2007 a bad year coming?
 

I heard a real estate investor say this over the weekend. I blew it off. Then I was talking with an accountant while waiting in line at a Karting track and he said the same thing. 2007 is going to be the beginning of a huge economic downturn.

The last time I heard doom and gloom like this was in the late 80's. I was wise to tighten my belt before the economy took a dump. I am considering tightening up now.

I know the real estate market here is tanking bad and the shockwaves are widespread due to the idiot politicians in this area not have the foresight to attract big business here. The entire economy in this area is centered around building houses. The cities leaders let Mitsubishi Motors slip on my along with Spripps medical research facilities. It is starting already in Porst St. Lucie Florida.

Opinions of the mindset here?

Are we heading towards a big crash?

You can see by the price of gold that some people think there's trouble a brewin.'

We are in a precarious economic situation, spending hundreds of billions a year of borrowed money. Too many people have enjoyed an artificially high standard of living for the past 4-5 years based on pulling equity out of their property. Savings are low and debt is high. We have new competition for resources -- not just oil.

There are many ways it can go bad. That's not to say it will; just that 'tightening one's belt' is a good idea under these circumstances.

The gold thing has me wondering though. The marketing of gold as an investment has been going great guns for a while now. I don't recall ever seeing such a sales campaign for a commodity. I think that has played a big part in it.

The politicians will never admit to the possibility of a worsening economic situation. Others like the Fed Chairman won't come right out & say anything because they don't want to start a panic. But, I think anybody can look at what techweenie is talking about and get nervous about continuing good times. Here in So Cal, it's kind of sad to hear the real estate industry trumpet the idea it's a great time to buy when important indicators are turning negative.

Monex will be happy to send you a copy of the report: "The Coming Revolution in Gold."

just maybe we might be getting into that corner because our spending is kinda outa hand. Here is a tidbit I stubbled across the other day.
A scary perspective....its only a billion

The next time you hear a politician use the word"billion" casually, think about whether you want the politician spending your tax money.

A billion seconds ago it was 1959.

A billion minutes ago Jesus was alive.

A billion hours ago our ancestors were living in the Stone Age.

A billion days ago no one walked on earth.

A billion dollars ago was only 8 hours and 20 minutes, at the rate our government spends it.

Isn't a billion seconds ago 1974?

I concur, 31,536,000 seconds a year. = 32 years

Nah, you're forgetting leap years and daylight savings time...

There are less frightful things going on now than a few years ago. The current flat yield curve usually comes before a downturn. Gold has historically been an indicator of inflation. etc etc. Then there is the unexpected "surprise".

That said I feel the best indicators are GNP and job creation numbers.

I'm getting a chunk of money from my divorce settlement. It goes in the bank...no way I'm buying any real estate. Paying off a few debts, then just trying to make enough money to keep the track car running. My possible splurge will be to buy a second motorcycle (after I sell my first one), but sticking with the cheap Subie.

Low savings and rising short and long term borrowing costs are crimping the consumer. In America, the consumer is the economy, so we are moving towards times of greater risk. I read an interesting commentary regarding the affect of the housing boom on the economy. The argument was that flat income levels in the past 3-5 years and low borrowing costs induced consumers to extract home equity to finance lifestyles.

Ben Bernanke is in a precarious position. If he does not increase fed rates, he runs the risk of letting "inflation" run wild, despite the fact risks may be minimal. Foreign banks will shun American debt and sell off treasuries AND agency (mortgage backed securities), causing rising yields. He's in a Catch-22 situation. I'm afraid the only result will be a reduction in GNP and recession. This will quell inflation threats.

I've said it before, but I still believe commodities are rising under speculative pressure. Warren Buffett seems to agree with me per his comments this past weekend. Fortunately, all central banks (US and foreign) are increasing rates and reducing the money supply. This stabilizes currencies and reduces the risk of inflation, and in such a market, commodities will suffer.

Nevertheless, I wish I would have bought gold 3-5 years ago.

I agree with roninlb regarding job creation numbers and GNP, and I would also add bond yields to the mix.

Here is the article I mentioned before:
http://www.itulip.com/newdepression.htm

I just went to the home page of itulip.com and saw this article linked.


Asia getting ready to dump the dollar peg

Credit expansion or the lack of expansion is critical to our way of life. Without a stable dollar, we cannot expect foreigners to finance our debt at cheap rates.

You can point your finger and call me a bear, but you can't ignore the dangers lurking. You can't expect to eat caviar on borrowed money and not expect to pay at some point down the road.