Ive been taking down my positions in the lst week.
We are in for a recession.
Fiscal contraction, even if a deal is struck
QE3 might be shelved as it was never intended to be anything but overcompensation for fiscal and policy deadlock, and Fed dissenters are now calling that out.
My previous optimistic posts were based on the hope that red legislators would come to the table aft the election, but that is not happening.
This country is in a virtual i tragovernmental civil war.
War has casualties.
Add to the above extreme technical toppyness in the markets.
Down to 40% equities so far. Closing positions is a little like ending romantic relationships.
I don't see the kinds of drivers that are required for a recession. The biggest problem this government has is a lack of understanding of economics. The primary driver behind a country's economic future is the current account, which for the USA has been in deficit to the tune of $600 billion per year for a fairly long time now. Just to stabilize the economy, total debt must increase by that amount. Growth requires a much greater increase in debt.
Housing is consumption, not investment. Read the definition of investment in the first chapter of any respectable macroeconomics text. Increased construction will just get us deeper into trouble.
If you think the US government has a high debt level, you haven't compared it with the increase in debt held by individuals. It dwarfs the government debt. History shows that in the end the only way to escape such debt is a large dose of inflation. It's been used countless times in history. The Romans were really good at it. It was used by France after the death of Luis XIV, who left the country deeply in debt.
"Housing is consumption, not investment"
You got that backwards.
Renting is consumption, but buying is absolutely investment. But even the rental properties have an owner, so every property is, to someone, an investment.
You also have to be careful with that current-account jazz. It doesn't take account of the fact that we export jobs. It's not working in the sort of ceteris paribus environment that it needs to be a relevant indicator of relative change in economic strength.
The brits last week basically said straight out that it was pointless to cut their credit rating, since they could simply fiat-inflate their debt away. But of course that just revealed that cutting their credit rating was a wise move, and the brits weren't listening to what they were saying.
But, you seem to say that it's individuals' debt, not government debt, that's the real problem. Government inflation can't help with that, because pay is the last price to rise when the government starts to print money. And individual debt is a matter of overconsuming against income, so raising the price of both leaves the same rate of debt accrual.
Eliminating waste and corruption and insane bubble-based economic activities (you know, like those idiots stocking up on gold and other precious metals), and bringing production back to the local economy, and spreading income around instead of sequestering it into fewer hands, is how we get away from the deficit strategy the entire economy, both government and individual, has to run.
I don't think so. The war is almost over; you are behind times. And Dingleberry is a fascist - pure and simple - who probably would like to sterilize the 47% to keep them from reproducing ... just like Hitler.
The Repubs have lost this battle ... it is over. Public sentiment is about 75% against then, and getting worse everyday. The biggest obstructionist, Mitch McConnell, has been taken out of the game by .............. Ashley Judd. Yep, she's running ahead of him for his seat, and since re-election is all he cares about, he is totally occupied with his upcoming election. I would like to thank Ashley for helping win the war against stupid politicians. I wish she could do something about Rand Paul; that guy has never been confused by the truth.
Wrong. We are and have been in a mild depression. Recessions don't last this long. Governments with debt levels as high as the U.S. don't have high rates of growth - history shows they can't. What's really interesting is when something goes wrong economically for a high debt nation is how quickly their debt spirals as they don't give up overly generous social programs until credit markets cut them off.
The war you mention is simply a war of the classes with our president as the ring master. When you think about the referenced polls the numbers aren't that hard to extrapolate: 47%'s, those sympathetic to the 47%'s, and the ignorant. What these folks want is not necessarily good for the nation but we may have tipped the scales in that they now represent the majority. I've been a landlord since college and have chosen properties 47's can't afford - what I've learned is Medicaid mothers produce more Medicaid mothers and most are capable of working but chose not to. I was in the emergency room our local hospital last night where there was a sign that said if you had insurance.....if you don't 'we'll stabilize you and send you off somewhere else. But if you have Medicaid we participant in that program. A Medicaid policy costs the taxpayer $7000/yr. There are deadbeats in this nation who have better healthcare than those who work. Odrama said to vote out of revenge so maybe that's why I and those who understand what is happening to this country voted for Romney. Okay, I voted for Romney because I believed he could grow our economy and Odrama hadn't.
All that said, this is not necessarily a bad time to invest - it is important to chose wisely and ignore the clowns on tv promoting their own interests. Low growth, low interest rates should have been very apparent after Odrama's second year as president - they still are.
I heard about an old woman who needed a procedure that cost her $6000 and that Medicare paid $800 for leaving her to pay the remaining $5200. I guess this is part of the improved efficiency that Obama was talking about when he moved money from Medicare to Obamacare. But you can't blame Obama for doing this. Look at the number of Obamacare recipients that vote for Democrats vs. seniors that vote. They did it to themselves. They should have known not to vote Republican. I mean really, what were they thinking? Now they know. Now they will pay. And deservingly so. This kind of behavior must not be tolerated and it won’t be.
If you have been out of work or underemployed for years our present situation is a Depression. If secure in a good profession the economy is soft and i can get good deals on houses and vacations. Its all in your point of view. For awhile i thought Dingleberry just picked excerpts from Raybans and my own posts and was pulling another "Flaming Entity" joke. Looks like i may have been wrong.
The definition of a recession reqiures two consecutive negative quaters of GDP. So we are not in a recession; therefore cannot be a depression. Try reading an economics textbook instead of posting nonsense.
I agree with your last paragraph anyway. Looks like a good environment for MREIT's so I took a position in WMC at just about dead bottom a couple days ago. I'll be collecting dividends shortly, and I might add a position in MTGE as well.