Tales of Wall Street and Washington, and even the Media – speak of economic recovery. I guess they think that if you say it often and long enough that it will happen. That does not mean that it is reality, now or any time soon.
With the employment rate shrinking, and GDP wallowing – what would you say that the prospects are for the economic climate ahead?
This is an important evaluation because it leads you to what kind of investments to make with your money – in your IRA, 401(K) or savings – how to plan your money making.
Here is what is very telling to me. Recently, RealtyTrac (a National Reporting Service) reported a shocking barometer of the state of the daily economic lives of Americans. In January of this year, one in every 409 homes was sent a default notice, listed for foreclosure auction or repossessed by the bank. This is HUGE. Recovery?
The repossession rate is on the rise – as banks repossessed nearly 90,000 homes last month – which represents a whopping increase of over 30% compared to January a year ago. In December, home values fell 17% — which can be expected when so many houses are showing up on the growing foreclosure lists for bargain prices.
And, according to US Government sources, the delinquency rate on convention loans more than doubled to 5.3% last year.
I am reminded of my first job in a big commercial bank (and I worked to approve home loans). I was invited to lunch in the grand dining room on the 30th floor by one of the senior vice presidents. The SVP stood at the floor to ceiling windows and gazed lovingly at the landscape well below – and so distinctly I remember him posed and saying: “See all of those houses out there? – We own them all!!”. I pondered that arrogant moment – and yes, with poetic justice – the Banks are going to own all of the houses in short order, whether they want to or not – the arrogance reigned supreme.
The economic system has been tilted by Bankers, Wall Street and Washington – with practices that have pummeled the lives of Americans – and debt burdens that are causing huge disbelief of the tales of Bankers, Wall Street and Washington. Their tales should not guide your financial future – they have a bad track record.
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This comment is from Mark in Illinois:
I would say the economy is going to continue to regress drastically. It is not recovering. Not even close! If you change our government reporting to an accrual basis from a cash basis, we would carry on our national balance sheet, even more devastating debt, due from the American people. You are in CA. That state and many more are approaching bankrupt positions. So, Federal, State, and going further to County and City and school districts, are collectively approaching positions with incredibly poor balance sheets, and positions of almost a constant begging for tax increases. The state governments, like the federal, are attempting to steal from teachers union retirement plans. The Federal Gov has stolen Social Security funds to handle their budgeting flaws. Based on future needs, SS is in dire need of change. But we as a nation, still spend more than we take in. No one is considering budgeting wisely. Rep. Paul Ryan of Wisconsin is being assailed by the democrats for offering a solution that will require sacrifice and cut backs and will hurt the us economy in the short run. Get your people to seek change. Seek those who speak of spending within our means and creating as part of that spending and budeting proposal, a fund to pay off the debt.
My family saves 30+ percent of our gross, but soon the tax man cometh!!! I am wanting in the present to beat inflation and the dollar devaluation. That is why I hired you. It is a very tough job. I recognize that. Do I want to make alot of money? Presently, in this economic environment, just beat inflation and dollar devaluation and give me more than I started after taxes… Time will tell if this can be done.
My suggestion – Get rid of all leadership of both parties…both Democrats and Republicans, and restore a value based set of leaders who will take hard positions. We can not give someone a benefit without taking a benefit away. Have your investment constituency read Ralph Waldo Emerson’s essay “Compensation”. We do not let people buy homes who cannot afford the cost. They rent until they have saved enough. They work 2 jobs. They get an education. They quit selling me on how hard their lives are. Everyone’s life is hard.
Mark