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The economy, what is and is not to be!
Bear
Posts: 18,954 ✭✭
Just my views on the economy from
an old bears perspective.
1. No body is sure what the future holds
for the economy.
2. The government and Regulatory Agencies
Will rarely tell you what you need to know. They
will usually tell you what they want you to know.
3. If you take 100 of the leading economists, some
of them may actually be correct in their predictions.
We just do not know which ones untill it is too late.
What we do know is this:
1. If you can save a point on your home mortgage as a fixed
30 year loan and if all the involved costs can be made up in
24 - 30 months, do it and quickly.
2. We are in a serious economic crises and no one knows how
deep the animal droppings are, or how long bad times may actually
last.
3.The average citizen must be prepared for any of the following. A great
recession, depression, eventual inflation or hyper inflation or a long and
painful recovery in a sort of continuing stagflation.
4. Taxes will eventually have to go up. Make no mistake, they must go up
and they will go up in due course.
5. Interest rates on money must go up or we will no longer be able to sell
our bonds to foreign buyers. This will eventually skyrocket mortgage rates,
short term interest and any other medium for an interest loan.
6.I have heard why PMs will go up and go down. Not knowing for sure, I would
hold some but do not go crazy.
7. Rare coins seem to have held up fairly well, hold them, buy them, but do not
go crazy.
8. Hold cash reserve. Money may well lose value, but if you lose your job, cash is
a very nice cushion to have. You may not be able to sell an asset when you need
to at anything near the price you need.
9.Stock is OK to hold, but be careful about betting the farm that we have seen the bottom.
Always hedge your bets. If you must buy, space purchases out over the next year, in order
to level out what may well be extreme swings.
10. Cut your overhead expenses. If you do not absolutely need something, do not buy it.
Cut back eating out, expensive vacation, new cloths, expensive coffee, shop for sales and
discounts.
Finally, believe nothing that you hear and very little of what you see. The Government, financial
institutions, newspapers, TV financial advisers are all in on the con to some degree. The last
thing on their small minds is your welfare or financial security.
an old bears perspective.
1. No body is sure what the future holds
for the economy.
2. The government and Regulatory Agencies
Will rarely tell you what you need to know. They
will usually tell you what they want you to know.
3. If you take 100 of the leading economists, some
of them may actually be correct in their predictions.
We just do not know which ones untill it is too late.
What we do know is this:
1. If you can save a point on your home mortgage as a fixed
30 year loan and if all the involved costs can be made up in
24 - 30 months, do it and quickly.
2. We are in a serious economic crises and no one knows how
deep the animal droppings are, or how long bad times may actually
last.
3.The average citizen must be prepared for any of the following. A great
recession, depression, eventual inflation or hyper inflation or a long and
painful recovery in a sort of continuing stagflation.
4. Taxes will eventually have to go up. Make no mistake, they must go up
and they will go up in due course.
5. Interest rates on money must go up or we will no longer be able to sell
our bonds to foreign buyers. This will eventually skyrocket mortgage rates,
short term interest and any other medium for an interest loan.
6.I have heard why PMs will go up and go down. Not knowing for sure, I would
hold some but do not go crazy.
7. Rare coins seem to have held up fairly well, hold them, buy them, but do not
go crazy.
8. Hold cash reserve. Money may well lose value, but if you lose your job, cash is
a very nice cushion to have. You may not be able to sell an asset when you need
to at anything near the price you need.
9.Stock is OK to hold, but be careful about betting the farm that we have seen the bottom.
Always hedge your bets. If you must buy, space purchases out over the next year, in order
to level out what may well be extreme swings.
10. Cut your overhead expenses. If you do not absolutely need something, do not buy it.
Cut back eating out, expensive vacation, new cloths, expensive coffee, shop for sales and
discounts.
Finally, believe nothing that you hear and very little of what you see. The Government, financial
institutions, newspapers, TV financial advisers are all in on the con to some degree. The last
thing on their small minds is your welfare or financial security.
There once was a place called
Camelot
Camelot
0
Comments
30 year loan and if all the involved costs can be made up in
24 - 30 months, do it and quickly............"
///////////////
Some folks like to do that.
I would rather sell assets that have appreciated and pay
off the mortage entirely.
The monthly free cash can then be used to start building
the pot again.
Having no residential-property payment is a real life changer,
and offers a kind of "freedom" that almost nothing else does.
<< <i> I would rather sell assets that have appreciated and pay
off the mortage entirely.
Having no residential-property payment is a real life changer,
and offers a kind of "freedom" that almost nothing else does. >>
Wisely said. That's my goal as well.
It may not be a bad idea to have a 5% long term
loan and bank interest at 10% plus. One may not be
able to get home loans this low for the next 50 years.
Camelot
<< <i>4. Taxes will eventually have to go up. Make no mistake, they must go up
and they will go up in due course. >>
I thought B.O. promised the middle class a tax break.
Worry is the interest you pay on a debt you may not owe.
Knowledge is the enemy of fear
<< <i>"1. If you can save a point on your home mortgage as a fixed
30 year loan and if all the involved costs can be made up in
24 - 30 months, do it and quickly............"
///////////////
Some folks like to do that.
I would rather sell assets that have appreciated and pay
off the mortage entirely.
The monthly free cash can then be used to start building
the pot again.
Having no residential-property payment is a real life changer,
and offers a kind of "freedom" that almost nothing else does. >>
Completly agree storm! Especially this type of uncertainty we live in today.
a very nice cushion to have. You may not be able to sell an asset when you need
to at anything near the price you need.
Horrible advice, especially with the prospect of hyperflation on the horizon. Your $20,000 in cash today may very well buy just $10,000 worth of goods/services in as little as 5-7 years.
""1. If you can save a point on your home mortgage as a fixed
30 year loan and if all the involved costs can be made up in
24 - 30 months, do it and quickly............"
///////////////
Some folks like to do that.
I would rather sell assets that have appreciated and pay
off the mortage entirely.
The monthly free cash can then be used to start building
the pot again.
Having no residential-property payment is a real life changer,
and offers a kind of "freedom" that almost nothing else does."
Again, some more very bad advice. Unless you are paying more than 6% interest, a 30 year mortgage is going to be a long run winner. The cash you would use today to theoretically pay off your loan is worth far more right now than it will ever be in the next 30 years. If 10-15% inflation DOES set in sometime soon, and you took that "payoff" cash right now and bought precious metals instead of paying off your mortgage, its a double win scenario. Your metals will retain their purchasing value by keeping pace or even exceeding the inflationary rate, and your current $1,600 mortgage will look like mere chump change, again in 5-7 years possibly.
///////////////////////////////
Using the proceeds from the sale of "appreciated assets" is
a bit different than using cash reserves to retire a mortgage.
Those of us who paid off our houses in 1980 - rather than
holding already grossly appreciated metals for additional
theoretical appreciation - obviously made the right choice.
I suspect we might be setting up for similar outcomes.
..............
Also, paid for residential properties can always provide home equity
lines of credit, when "opportunities" arise.
<< <i>"...Your metals will retain their purchasing value by keeping pace or even exceeding the inflationary rate, and your current $1,600 mortgage will look like mere chump change, again in 5-7 years possibly...."
///////////////////////////////
Using the proceeds from the sale of "appreciated assets" is
a bit different than using cash reserves to retire a mortgage.
Those of us who paid off our houses in 1980 - rather than
holding already grossly appreciated metals for additional
theoretical appreciation - obviously made the right choice.
I suspect we might be setting up for similar outcomes.
..............
Also, paid for residential properties can always provide home equity
lines of credit, when "opportunities" arise. >>
When you discuss previous precious metals prices, do you always use a 6 month slice (1980) to make a point? Or do you prefer looking back on the previous 100 years as a whole?
a bit different than using cash reserves to retire a mortgage.
If you're talking about bullion, then you are pretty much talking about the same as cash reserves only the bullion gains get to be taxed.
That appreciated bullion for starters falls under a 28% capital gains tax. In 1980 it may have been still been treated under the short term gains rules if held > 1 yr. It would be great if you could just cash out at 100% of the appreciated "bullion" asset and trade for your house, but not per the IRS. Increasing property taxes and decreasing "effective" wages over the next 5-10 years will also probably bite into the cost of home ownership. In a true deflationary environment one's paycheck should outperform consumer prices and fall more slowly (ie all consumer goods, foods, homes, rents, should all fall faster in price).
roadrunner
<< <i> Again, some more very bad advice. Unless you are paying more than 6% interest, a 30 year mortgage is going to be a long run winner. The cash you would use today to theoretically pay off your loan is worth far more right now than it will ever be in the next 30 years. If 10-15% inflation DOES set in sometime soon, and you took that "payoff" cash right now and bought precious metals instead of paying off your mortgage, its a double win scenario. Your metals will retain their purchasing value by keeping pace or even exceeding the inflationary rate, and your current $1,600 mortgage will look like mere chump change, again in 5-7 years possibly. >>
Unless you have a guaranteed rate of return -- such as an FDIC insured CD -- with an interest rate greater than your mortgage (6%), you're better off paying the mortgage down. In making investment decisions it is improper to compare a hypothetical rate of return (from precious metals, stocks, etc.) against a fixed debt which must be paid off. It's apples and oranges.
I agree that using inflated assets to pay down debt makes a lot of sense. I know people who've paid off their mortgages and none of them regret doing it. My parents did so and it was one of the smartest moves they ever made, as it protected them in times of job loss and now in retirement.
////////////////////////
All I know for sure is that it took me 28-years to do the
full rinse-and-repeat of the 1975 to 1980 secenario.
Folks who want to risk waiting another 3-decades for
the appreciation thay had between 1998 and 2008,
should just keep buying metals at any price AND
hold them forever without EVER cashing-out ANY gains.
Since they never plan to sell them, it really won't matter.
Paper profits are not worth much of anything tangible.
................
And, everybody should have some metals for an "emergency."
(If everybody responded accurately in last year's poll, I have about
as much of the metals as do any of the respondents. Thus, I am not
"anti-metal." I am anti NEVER taking profits, which can be converted
to other more useful assets.)
the appreciation thay had between 1998 and 2008,
should just keep buying metals at any price AND
hold them forever without EVER cashing-out ANY gains.
Since they never plan to sell them, it really won't matter.
While it's good to take profits off the table when it serves ones purpose, it's also just as good an idea to wait until a market gets into the mania stage to cash out. The current PM's market certainly has not gotten even close to a blow-off as seen by gold and silver in 1979-1980. The average person still knows nothing and cares less about PM's. If someone thought 1974 was the peak for gold at around $200 ounce and cashed out, they did pretty good if they doubled or tripled up. But the majority of the gains would occur from 1976-1980. The other huge difference between now and the 1970's was the economy and in particular the finanical sectors. There's just no comparison. Even with inflation raging in the 1970's there was no concern about every major bank failing and having to pump 100% of GDP in into insolvent entities. It seems far less likely today that gold will disappear into the abyss with all the problems the world currently has to tackle over the next 3-5 years. Major bull markets in gold and silver that fizzled out in 2008 after only approaching 40-50% of their 1980 inflation adjusted highs? I'm not buying it.
Don't forget that the PPT or the President's working group wasn't even around in the 1970's to pull strings on the markets as they freely do today...one of Volcker's regrets was that he didn't try to suppress gold back then. Today we have massive central bank leasing and selling of gold, as well as $100 BILL in gold, and $190 BILL in silver derivatives, plus 2-3 major banks taking 60-80% short positions in the gold/silver futures to help "manage" markets. It seem incredible that the silver derivatives have doubled in the last year or two to give "leverage" of nearly 200-1 over the comex silver supplies. Even with all this "help," they've only managed to keep these markets from doing much more than tripling or quadrupling. So what happens when the paper games stop working? Strong double digit Interest rates stopped the commodities bull in the 1970's. We have no such ammo left today unless we intend to disturb the $400 TRILLION pile in interest rate swaps that currrently exist. JPM carries $65 TRILL of those by itself. This is why I don't think the PM run is quite yet over, just like the drop in paper backed asset prices is probably far from over.
roadrunner
All I know is we are fantastically better off having dumped money into mortgage payoff. And it was the completely "wrong" thing to do back then, too!
The next 10 years? Who knows!
Hummmmmmmm...I doubt that it is really a con, it's more like the mullets are being gamed. JMHO
Methinks the mullets know, at least those that survived the first wave of lay-offs and mortgage melt downs, the ones that managed to get repositioned and got rid of their debt by cashing in that 2% CD's and savings account to get rid of 29.9% outstanding balance credit card interest and then they got into harder assets and started working on creating a more secure situation...they were once gamed but now they are twice wise and folk seem to learn pretty quickly, especially when you start reaching for their wallet. We're no longer keeping outstanding balances on our cards and we don't charge anything we can't handle in a month or two, but we aren't big into savings accounts or CD's anymore...hummmm. We know the big banks are gaming their butts off to try and stay alive and defy the odds and they are gaming everyone, the gov. the equities, the investors, us, everyone; "Put your money in the bank, spend money on stuff you want, buy stocks, you need to buy a new car right now with these tax incentives and hey, how 'bout a new home and I'll even throw in 8K" and the drone goes on. The first wave took out about 10 percent of the players, they never saw it coming; first they got hurt then they were toast, just like that. Everybody knows the game is on. Those that can play are playing, even if it is comprised of nothing more than stashing cash and hard assets and slashing descretionary spending. We all know how the banks work now but many of us are limping because we lost 40% of our paper assets in the last few months and we're pissed that we got gamed but we won't get gamed again.
The only downside of our situation is we are going to get the bejezus taxed out of us. Most people that are in the game are getting taxed at a minimum of 50% of their income...20% to 28% of their wages and that's just the income tax but then there's the property tax on the house and the gasoline tax and medicare tax and vehicle registration tax and the phone line tax and the sales tax, and the list is long and then you get to professional fees and licenses, tollway charges, fishing/hunting license fees, license plate renewal fees, permit fees, and thank goodness you don't own a small business; your salary is really only half of your pay rate so take that into account. The sad news is that these taxes are going to mulitply in type and amount and in the near future...it ain't good but it's probably necessary for what ever reason.
Yeah, we're being gamed but that's what happens to mullets...you got to get 'em into the net, get 'em on the boat and take 'em home, that's how mullet catchers make a living. The good news is that we can still play, we still can discharge or invest our assets in just about whatever way we please, we can consume conspicuously, we can chase satisfaction, we can work on securing our future, we can even vote; it ain't that bad...it's just different but it is a game and you better not lose lest you get swept into the net.