Times are tough all over

[Undertoad]

The greedy* homeowners that took ARMs are now again being greedy* by defaulting when their home loses value, instead of just sticking with the program and paying until things get better.

*in this context, "greedy" means behaving pretty much like everyone else in the culture.

[Cicero]

Originally Posted by Undertoad

The greedy* homeowners that took ARMs are now again being greedy* by defaulting when their home loses value, instead of just sticking with the program and paying until things get better.

*in this context, "greedy" means behaving pretty much like everyone else in the culture.

Are you refering to my post about greed in some way? Or are you calling homeowners greedy with a hint of sarcasm, or are you seriously saying homeowners were greedy? This is hard for me to read, if you are serious or not.

[glatt]

So is anyone else willing to admit that they rode this market down? We've got a couple Dwellars who say they saw this months ago and got out before the crash. I remember a thread back a few months ago where lookout asked if we were positioned where we should be. I don't know if that was supposed to be a subtle warning, but I ended up taking a long view after reading that thread and staying in the stock market.

So did you all get out months ago? Or don't any of you have 401ks?

I know it's tacky to talk about personal money, and I'm not asking for any details, but is anyone else wincing when they look at their 401k accounts? Or am I the only dummy?

My 401k is down 31% from one year ago, and I've been pumping money regularly into it for that entire year, so when you consider that, it's even worse.

[tw]

Originally Posted by glatt

I remember a thread back a few months ago where lookout asked if we were positioned where we should be.

Maybe it was Fall 2007 that I posted a warning of a serious market problem. I cautioned about unloading all credit card debt and setting up for an economic downturn. In Fall 2007 it had become obvious that a downturn was inevitable. I could not say if it was immediate or due to happen in a few years. But I do remember posting that caution especially with having no outstanding balances on any credit card.

It still applies. What happens in equity markets adversely affects jobs and Main Street some years later. Again, no way to know how severe that downturn will be. But that downturn will occur and will not be on George Jr's watch.

[glatt]

Originally Posted by tw

Maybe it was Fall 2007 that I posted a warning

Yes, but tw, you've been warning of the collapse ever since I came to the Cellar years ago. Why should I have given that one post any more weight than the others?

[tw]

Originally Posted by glatt

Yes, but tw, you've been warning of the collapse ever since I came to the Cellar years ago.

As I noted, I could say why BUT I could not say when. The warning was not in 2007. The warning was posted in 7 Sept 2006. Since the problem did not happen in months, then was it 'Chicken Little'? Posted in
Which is your favorite paranoid fantasy? are also reasons why we knew something bad was brewng:

Originally Posted by tw

Has good news in this economy been based in productive activities? Well, incomes have been dropping for the past five years. So why the strong housing market? Was that housing market due to productive and necessary products - or just wild speculation? ...

Those who otherwise could not afford the home and those who were only buying on speculation will suffer. Big part of the American economy that has been its 'engine' may collapse. That is the economic fear to a flurry of bankruptcies, a collapse of industries that kept the American economy looking good, and maybe a major recession. ...

Any one of three things may happen. Housing prices drop leaving massive debts for homeowners - maybe a house worth less than its mortgage. Rents skyrocket. Third is inflation resulting in much higher interest rates. We already see inflation jolting upward AND massive American dollars overseas waiting for what?

This economy has not been about America producing things. America's manufacturing economy is about 15% below what it once was - proportionally. Americans are becoming less technically able as indicated by college degrees (and skyrocketing numbers of student no longer finishing college), exportable products, and the number of immigrants who are now required for the more productive jobs. All this time, those problems are vague and looming because problems do not yet appear on spread sheets. ...

Economic diseases are cured by recessions. Are you financially secure to weather a recession, loss of housing values, or massive rent increases? This is the question that a 2% drop in housing prices asks of you. After all, what other industry is ready to employ Americans when the housing industry drops by 50%. Toll Brothers has already seen a 50% drop in sales – therefore even resulting in a drop in house prices. What's in your wallet - or savings account? Were you foolish enough to take out a balloon mortgage or interest variable rate? Are your credit cards at $0 balance? That 2% drop in housing prices may be your last few warnings. Speculation and easy money is over. Satan demands his due.

That 2% drop in housing prices is considered a leading indicator of economics taking revenge on easy money. A problem only made worse by an $800billion trade deficient and a $100billion war that is being lost. Of massive dollars sitting overseas and not yet appearing on spread sheets either as the selling of America, devaluation of the dollar, or inflation. The American economy was so stable and reponsible in the 1990s. Major problems are looming. Maybe this time, we will not make mistakes - and instead increase interests significantly before damage occurs; avoid the 'guns and butter' mistakes by Nixon in late 1960s. We have major outstanding debts and we have an economy that looked good only as long as housing prices kept increasing.

[classicman]

Originally Posted by glatt

Yes, but tw, you've been warning of the collapse ever since I came to the Cellar years ago. Why should I have given that one post any more weight than the others?

lol - truer words were never spoken.

[LabRat]

Originally Posted by glatt

My 401k is down 31% from one year ago, and I've been pumping money regularly into it for that entire year, so when you consider that, it's even worse.

I heard this morning on GMA that the average american has lost 19-25% of the value of their 401K investments. The overall market is down 40%, so as long as you were diversified, hopefully you haven't taken too bad a hit. (What to Do With Your Money
Mellody Hobson and John Bussey discuss the government's plan for the economy.)

I just got my last quarterly statement, and have lost 10% so far since the first of the year. I have been a bit conservative up to this point, but I am making a point to now shift my allocations so I am dumping a lot more into more and different stocks than I was till now. I am youngish, and figure I'm gonna buy while it's cheap and have time to wait for the market to recover.