All Forum Posts by: Zach Ziskin

As you said, for all of 2007, we had a record trade deficit of over $800 billion, or almost double what we exported. And the cure is almost as bad as the disease, since the only reason that gap has been closing is because of the weak dollar, which combined with the Fed's monetary policy is making everything more expensive for consumers here in the U.S. Even worse, all this price inflation along with the Fed slashing interest rates is killing people who are on a fixed income, such as senior citizens or those who depend on interest income from their savings.

All of these factors are converging to create an economic environment the likes of which we'll probably not see again for a very long time (hopefully).

True, but compared to how much we import it's a drop in the bucket. And our major trade deficit continues to grow.

Perhaps, but the fallout from the bubble markets are having effects on the entire economy and country, from bank failures and credit markets seizing to lending restrictions being tightened across the country, which affect everyone. Plus, the systematic devaluation of the dollar causes everything to be more expensive for everyone, regardless of where they happen to live.

Joshua,

I agree, so far we've been following the Japanese model in lockstep, the only difference being that since this is the U.S., the magnitude or scale is even larger. The bottom line is that economics are driven by human nature and behavior, which as we all know works the same in any part of the world and in any era, which is why history has that nasty habit of repeating itself over and over.

Just last night JP Morgan agreed to buy Bear Stearns (up until Friday the 5th largest investment bank) for $2 a share!!! A company that mere weeks ago was worth over $20 billion has been revalued at $236 million. People who on Friday had net worths of over $100 million today have awakened with net worths of $3-4 million. The dollar is tanking, gold is through the roof, people have lost all confidence in the banking and credit systems.

One thing is certain--those who have cash will be able to acquire all kinds of assets at once in a lifetime levels when it's all said and done.

Well, thank goodness you came here to explain it to us guys who just "don't get it"... :goofy:

For all that making things other people want that Japan did, it still didn't stop them from falling into and staying in a deflationary spiral for almost a decade, during which the Nikkei crashed, their real estate lost 50% of its value, and their government cut interest rates to ZERO in a desperate attempt to turn things around.

So much for making things other people want, huh? :roll:

Yes, the market is that volatile, and they pretty much have to put on the happy face and say all is well. If they all came out and said "yeah, we're in danger of failing, we invested in all kinds of derivatives that we don't even know how to mark to market a lot of it, and we're in big trouble", the already fragile credit markets would collapse completely and we'd be in a depression in a matter of weeks.

As it is we'll probably get there eventually anyway, but they're going to put on a brave face as long as possible as they hope to "whistle past the graveyard"...

I agree, this is just the beginning. We still have no full idea the extent of the defaults that can and will occur in the unregulated OTC derivatives market that banks and hedge funds have been playing with, which is estimated to be somewhere in the ballpark of $500 trillion. :shock:

Hang on to your hat, it's going to get interesting over the next couple years...

IMHO the closest parallel to look at is Japan. We've followed their model in lockstep so far, from the runaway stock bubble that popped to a runaway RE bubble that popped, followed by a deflationary spiral that they've only recently begun to come back out of. By the time Japan bottomed out, their RE on average had come down 50% from its peak, and given how we've been following their economic path so far, I'd expect the same result in a lot of areas here.

Here in South Florida, one of the epicenters of the RE bubble, prices are down anywhere from 20-40% from the peak so far. My own townhouse (currently for sale) is down about 15% so far, but many others are already much worse. I just found a 3/2 REO going for less than 50% of its current FMV, which is 20% below where it was at the peak. :shock:

Realtors I've spoken with here said we're seeing approximately a 2% per month steady decline. I'd expect a 50% total haircut on a lot of stuff down here by the time it's all said and done. My guess is it'll take another 1-2 years for the bottom to be reached, and I don't think it'll bounce right back up quickly thereafter, it'll probably flatline for another year or two.

If we get back to historical averages of appreciation, it would mean it would take another decade or longer to get back to where prices were at their peak, and some might not get back there for far longer than that, since their bubble prices were so out of whack to begin with.

I was curious to get some feedback on the pros and cons of going with a realtor to represent you as the seller on a property as opposed to listing with a flat fee MLS service. Obviously there is the commission savings by going with the flat fee MLS. I guess the question is, assuming you as the seller have all your stuff together, what other benefits does having a realtor represent you as a seller bring, and do they outweigh the commission savings of the flat fee listing service?

While it's true that no one has a 100% crystal ball, with all due respect I've followed my friend's economic newsletter for over 8 years, and the man has nailed every macro economic trend to the letter, and I mean NAILED. And especially considering I live in what was one of the prime bubble markets (South Florida), I'm inclined to believe him again this time as well. YMMV.