Monday, March 12, 2007

What's in a Year?

This blog's title "the Great Depression of 2006," has come under some criticism from a few people who suggested that I change the year in the title, since it "Didn't happen in 2006."

Most of what I have been addressing, is what is not apparent at the present, but will be visible at a later time in history. The Depression or Severe Recession that we are entering is not an obvious place in time with an entry point and an exit point. If you buy the concept, we're IN and going DEEPER.

No one, in 1929 even knew they were in a depression. It's referred to as the depression of 1929 because of the stock market crash. From a historical point of view, it probably started with the hurricane season in 1928 that wiped out Florida's land speculators. It wasn't until 1931 and 1932 that people of the time saw the depression for what it was.

History never really repeats itself by going full circle, it more or less analogous to a spiral that when looked head on is a viewed as a circle but when viewed from the side it looks like a coiled spring. There is similarity to the past cycle but yet a little bit of difference. Time would represent the length component of the spring.

One gentleman suggested that I change the year on my blog every year until I get it right. I guess that perception is the real issue here, 2006 is where I peg it.

36 lenders have just bit the dust and the 100% loan is gone. Congress didn't have to act, investors just refused to buy the 100% loans. Isn't it a little like credit card debt? No questions asked just sign here and spend? They're probably the next problem child. We're at the top of the roller coaster and just beginning the first downward roll. Oh goodie!! I only told you when the ride started, so hold on!

What's in the drop on the way down? Maybe a bank failure from credit card debt, or a hedge fund collapse. Go out and shoot 36 lenders and claim no collateral damage, you're either blind or selling into this mess. We are well on our way to our California foreclosure prediction of 20,000 units for May 1. That would be a double from February 1. It could happen as early as April 1 with present data plotted.

It looks like a lot of what we are watching is accelerating. The speed is picking up. It doesn't quite give you that warm and fuzzy feeling (every muscle is taunt). Panic is in the air. Enjoy the ride!


Anonymous said...

Hey Jim,

I enjoy your posts, and visit often. I agree totally with your thoughts about where we are headed. In fact, my wife originally found your site and told me about it, telling me that you sound just like me. I'm sure you've gotten some flak from people over the last couple of years. We were told by just about everyone that we were stupid and crazy to sell our house when we did in order to rent and ride out this crazy phenomenon. We were told that we would be priced out forever, and never be able to buy a house again here in San Diego. We sold at the top of the market, put our equity away and are enjoying watching everything unfold just as we thought it would.

Anonymous said...

Hi Jim,
I enjoy your posts and appreciate your hard work. I rent in Los Angeles and am waiting it out ... whether it be the Great Depression of 2007, 2008 or 2009. From the looks of things, it's accelerating quickly but will take a while to get through the red tape. Keep up the good work!

Jim Driscoll said...

While 1928 was probably the start of the great depression, the land value collapse started in 1926 (or so I hear). It was primarily driven by a land price bubble, and the loss of capitol to the banks floating ballon loans (old time option arms :-) was probably one of the big contributing causes to the collapse.

Sound familiar?

Jim in San Marcos said...

Hey Trouble Loner

Thanks for the comments, most of my relatives are still gloating at me with their million dollar homes.

My grandfather on my mother's side, told me that never try to get rich unless you want to be broke for the rest of your life. Its not how much you earn, its how much you get to keep.

My grandfater on my fathers side owned 5 pieces of Flordia swampland when the bottome fell out of the market it 1927. My grandmother never let him forget it.

I think we may get in the last laugh.

Jim in San Marcos said...

Hey Jim D

I googled up a few blurbs on the Florida land bubble and you're right, it collapsed in 1926. So those guys were dead in the water three years before it hit everyone else

Thanks for info--history kind of runs together sometimes and gets overlooked.