The reality of our economy

Discussion in 'Economy' started by OweO, Jul 14, 2010.

  1. OweO
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    OweO Rookie

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    In 2006 and 2007 I remember the prices people were paying for houses. I am in South Louisiana and houses that were going for $80k-85k in 2004 were going for $205k in 2007. Families in which both husband and wife had average to higher average jobs were living like millionaires, basically living month to month because of the monthly bills paying for all the BS they were buying because they felt good about where they were and what they were making.

    Summer of 2008 came around and gas was almost $5.00 a gallon and I started to see some people be affected because they were basically doubling their monthly average spend on gas. Then Oct 2008 came around and the stock market dropped.. I worked with guys who were working PT just to work because they were retired all of a sudden loose half of their retirement and was begging to work full time only to get even less hrs. I think more and more people continue to get affected by the state of the economy and this causes people to be careful with money. Now 70% of our economy is based on consumer spending but this recession is shaping a mindset that will have a longer term effect.

    Housing market is in the shitter and people are learning to live without and realize they dont need the biggest and best.

    In order for the economy to get to where it was 5 years ago, it is depending on people to do they same thing that has caused the recession. I have always been a glass half full guy, but am I out of line by saying I honestly see things getting much worse before it gets better?
     
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  2. B. Kidd
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    B. Kidd Gold Member

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    One thing that is definitely getting worse are foreclosures. Approx. 1/2 million foreclosures this year already, and we are on track to set a new record of 1 million foreclosures by this years end.
    In a 'non-recession' regular year, the average amount of foreclosed homes used to be approx. 100,000.
     
  3. topspin
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    topspin BANNED

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    that is a very good take.
    and it's why I was against the stimulus and bailouts.
    We are growing and would be, I'd prefer it to be related to normal inflation and supply and demand with our country producing and consuming more. Not from phony gov stimulus money that could wind up as a second house of cards.
     
  4. topspin
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    topspin BANNED

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    I'm in S. Louisiana too and around the NAWLINS area the housing inflation was made worse by the land shortage with water all around us. When I moved to Houston in 04 I couldn't believe you could get more house for the dollar there even though they had a far superior economy.
     
  5. Pepe
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    Pepe Senior Member

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    I believe your numbers are off just a tad.

    Foreclosures will run approximately 3.0 - 3.5 Million for 2010.

    Personal Bankruptcies will run to 1.5 million or so for this year.

    Never forget that 1.6 Trillion in Option ARMs that has begun to "Reset" this year and will run through 2012.
     
  6. william the wie
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    william the wie Gold Member

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    Most all of that will go into the shadow inventory and start backfiring early next year when it leads to increased municipal bankruptcies. Two factors will complicate the hell out of those resets:

    A) Foreclosures are handled by local Judges who get their salary mostly from local property taxes and are often elected by renters and flippers.

    B) Federal REOs do not pay local taxes. When the properties are sold losses must be recognized. Almost all mortgages are now owned by the federal government.

    I foresee bitter conflict particularly in the blue states.
     

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