Monday, May 29, 2006

The Pop and Drop Monetary Implosion

You are beginning to read about the coming bubble collapse, and the people forming corporations to buy distressed property that will come on the market, in the coming months. "We're going to get rich."

There is this concept that no one wants to accept; the collapse will not be a one-item event. It is all intertwined with the financial markets. This house of cards will fall. What will trigger it, is anybody's guess.

We can pretty well surmise that about 6 trillion dollars worth of house equity will evaporate. Credit card companies are going to be severely stressed. Bankruptcies could turn what could be a rather fast pop and drop into a slow pop and flop (in court).

All of the second trust deed holders aren't going to sit in a barrel waiting to be shot. They are going to discount their paper until there are no more buyers. At 20 cents on the dollar, it might be worth the risk of purchasing one or two.

At this point, when average homeowners need to raise cash, they are going to want to sell cars, plasma TV's, you name it. Now, Wal-Mart has a competitor that can undercut them. This is where the recession starts.

All of the Starbucks Coffee, fast food, high speed internet, cable TV will be paired down by families trying to save money. These items will slowly become less and less of an item of consumption.

Most economists see a rather dull forward projection of the economy; “Everything is great and gee there sure are a lot of houses for sale.” Its kind of like the two star crossed lovers in India on a ferry boat 10 years back, that decided to commit suicide. Everyone on board rushed to one side to witness the event, and the boat rolled over--a couple hundred people inadvertently joined the couple and drowned with them.

I think what can be agreed upon at the present time, is, there is no fear of what is about to happen. There is no perceived crisis. It's probably a good time to be looking for a life vest.


Anonymous said...

How can one really take anything you say seriously when your very first word is misspelled? It's YOU'RE not YOUR, sheesh!

Jim in San Marcos said...

I corrected it, You are write, I am a wousy speler

Thanks for the imput