How many think the worst is over? Part 2.

Question

http://www.msnbc.msn.com/id/38277180/ns/business-consumer_news/

A couple days ago I posted the same topic. The above article is an article that discusses possible deflation and recession for the U.S. There are a lot of items that are happening at the same time as pointed out. Worth reading and seeing the conditions that are affecting us, imo. Rich

Bryan Hancock · Answer

Without job formation and incentives for people to hire I don't think we will get out of the mess anytime soon.  Eliminate payroll taxes for a year, make some structural tax cuts, and stop attacking capital formation.

In other words...stop this senseless tax attack on "the rich" in the middle of a depression.

I certainly don't have all of the answers, but something has to be done to get people employed.  I saw a study that someone posted that claims 55% (!!!) of people have been laid off, had their hours cut, or are marginally attached to the workforce.  That is a STAGGERING statistic.  Is there any wonder people are nervous and unwilling to spend money?  U6 unemployment is at 22% and Europe's debt crisis is very worrisome.

I think we muddle through for several more years....I hope I am wrong.

Don Hines · Answer

If you haven't read it before in any of my other post, I have been just sitting and watching and not active in RE. Now I am jumping back in with all 4 feet. 
When I go out to eat, the resturants are full. I am never the only one filling my car up at the service station. I took my wife and some friends out on my boat for a little dinner cruise a couple of days ago (on a Monday evening). The lake and resturant was full of people. Unemployment is running about 2% lower than the national average here in Little Rock. These observations have sold me that it is time to do something. Right or Wrong.
But, most of all, I am tired of "Doom and Gloom". Will it get worse? I think so if we sit on our haunches. Depends on me!
Don

Jeran F. · Answer

I've been talking to a number of different investors lately that have become extremely pessimistic over the last few months. Most indications prove to me that we are creating yet another bubble. Housing prices in some areas of southern California are actually selling higher than 2005 and 2006 prices. This could be related to the FED buying mortgage back securities until early this year to push rates down and the banks controlling the inventory in the RE markets.

It's actually quite pathetic what this government is doing to us. But as someone mentioned above it's a good old boys club and I don't think there will be any changing that until we actually have civil unrest. At the end of the day I am hoping for the best, but preparing for the worst. I'm hoping the next few years will give us a better understanding of the future because right now it's very uncertain. I can only pray that somehow we can get ourselves out of this mess, but I truly thinks it's a long shot.

Bryan Hancock · Answer

The last time this happened the only thing we had to fear was fear itself.  This time around we have to fear fear and a gluttonous spending monster in Washington that is bound and determined to run the car off the road permanently.  Spending simply cannot maintain the current clip and needs to be scaled back considerably when new entitlements kick in and consume 2/3s of our "revenue."

None of this takes into account what will happen if the sovereign debt markets get spooked and the cost to roll over the debt we have with an average of 4-year maturity doubles or triples....bye bye military spending.  Bye bye all services other than MANDATES that are uncontrollable.  People don't realize how precarious and scary this situation actually is.  This is putting the self-defense of our country at risk!

I am reading a book on hyperinflation and depression right now to get a sense for how people can plan for the worst.  I think it is unlikely that this will happen, but if there are simple things one can do to protect their life savings from a reckless spending machine called Congress then it makes sense to spend a bit of time planning for it.

We have a 5-month-old daughter and my fear is that she will grow up in a country that is unable to function properly because of the reckless behavior of her predecessor's generations.

Kevin Yeats · Answer

I certainly agree with the current view of using taxes to *ATTACK*.  It does not make sense.

Specific example - the tax on Medical Device manufacturers included in the Health Care Reform bill.

How does imposing a tax on a manufacturer (or anywhere along the supply chain increase the supply of anything at a lower price?

As for the unemployment, this comment is based on my own small observations, but I know a lot of people that are *unemployed* and collecting unemployment benefits but are also working under the table at some job, albeit for less than 40 hours per week.  Too many people learn how to game the system which leads to more burden on the rest.

... as Atlas Shrugs.

Dale Osborn · Answer

It will take the voters to CHANGE the personnel out in 2012. Even then, we need new thinking rather than continuing the good old boy system in place in our government.

Bryan Hancock · Answer

Yeah...The book takes more of a "planning" approach, which is obviously the right thing to do given that there are so many variables to account for.  Rich's strategy to hedge with the "mirrored strategies" is one of the best that I have seen as long as you have the capacity to execute it and you do so with the proper type of financing.

I actually had a multiple reply thread with another BP member over this and we never saw eye-to-eye on the thing.  I don't want to pull the scab off of festering wounds so I won't go there anymore.

I don't see how one can execute on a strategy like Rich's without a significant amount of assets already built up.  Perhaps one can have some property as lowly leveraged as possible without being free and clear.

Alan Smith · Answer

I am betting a terrorist attack will soon derail the economy completely.

How many think the worst is over? Part 2.

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