a 20 or 25 year tax-free AAA municipal bond -- wierd, isn't it? So it makes you think other people think this as well.

So what's the guys message? Cash is king, and debt is death. We could see a *massive* recession under this scenario. Not just job loss... but also ripping apart people who rely on debt.

Anyone disagree?

Welcome to the simplicity of economic engineering. Numbers do not lie. Make your money work for you (invest). Stop letting it work for others (Debt). One plus one will always equal two and compounding interest will always kill one in debt. Investing wisely means get rid of negative debt, do without when you dont need it, invest as much as you can now and in the future you will be sitting fat and happy! Its not incredible intelligence, its common sense in practice. Save some and live on a budget no matter how much noney you come into. Someday (sooner than later) with that mindset you will be able to loosen the belt and live life to the fullest.. Funny thing is you dont have to make a shit-pot of money to make it work for you either!

 

[Matthew_31]

Invest in economic assets that will be targets to large government expenditures. Medical information technology, natural resource funds will consistently produce dividends. Remember, recessions are just periods of slower growth.

Immigration is a key to fighting off such population imbalances. Cutting it off is the absolute wrong answer. Closed economies dont blossom.

Matt