Economic doom draweth nigh

In The News
1

Dr. Doom said,

“Now we’re facing the perfect storm: inflation, stagflation, recession, and a potential debt crisis,” Roubini said.

https://www.msn.com/en-us/money/markets/a-perfect-storm-of-recession-debt-and-out-of-control-inflation-is-coming-for-markets-this-year-dr-doom-nouriel-roubini-says/ar-AA188Cvg

No one has a crystal ball, but me! :rofl:

Seriously, though, there’s always economic doom, isn’t there? Heck, another article said 60% of people are living paycheck to paycheck. So doom is a daily occurrence for them. Our debt based economy has always been a bad deal for the most part.

Back in the day, people made their investment coin by purchasing bonds. That all flipped, especially with the record low interest rates we’ve had over the last decade or so. Low rates mean, money is cheap. This led to lots of stock market speculation.

Then factor in COVID and the rest is history.

Yep, something is going to break, it already has. Have you seen mortgage rates these days? They’re now at 7%, but house pricing haven’t dropped a lot considering mortgages rates were under 3%, what, 6 months ago.

House prices really need to drop in half at this point with rates where they are. Remember, people don’t buy the mortgage, they buy the payment. People cannot afford the payment at 7%. This will have all sorts of other consequences.

However, for now, the Federal Reserve continues to raise rates, which I applaud. Will they turn back, I don’t know. No one does right now. The mainstream media keeps pushing that narrative though as it would bring back the roaring stock markets and keep the good times rolling.

But, it’s time for a correction. We’ve gone too far off the mark and this is, and will affect the entire globe. Will it finally be “the big one?” No one knows, I’ve been hearing about the big one for 20 years. So we will have to wait and see what happens.

In the meantime, don’t sweat it. Do what you can do, go outside and have some fun and enjoy life. Doom and gloom never improved a single persons life in world history.

That’s a fact.

P.S. A lot of people who scare folks about everything under the sun said the Federal Reserve would keep expanding their balance sheet forever, buying up everything. Well, they’ve now reduced it by $630 billion in a matter of months. This is tied to the increase in interest rates. Note: The boogieman isn’t everywhere, only under your bed. :grin:

For your reading pleasure:

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Big news in the financial world.

SVB Financial which has $200B in assets is falling like a rock and trading has been halted. How this reminds us of the Lehman ($600B in assets) collapse back in 2008.

Here’s the back story:

https://wolfstreet.com/2023/03/09/svb-financial-silicon-valley-bank-shores-up-balance-sheet-liquidity-to-face-the-future-shares-collapse-55-today-84-from-consensual-hallucination-peak/

This bank was mainly used by startup companies who burn through investment cash from venture capitalists. Already, we have calls for a government bailout (from billionaire Ackerman) to save the bank.

https://twitter.com/BillAckman/status/1634028534107602944

Don’t you love how “capitalism” works? You run a shaky operation and when the chips fall someone comes along and saves your bacon. It only happens with the big boys.

And…

https://twitter.com/BillAckman/status/1634032841687285761

Things are getting dicy…

Oh and the stock market is down, again…

With today’s job report, expect the Federal Reserve to keep raising interest rates. This will begin to chip away at the economy and bring down inflation which will cause all sorts of other issues. Not saying it’s a bad thing, prices of everything are insane.

As always, the government causes our problems.

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You’ll want to keep your eyes on this one. The FDIC stepped in. This is the biggest failure since the last financial collapse.

Always remember, the FDIC is there for you, but only up to $250,000.

4

The biggest thing you want to think about with this collapse of SVB…

  • Is there “contagion?”
  • Is this thing going to spread to other banks?

Already some turkeys are calling for a federal bailout. It better not happen. The cards need to come down. All this free money (since 2008, low interest rates, covid cash, etc) caused the crisis we will face at some point, perhaps it’s now.

Time will tell.

Hold onto your hats!

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My wife was asking me about this when I woke up today. I told her that she should do her own research to understand what happens when you put your money into the bank. She said " Just tell me so I do not have to". I think that is how most folks today think. I Love her, but she has no interest in learning what is going on in the world, I guess that is why God gave us each other, She keeps me sane from this crazy world and I keep her grounded. I wish all of you a Wonderful day. God Bless us…

Chris

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Are you sure about that??

I was curious and listened to some “news” and everyone was saying in unison EVERYTHING IS FINE, EVERYTHING IS FINE, EVERYTHING IS FINE.
The local news sites are not even mentioning what happened.

I am being a smart arse.
Yes, buckle your seat belts.

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Fear is driving global markets…

In after hours trading, the DOW is down over 500 points. We’ll see how the market opens. Friends, I cannot stress enough. Please ensure you do not have more than $250,000 in a single bank account.

Read my article, Bank Runs, Blow Ups And Backstops Are Here to understand what’s happening and why.

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The Treasury and Fed, along with other world leaders keep saying,

The banking system is ‘sound and resilient.’

The more they keep saying it, that means there is a problem, and they’re trying to convince you otherwise. $100 billion in deposits was yanked from smaller banks. The more this happens, the more we have a problem.

Then, we are yet to find out how many other banks made long term bets with low interest rate bonds. The essentially bailout (by another name) of these new banks once again rewards the fiscally irresponsible. There’s no reason for banks to be responsible, because ol gov will bail their backside out when they go crashing down.

What a mess.

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I started a small service business in the early 90’s. One that required very little start up cost’s and very little monthly overhead . I drove up to a service call one day to a very nice house with a late model BMW in the driveway. A very attractive and well dressed young lady answered the door and led me to the problem. I told her I could make the repairs for 125.00 since it would require no parts. She appeared to be stunned and and she became quiet and then started crying. I was taken aback as well. I was thinking , Ma’am I said 125.00 not 125.000 She apologized and said, don’t be fooled by this house. My husband and I are overextended and flat broke. we don’t have a 125.00 between us I am very sorry to say. I asked her what she could pay and she said I have 20.00 and I can pay you now and pay you the rest as soon as I can. I did the repair and took the 20.00 to pay for my fuel and time and told her not to worry about it, thinking she had more than enough to worry about. I figured the new car and house would be going bye-bye soon. Over the next several years I learned that most people that appeared to have money were broke, and the customers that appeared to be broke paid cash without hesitation and never tried to pay with credit card. I read a study on divorce that found that a large number of divorces are related to financial crisis. Young People want what mom and dad have ‘right now’. and our lending institutions make it possible.
'Good credit, bad credit, no credit… we’ll put you in a new car! A banker I’ve known
since I was in my teens once told me that when he first started in the banking business, the most they would loan on a new car was 5% of the sale price. With the sound logic that if a person needed more than that, they simply could not afford it and likely do more harm than good to the customer and be unethical. Ethics ? what is that? Our country should relearn what it is. And lenders should be required to explain especially to young people exactly what APR is and what it will add to the purchase price. Make them aware of tag, tax, and title and mandatory full coverage for the term of the loan. Require 3 yrs of tax returns to verify Average annual income and amount of debt they already have to calculate what they can afford to buy and refuse to sell them anything above that amount. Of course if they were required by law to do that, new car sales would drop 70% overnight.