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wolfhounds (< 20)

Are we broke yet?

Recs

6

February 25, 2008 – Comments (4) | RELATED TICKERS: KMX , GSBC

Reviewing the last several days posts regarding the economy, banks, and the like, I am adding my weekly tidbit of information that may not be earthshaking but expands the view of how we are really doing.

Too many economists are still arguing (as of this morning) whether we are approaching a recession. Bloomberg reported it's now 45%. They are getting smarter. One widely accepted proposition that we haven't reached that threshhold yet is the unemployment rate is not high enough and weekly layoff numbers don't point to a recession. Oh yes, my tidbit. An interesting piece on last night's news pointed out that auto repo yards are doing so well that most are near capacity. Interviews with owners disclosed that a large number of repos are luxury cars. Further interviews disclosed that most of these were not from people who lost their jobs; they just can't make auto payments. 

Auto loans, like credit card loans are going bad faster than the speed of ......lost jobs. The problems of mortgage backed securities are still not fully played out, and the same issues of packaged, sliced and diced auto loans have yet to become major problems for the big players. When thet do it will be the regional and smaller banks who will sufffer the most. Many missed the mortgage meltdown by sticking to writing plain vanilla mortgages, but auto loans is big business for them too. Write offs of the dozen I follow started accelerating three months ago. My guess is that when 1st quarter reports start rolling in we'll find out how broke the economy really is.

4 Comments – Post Your Own

#1) On February 25, 2008 at 12:43 PM, TheParadox (98.35) wrote:

...and then the world will end.

Our economy is better than most people make out, and these short term problems are just that, short term. People can't foreclose on their homes forever. Bad debts eventually catch up to people on there report cards (aka credit report)... and the bad stop getting loans and the good do just fine.

But it is interesting to hear your view, i do respect your opinion and agree to some degree, but also know our monetary policy, the interest of financial institutions and even consumers will stop this madness, sooner if not later.

Buy stocks...

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#2) On February 25, 2008 at 1:01 PM, wolfhounds (< 20) wrote:

I do buy stocks even if the world was coming to an end (LOL). Just not banks. We didn't drop dead during the S&L crisis so this will pass as you say. I'm just stressing that there's more than meets the eye in the world of financial stocks of all stripes, and to me this is an indicator the market can get even more volatile.

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#3) On February 25, 2008 at 5:36 PM, ATWDLimited (< 20) wrote:

Bad Markets can be good for reevaluating values of stocks etc. Like last month I made tons of money, no joke, while the market sank, in basic Materials and Energy stocks which i bought up right in the middle of the dip on Jan 22, at 2 pm, lucky I had a half day from school, I am only 16.

Look, fundamentally the US economy is actually collapsing, the credit crisis etc is really a result in something deeper, its called wage stagnation and inflation, think of the 70s, all we need is unemployment. US wages have stalled and even decreased in purchasing power because of globalism/free trade, so the Us consumer/household borrows to maintain the high standard of living and in order to continually improve the quality of life Americans just borrowed more, just like the US government.

Rising import prices, high infaltion on food adn energy are killing the US, while free trade is killing once high paying jobs and illegals are draining resources from the medical system causing higher rates, and pushing down wage levels due to abundant cheap labor. Obesity is causing more and more problems there as well, not to mention old age for many workers. Industry supports advances in technology and schooling/invention, but it is moving away leaving lower paying clerk jobs at chain stores.

So although the US is not dead yet in the long run, it is dying, the same way England did before, lost base, long wars, high debts and hollow core of an economy.

The drum beats will continue and the US aint over till its over, burried in the grave after the long procession to its resting place. RIP USA, you were the Greatest Nation, until you lost it.

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#4) On February 25, 2008 at 5:59 PM, wolfhounds (< 20) wrote:

Far too cynical to be 16. But cynical is good.

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