TheCatSite.com › Forums › General Forums › IMO: In My Opinion › How much worse is it going to get?
New Posts  All Forums:Forum Nav:

How much worse is it going to get?

post #1 of 22
Thread Starter 
Cities Deal With a Surge in Shantytowns

Quote:
Like a dozen or so other cities across the nation, Fresno is dealing with an unhappy déjÃ:censor: vu: the arrival of modern-day Hoovervilles, illegal encampments of homeless people that are reminiscent, on a far smaller scale, of Depression-era shantytowns. ...
While encampments and street living have always been a part of the landscape in big cities like Los Angeles and New York, these new tent cities have taken root — or grown from smaller enclaves of the homeless as more people lose jobs and housing — in such disparate places as Nashville, Olympia, Wash., and St. Petersburg, Fla.
Tent cities pop up in small towns as well as big

US tent cities highlight new realities as recession wears on
post #2 of 22
I am getting scared, really, I am. People are getting so, very, very angry.
post #3 of 22
They really have little choice since we are so against socialism. We don't have a safety net in this country. No one will step up and take care of them. They will have to ride it through and hope that the economy recovers.
post #4 of 22
I heard an interview with one of the residents of the Sacramento tent village that contradicts this part of the article:

Quote:
Many of the 200 residents of Sacramento's Tent City, as with those around the country, are not recent victims of the downturn: They are the chronically homeless, some of them mentally ill.
The person had been a welder that lost his job last year, then his house a few months later. He claims that this tent village grew from about 3 people a year ago to around 400 today. They are not the chronically homeless, and the majority are victims of the downturn. Every time he has applied for a job, he's been declined because he can't provide an address since he is technically homeless. He can't figure out how to get out of the condition that he is in.

And Arnie is going to spend $1M for additional accommodations for 200 people? That doesn't even handle the ones already homeless, let alone those that continue to fill these types of settlements.

I see it getting worse before it gets better. Until we can get unemployed people back to work, what options do they have?
post #5 of 22
Employment always lags. There've been some positive economic reports lately. I think we're getting near the end. It's typical that the turning point is reached at the point of maximum pessimism. (Think about it)
post #6 of 22
Quote:
Originally Posted by coaster View Post
Employment always lags. There've been some positive economic reports lately. I think we're getting near the end. It's typical that the turning point is reached at the point of maximum pessimism. (Think about it)
I really hope you are right.
post #7 of 22
Unfortunately, that doesn't help people without jobs.

I've seen this happen before. Companies are so short-sighted. Tough times come and their first reaction is to slash costs by letting people go. The people let go are their best assets; the brains of the company, if you will. It's not the executives that make the company run, it's the employees in the trenches, and when they go, with them goes a lot of knowledge of what made the company successful. Then when the economy starts picking up, suddenly they need more warm bodies, but at that point that's all they're getting because the brains have gone off and gotten jobs somewhere else, or else won't come back to work for what the company can pay the rookies.
post #8 of 22
I remember seeing tents like these in Greece several years ago, and i honestly couldn't believe that people lived like that. In certain areas in the UK we have Gypsy's living in caravans in fields, but their always moved on, but at least their homes are solid and warm
post #9 of 22
You don't want to know what I think.

Tim - unemployment lags. But new jobless claims lead.

A MetLife study released March 9 said that 50% of Americans are two paychecks away (one month) from not being able to meet their financial obligations. 28% are one paycheck away from not being able to meet their financial obligations: http://www.metlife.com/about/press-r...l?compID=12452

The median price of a home in dowtown Detroit sold for $7,500. Yes. Seven thousand five hundred dollars.

Elkhart, Indiana passed a law limiting garage sales to one per month back in October.

In the U.S., average weekly hours worked was 33.3 hours in February - the lowest level recorded since the Bureau of Labor Stats began calculating the data.

Family wealth ("net worth") has fallen 22.8% in 18 months - again, the fastest decline since the Federal Reserve began collecting the data in 1952.

Home equity to after-tax income has dropped to 74%, the lowest level since Sep 1967, and home equity as a share of home values dropped to a record low of 43% in December. Also as of December, 20% of the homes in the U.S. were in a position of negative equity (meaning the value of the house is less than the mortgage owed on it).

861,664 families lost their homes to foreclosure in 2008. And don't forget - that includes the prevention programs and foreclosure moratoriums by several firms and Fannie Mae and Freddie Mac. The number of families that lost their homes to foreclosure in January was 72,694, and in February it was 121,756.

We haven't even really begun to deal with the coming commercial loan delinquencies. And, of course, credit card delinquencies are rising.
21 banks have failed in the U.S. so far this year. (That compares to 25 for 2008).

We figure there's another $1.5 - $2.5 trillion that's going to be needed.

I don't remember who said it, but someone put it like this: The government has been responding to the current financial crisis like it is a mildly ill patient, when in fact, it is gravely ill, and if appropriate action isn't taken, it will become terminal.

Laurie
post #10 of 22
Quote:
Originally Posted by LDG View Post
You don't want to know what I think.
Sure, I do!!

What would constitute "appropriate action" from your viewpoint?
post #11 of 22
Honestly, I don't know what fixes it. We've destroyed our balance sheets over several decades - it can't be fixed in just a couple of years. What brought us out each recession since we've become a service-based economy is consumer spending (again, reminding everyone that 70% of our current GDP is consumer spending). Consumers AND corporations need to clean up their balance sheets now, and that just won't take a year or two.

When the California housing market collapsed, it took over a decade to recover. This is on a global scale. And while governments around the world are taken concerted action - we still feel it's like putting a bandaid on a severed leg or something.

Things that have struck me as good ideas from other people:

Raise social security benefits (helps seniors hurt by fall in home prices, loss of dividend income from retirement assets, and the dollar's purchasing power);

Something that would never be considered: A payroll tax holiday. Puts money in people's pockets immediately.

Rather than buy the toxic assets from the banks, put a moratorium on foreclosures and have the government buy homes from the homeowners who have no hope of making their mortgage payments.

Obama's admin is into the infrastructure spending - great, but those are projects that take a long time to get going and address a specific segment of the workforce. Perhaps the government should consider investing in other kinds of proects/industries

Seven states have double digit unemployment rates right now. I'd have to go look up the number - but quite a few states' unemployment funds are insolvent or close to it.

The FDIC's fund stands at less than $20 billion right now - they've had to raise fees for their insruance to keep the fund solvent - this is a vicious circle, because it hurts "borderline" banks. The FDIC says last years' 25 bank failures "drained" its funds - we've already had 21 bank failures year-to-date.

The markets got really excited when Geithner outlined how they're actually going to use the TARP money to fix the banks (buying the toxic assets). The problem, however, remains the same - the gap between what the banks says their assets are worth and what the market says they're worth. If the government buys the toxic assets at a higher price than the market says those assets are worth, the taxpayer eats the bill. Theoretically, if a bank plans to hold the loan to maturity, it can keep it on the books at 100 cents to the dollar. Anything else means some kind of writedown - so we think there's another round of bank write-downs and/or failures coming.

In the fourth quarter the U.S. economy - the global economy - fell off a cliff. Clearly recent numbers indicate the rate of fall is slowing. But while so many want it to mean we've hit "the turn," we think all it means is the rate of fall has slowed down. Economists are so used to thinking that if we fell off a cliff in a "V" - then we recover in a "V". We think we're in totally uncharted waters.

Don't forget - Eastern Europe is falling apart, and Western Europe doesn't want to bail them out.

I went back through our morning notes for the past two years. In the second quarter of 2007, "everyone" was talking about having hit the bottom in the housing market. Even then Gary was saying he thought prices had to come down to at least 40% off their peak and we were still shorting the builders and the financials. We still aren't there YET, and housing starts, with that exciting headline of "Housing Starts Surge 22%" on March 17? Housing starts were at a (seasonally adjusted annual rate) of 483,000. OOOOOO - it was the largest percentage gain in 19 years. Wow, is THAT exciting or WHAT? Yeah, well, when everyone was hoping we'd finally hit bottom in the 2nd quarter of 2007, housing starts were at 1.45 million.

So can things get worse? Yes. Because even back in 2007, most economists didn't think it was going to get much worse.

Everyone turns to "China." Of course, the problem with The People's Republic of China is that they can just make up numbers. Happy to write about the problems with that if you're interested. But the government in China reports a 4% official urban unemployment rate. Notably, The Chinese Academy of Social Sciences says that rate has actually reached 9.4%. And China has about 130 million migrant workers, accounting for about 10% of the total population. It is estimated that about 20 million of them have no jobs to return to. Police are deployed at train stations in many areas - because they return to jobs that aren't there, and the facilities provided to them to live in are not available.

The most telling number when watching China is electricity output, because that's the closest thing to a "real" guage of actual economic activity there is. China's power consumption fell 13% in January. That's a misleading number - because so much of China's power is not produced "on the grid," so to speak, but by generators not included in the number. But for the GRID power to be down that much, the anecdotal number indicating a fall off in production is much, much higher.

I've written before, and I'll write it again. We are going back to an era where there will be more tent cities, and there will be "bread lines" and soup kitchens. I'm just glad we live on a farm in an area where there are many natural resources.

Laurie
post #12 of 22
Unfortunately it will get worse and worse. More people out of jobs, more disasters with weather, etc.

The more the government tries to fix things, the worse they get. They want to play the "give away games" and its the taxpayers there are funding the bailouts, welfare, etc.
post #13 of 22
Laurie, you've got some really good ideas there. Have you sent them to your legislators?

On the news the other day I heard that Social Security benefits will be frozen for 2010. There was a larger than usual increase for 2009 -- 5.5% if I remember right. So freezing for one year will bring the SS COLAs down to the usual 2.5% or so.

My chiropractor suggest the payroll tax holiday, too. That benefits both employers and employees alike.
post #14 of 22
I'm not nearly as up on the economic world, nor do I understand it all, as well as Laurie and Gary, but I do agree with them completely.

I'm not trying to turn this into an Obama bashing thread, but he is President and it wouldn't matter who was President who was pushing this agenda, this would still irk me. It irked me when Bush pushed the 1st TARP so fast it wasn't thought out too.

We were in the "greatest economic disaster since the Great Depression" when he was pushing for the stimulus bill passage so fast that no one, not even Congress, knew what was actually in it. We were all just supposed to trust him that it would work, even though HE didn't even write it. After it was passed (OK, a couple weeks after), all of a sudden it's "not as bad as we think". Um, what? Oh yes, and "the dollar is unbelievably strong" (I may have the wrong adjective, but it's something similar). I'm not an economist, and I know that it's probably as bad or worse than we think, and the dollar is getting weaker by the minute with all the deficit spending that is going on!

It also irks me to no end that Obama and Congress are spending without scrutiny right now, and frankly in ways that I really don't feel will do anything for the overall economy, and yet at this horrible economic time they want to raise corporate and energy taxes. Um, who do they think employs people? And who do they think is going to pay for the tax increases? It won't be the companies - they will pass the increases on to the every-day consumer. So even though they are saying that they aren't raising taxes on the middle class, the middle and lower income families are going to be hardest hit. I don't understand how they don't understand that!!!
post #15 of 22
I think it should be understood that all the leadership, Geithner and Bernanke included, are feeling their way in the dark. This is NOT the same as the Great Depression, though we can certainly learn lessons from that experience and try to not repeat the same mistakes (like raising taxes.) But we can't assume they know what they're doing because the simple fact is that they don't have all the answers; they're learning as they go, experimenting with our economy, and we are the guinea pigs.

Obama is relying on the expert advice of his cabinet and his advisors. I made the point in another thread that they're all students of the Keynesian school of economics, and that if it's Keynesian economics that got us into this mess, it might not be the best economic model to get us out. I'm just saying, what if all his advisors are telling him the same thing and they're all wrong.
post #16 of 22
It's going to get a lot worse. I drive places and see all the houses for sale and manyof them are empty. Businesses are raising prices just to stay in business but then again, I know I spend less b/c of the raised prices. So not sure what will happen. We're going back to a way of being more self sustaining with our food. It's a start.
post #17 of 22
Quote:
Originally Posted by coaster View Post
But we can't assume they know what they're doing because the simple fact is that they don't have all the answers; they're learning as they go, experimenting with our economy, and we are the guinea pigs.
I don't think there is a single person or group of people in the world that know exactly what to do. We've never been in this situation before and it is going to take trial and error to work out of it. I'm angry at the years and years of failed policies that got us here.
post #18 of 22
I see a few signs that we might be close to the bottom. You never know, of course. One wag said that if you laid all the economists in the country end to end, they'd still all point in different directions.

And when it comes to academic economists, they have no incentive to be conservative in their predictions. They make wild prediction on purpose, because being correct just once is enough to make their reputation for the rest of their lives. How would you like to be the economist who predicted the crash of 1987, or the current one? You could write your own ticket for the rest of your life...provided that you had made the prediction specifically enough, and loud enough to be carried in the newspapers, on TV, etc. So that's why you see them working so hard to get in front of the cameras.
post #19 of 22
Quote:
Originally Posted by mrblanche View Post
One wag said that if you laid all the economists in the country end to end, they'd still all point in different directions.
I like that!! That's even better than Ronald Reagan's quip about wanting to find a three-handed economist because all the others always told him "one the one hand this......and on the other hand that......"
post #20 of 22
Quote:
Originally Posted by mrblanche View Post
I see a few signs that we might be close to the bottom. You never know, of course. One wag said that if you laid all the economists in the country end to end, they'd still all point in different directions.

And when it comes to academic economists, they have no incentive to be conservative in their predictions. They make wild prediction on purpose, because being correct just once is enough to make their reputation for the rest of their lives. How would you like to be the economist who predicted the crash of 1987, or the current one? You could write your own ticket for the rest of your life...provided that you had made the prediction specifically enough, and loud enough to be carried in the newspapers, on TV, etc. So that's why you see them working so hard to get in front of the cameras.
Good point!
post #21 of 22
One good way to judge the economy is by trucking. It has been way down, starting over a year ago. Several large companies (such as Swift) have been in serious trouble, and all the big fleets have cut their truck numbers. I'm not in that arm of trucking (48-state irregular route common carrier) any more, but I can judge a little bit by how many new trucks I see in those fleets, and how busy the truck stops are at night. I wouldn't say we've seen a major upswing, but it doesn't seem that the companies are cutting as much as they were, and some are even beginning to hire a little.

This isn't very scientific, but I had several friends who took my advice back in 1999 when that one hit, and sold out a lot of stock just before the 25-50% decline back then.

I have been buying stock.
post #22 of 22
Thanks for sharing that info, Mike, it's really interesting! I hope you're right.

Laurie
New Posts  All Forums:Forum Nav:
  Return Home
  Back to Forum: IMO: In My Opinion
TheCatSite.com › Forums › General Forums › IMO: In My Opinion › How much worse is it going to get?