Inside one of those routine political polls — interviews with 1,006 Americans by Opinion Research Corporation for CNN on Oct. 3-5 with sampling error of plus or minus 3 percentage points — was this question …
As you may know, the U.S. went through a depression in the 1930s in which roughly one out of four workers were unemployed, banks failed across the country, and millions of ordinary Americans were temporarily homeless or unable to feed their families. Do you think it is very likely, somewhat likely, not very likely, or not likely at all that another depression like that could occur in the U.S.?
The results:
- Very likely, 21%
- Somewhat likely, 38%
- Not very likely, 29%
- Not likely at all, 13%
How would you answer this same question?
Chances now of another depression like the 1930s ...
Latest market meltdown news …
- Crisis pushes Dow under 10,000, 1st time in 4 years
- Three super banks to dominate O.C. lending
- O.C. ‘08 bankruptcies jump 93%
- Europe’s banks melting down, too!
- Subprime nation
- Orange County officials prepare for financial storm
- O.C. lawmakers explain their bailout vote. What do you think?
- Mortgage markets yawn at bailout
- OCTA out $228,000 after Wall St. bankruptcy
- County officials are worried about credit crunch
Now, those of you who read this book back in April 08 are probably pretty happy today since you are most likely out of the market and not losing a penny.
everyone has credit cards that let them buy things
a depression is impossible !
even though I sometimes agree with Schiff, we still have a long ways to go, to get to what he’s been predicting, and even a broken clock is right twice a day. so instead of trying to time the market, look for better opportunities that keep arising. if you have 30+ more years to go like me, being completely divested of stocks is not very enticing, and to take care of things like employer match one has to invest (even if it’s not in stocks). besides - this doesn’t prevent you from being diversified in bonds, metals, cash, RE, global equities. bottom line, which Schiff doesn’t mention, I am quite sure Warren Buffett is buying not selling
Goes to show you how objective these surveys are. Just a few weeks ago, majority of people polled thought their home values were increasing
Now majority is expecting a frickin’ depression.
What is it with people? The lack of reasoning is astounding.
People draw conclusions based on two stories they hear as opposed to earning the knowledge through their own research.
That’s what I tell our product engineers repeatedly - you earn the knowledge through research and the product is the reward. Just dancing on the coat tails of other people’s work gets you nowehere and these folks obviiously are doing so.
Ignorance is not stupidity - it also happens to be a sin in Buddhism.
It is a frame of mind that someone chooses. I just wish more OC residents would choose not to be.
it is good to know that nbi is well versed in buddism.
Depression likely? I thought were not even in a recession? Dang nabit.
Mav,
BTW I have no credit cards :).
I think a depression is posssible. Credit cards have limits. To get more credit will get harder once more people start defaulting on them. I seriously hope we are seeing an end to living beyond your means age. If it takes a depression to get us there then so be it. I think the sh** has finally hit the fan.
But hey maybe the government will rescue people from thier credit card debt too. This can only go on so far 2. Lets shoot for a 20 Trillion national debt.
This may be of interest to some of you:
http://calculatedrisk.blogspot.com/2008/10/q2-2008-mortgage-equity-withdrawal.html
….. poneeboy, i suspect, the sh** will really hit the fan….. when joe six pack, is in line at wallmart…. buying food for the family…. and his credit card has been de-activated….
…. deflation will certainly make those in debt scream uncle….
Puleeez don’t mention the broken clock gimmick about being right twice ( . .. .without also arguing that some famous superbear successfully forecast 27 of the last 2 recessions). Do these arguments have any merit at all, even rhetorically? Of course they don’t.
The facts are: our ‘booming economy’ of the last few years has been driven by consumer debt anchored on the (unjustified) anticipation that housing values would continue to increase. (Whew Hew!, We suddenly have $200k in home equity, we’re rich, lets get a HELOC and buy some stuff, plus some income property!). I think it is inevitable that a long recession is on the horizon. And what is a depression technically? The definition is a bit subjective, but “a year’s worth of negative economic growth” fits the bill. Personally, I think this situation is ‘in the bag’.
Don’t even start suggesting that Bears are permanently biased and don’t ever see the silver lining. I’m watching for it, but ALL INDICATIONS suggest that there are many other dominos about to fall. The housing momentum is gaining on the down-side. (And “NO”: the fact that people continue to buy houses in Santa Ana at $1.25 on the dollar is NOT a positive indication).
Depression likely? You bet. As the survey shows, 59% of the people are in depression, since they missed out on a multi-million dollar gain on a beach property. Ten years ago, many were saying CdM beach homes were too expensive at under 500K. They said the income levels can not support such high prices. Where did you people get your college degrees from?
Oh, by the way, I was just in Newport Bubbs…sorry. Did not mean to trespass.
Uh, anyways…did you all hear that B of A and Countrywide are going to adjust the principle balances on the sub-prime borrowers to 90% of the CURRENT appraised price if they qualify for their program? This is the first of many of these initiatives…fasten your seatbelts. Prime borrowers and Alt A will be included as well…just give it time. WAMU et al will surely follow…like the airline sheeple. Monkey see monkey do.
I was one of very few that predicted the lenders would begin capitulating and realize that they will have to do this in order to right the ship.
this is all just part of the biblical plan for man’s salvation.
Soon we shall all be issued a number that will let us get credit or not. Oh wait we already have that number, it is called a FICO score. Soon thought it will come to pass that those with less than a 666 score can no longer buy or sell.
Soon my friends. Soon.
Or it could all just be piling on with the gloom and doom. Who knows - Who cares? I don’t.
I am godalmighty and I approve this message.
bloodinthestreets: You do understand that to give any validity to “now is the time to buy,” all attempts to discredit anything bearish is required
Given the current events and the implications of what is about to happen - I believe that either 2700 people last month carefully accounted for the potential risks and have contingencies in place or we have a couple of thousand future whiners that thought being bullish was simply a permanent frame of mind of which they wanted to partake.
only fools would believe that a bearish investor is always bearish
a pure idiot would think that purchasing a home doesn’t warrant consideration of risks that investors would normally be concerned with - especially when they are borrowing money to do so
use of logic seems to be limited to Yankees (okay - I had to throw in some comic relief)
Mulli: what are the requirements?
OMG– mulliphony the great prophet —
a legend in her own mind– hey mulli
I got your adjustment right here–
the stock market was so impressed that
the dow fell below 10000
which is where it was 10 years ago… and
where real estate prices are headed to as well
I don’t know NBI…they have to be behind and they have to fit their program…heard it on cnbc sat. radio on the way home from bubbleville.
Sweet rants…more to buy. kiss kiss.
A depression is characterized by people waiting in long lines for food and shelter as was the case in past event. The only people waiting in long lines today are folks waiting to buy a $300 cell phone at the Apple store – go figure…………………
what would you do if you could not buy food in the grocery store, because of a lack of food, not money.
what would you do if there was no gas to buy?
what would you do if you turned on your faucet, but no water came out, flipped on the lights, but no electricity?
your neighbor comes over and cleans out your pantry, but no cops to call, or worse, your neighbor was a cop.
we could experience these types of shortages, distribution problems, security problems on a short term or long term basis if a depression era environment hits our modern society. it all depends on how the public reacts to the problems coming over the next few weeks/months. what was seemingly impossible a short time ago, is now a possibilty, a certainty, no, definitely a possibility. and things have changed so quickly in the last couple of weeks that main street is mostly unaware of the true risk/danger we face. that is actually a good thing, because what will bring us down is widespread public panic. so dont panic people when/if shortages hit!! :). and we may just make it through this with some hard times, and then some great opportunities for growth and making money!
Interesting how B of A and Countrywide are spinning (or perhaps that other article mis-represented) that THEY are adjusting mortgages or thought of some neat idea to “help” people when it is actually the 2008 Housing Recovery Act (Look it up on USA dot gov under US Financial Crisis) They are merely being part of it (which looking at their financial situation, doesn’t look like a choice).
Regarding hopping out of the market and being “fine” keep in mind that we in OC live in a different economic state than most and this is and WILL affect us ALL. bloodinthestreets was right - we’re already there… we didn’t have a “booming economy” we had low job demand, high productivity and every other market indicator pointing to recession YEARS ago (”anti-inflationary cycle” - Greenspan) with inflated home values and plenty of money to lend… so we went shopping. PS - No credit cards or a car payment here either … so not “everyone” will be living off of them. My money’s in the bank and invested…
rants is so prophetic that he sold way back in 2002… missing out on the 100% upside that occured between 02-06. His poor daughter has had to live in squalid apartment conditions for the past 6 years due to this horrible decision.
What’s your next prediction Nostradamus??
NBI is correct…stupidity is what is counted on by the elite.
Stupidity is what people like kb above preach…the soak in it.
There CAN NOT BE A SHORTAGE OF MONEY. We have a fiat system that allows us as a sovereign nation to produce money from thin air.
WITH THAT SAID…the injection into more debt like we did is absurd…anyone with a PHD in advanced macro economics can understand the fundamental inverse equation involved with FIAT based debt systems…riddle your mind with that for a bit…i will address the answer another time kids.
FIAT…Made up…FIAT…Made Up…get it???
My suggestion? Inject 1 trillion into the system today to hire US citizens to perform a micro focused audit of the FED and all of the wall street transactions…this gets real money into the hands of real people.
go ahead and talk to me about the VALUE of the dollar…BS…it is made up amigo…WHY is it STRONGER today against euro?
MADE UP. We could have taken the money they just approved and instead of paying foreign debt, it could have been used for domestic plans…FREE OF NEW DEBT AND ACTUALLY ENTERING INTO THE MAINSTREAM CASH FLOW…
The stupidity on so many blogs is staggering and it is truly amazing to see the simple minds barfing out rhetoric like they understand an ounce of the complexities involved.
IF WE HAVE A DEPRESSION, IT is because YOUR government WANTS you to have one…that is it folks…done deal.
No more creating unreal debt by black box entities that have no justifiable power.
Simply introduce some real money into a real system that goes to real people.
and by the way…THE GOLD STANDARD IS JOKE, do not buy onto that please.
we are too complex of a global economy for that…we need FIAT…we just need the right monkeys running the show…can we all say ‘Morals and Ethics Please’…
You rob a bank you get a stiff jail sentence, you rob the whole country and the world you basically get rescued. Viva America…….
The other crux of the problem is simply WalMart. If we passed the above mentioned 1 trillion dollar injection, the retards of the country would march to walmart and keep spending. that money is used to purchase good from china at very low margins…meaning not a lot stays with wallyworld and american people.
they pay as low as a company can, they admittedly hire the dumbest of the bunch.
hmmm, let me get this straight…we borrow money from the fed that is sold to china…we owe interest on the money…we take the money we borrowed to go to debt via credit to consumers…they use that to purchase goodies as wallys and it goes to china.
they have our debt plus the interest we owe them and the capital that they lent us right back…F’ ING GENIOUS.
ANOTHER LESSON IN MACRO ECONOMICS ON ITS WAY MY FRIENDS.
digdoug:
most genius are known to be crazy.
YOU ARE ONE OF THOSE!
As long as Repubublicans are in office we are going to have one recession after another. Same thing happened during Regan-Bush years. The wealthy got wealthier and the rest of us suffered through one recession after another and huge S & L failures that the gov’t. had to bail out. Now we are going through it again. Why people vote Republican is beyond me.
How could a president screw a country up so thoroughly in 8 years with so many obvious foolish blunders without doing so intentionally?
That’s what I want to know.
The subprime debacle was his final and most devastating act.
Mission accomplished.
Now he can retreat to his Crawford with that smirk on his face.
There is such a thing as a self-fulfilling prophecy. People talk about something as an inevitability enough, hear the doomsday talking heads predicting it’s coming (so they get to say they said it first) on the news 24 hours a day, and it can turn the tide.
I’m not saying we should all sit around with blindfolds on ignoring what is happening around us, but a positive outlook on life never hurt anyone.
Talk about self-fulfilling prophecy! Check this out:
Dig says: “The stupidity on so many blogs is staggering and it is truly amazing to see the simple minds barfing out rhetoric like they understand an ounce of the complexities involved. ”
Then Dig says: ” IF WE HAVE A DEPRESSION, IT is because YOUR government WANTS you to have one…that is it folks…done deal “
“59% say economic depression likely. Do you agree?”
I was leaning towards a depression until Leo was able to find 1 Ladera Ranch home that sold for 101% and Newport Beach doubled its sales from 1 to 2 homes.
There is one thing realtors are good for……..comic relief!
bloodinthestreets is my official queen of the ignorant at this point.
You qualify for the first statement you refer to and with regards to the second we have some simple facts:
debt was introduced by THIS government that increased our national debt by 3 in 8 years…THIS government DECIDES who will pay what debt…
how do you feel sending the taxes on your paycheck knowing that the ENTIRE IRS tax equivalent was just awarded to foreign interests by YOUR government?
You hope that enough of the right information being sent around will enlighten, but you can not EVER stuff enough good information into a dumb brain to make is smart…there is no correlation.
Gov. decides who will pay what debt. I agree that is occuring.
The notion that liquidity or ‘illiquidity’ dictates whether or not we have a recession . .. in my opinion, this is text-book foolishness.
As rants has wisely said:
“Never argue with a moron, they bring you down to their level, then beat you with experience.”
When people start an argument about apples, then yell about oranges . .. that’s my cue to sign-off .. . g’night !
I think it is possible. No one knows the actual value of the underlieing securities, Go online and look for “Credit default swap”.
http://en.wikipedia.org/wiki/Credit_default_swap
This should scare you.
liar loan - I sold in sept 04 and thank my lucky stars
everyday that I did- you may now go back to your
overpriced value dropping stucco box condo and
watch wheel of fortune- TA TA
ocobserver: the subprime debacle was created by the Clinton administration in the mid 1990’s.
The debacle was exacerbated by Wall St. investment houses from 2004-2006.
He who controls the money controls the business. Wall St. got drunk on these loans…sold them with reckless abandon, and continued to buy more. If they stopped, lenders would have put on the brakes, and consumers would have been forced to accept those terms from underwriters. It really is that simple.
A depression is already in the working. Credit is hard to obtain presently and it will only get more difficult to get any kind of credit in the near future. The bailout is a sham that will only “bailout” the gigantic financial institutions from some of their self-created hardship. It will not effect the little guy in the slightest. The banks may be able to salvage some of their investments or the assets but the consumer is screwed and will still lose their home. Why? Because the loans that were given were over the appraised values of the homes and even those values were artificially inflated. This recession is only beginning and a depression is more than likely. Hold on to you hats. Were in for a rough ride.
This is some scary stuff.
Mulliganville Says:
October 6th, 2008 at 9:26 pm
“ocobserver: the subprime debacle was created by the Clinton administration in the mid 1990’s. ”
OK….
“The debacle was exacerbated by Wall St. investment houses from 2004-2006.”
What? You disappoint me. I was expecting the blame to fall on Clinton, Carter, Obama, or any other democrat. It’s OK to blame them, but not a Republican administration.
Mulli that statement above re: adjusting loans that are 90%
sounds silly to me. After the drop in the Market price of homes
just how many will fit that requirement? Now I know why your attacked so much! I will not attack but that plan sounds ridiculous
as far as helping the market. And I know what your goin to say
just reporting the news. Thanks
Price of bad tidingd I found the same info as you.
And your absolutely right. Anyone who follows this
and researches this out will come to the same conclusion.
Sorry mulli I reread your statement.
Got it.
Well looks like republicans will finally be gone as a party for good, check the polls obama will raise capital gains taxes here comes the mother of all stock market crashes. Real estate will continue to fall off a cliff as far as prices, earlier this year dow jones 14k just went under 9k all in one single year to make things worse henry paulson hijacked the financial system and bailout hes old buddys.
rants-
It’s true that I live in a stucco box. The area of huntington I live in would cost me more to rent a comparably sized unit than my current monthly outflow. My family loves the area we live in.
As for the value dropping, it’s true that on paper our condo has dropped quite a bit, but I don’t plan on selling for a very long time. In fact this is the first property of the eventual real estate empire I will own. In two years, we’ll buy #2 at market bottom. This time a SFR for us to live in while we rent out the condo. Like I said, we’ll get more in rent than our monthly outflow, so to me there is no loss on this deal.
And anyway, I’m more of a Jeopardy man. And you’re more of a mixed martial art fan which says something about you too.
# Jimmy2 Says:
October 6th, 2008 at 2:44 pm
“Ten years ago, many were saying CdM beach homes were too expensive at under 500K. They said the income levels can not support such high prices. ”
Who said this? You’re not trying to use this as evidence or reasoning that housing values in CdM won’t fall over the next few years, are you?
EDFROM PASADENA Says:
October 7th, 2008 at 2:19 am
“Well looks like republicans will finally be gone as a party for good, check the polls obama will raise capital gains taxes here comes the mother of all stock market crashes. Real estate will continue to fall off a cliff as far as prices, earlier this year dow jones 14k just went under 9k all in one single year to make things worse henry paulson hijacked the financial system and bailout hes old buddys”
No, look for the Democrats to suffer the same hubris and corruption that drove the Republicans out of power 2 years ago. See Mully, I am truly fair and balanced.
What, the stock market is already crashing because of an unelected candidate? It doesn’t have to do with over-leveraged institutions and slower consumer spending?
Price of Bad Tidings Says:
October 7th, 2008 at 11:25 am
“No, look for the Democrats to suffer the same hubris and corruption that drove the Republicans out of power 2 years ago. See Mully, I am truly fair and balanced. ”
Whats that saying? Power corrupts and abosolute power corrupts absolute. It realy doesn’t matter which party gets in as long as there is no real change in spending and debt by government and us citizens, this country is screwed.
What are the consequences of an economic depression, like the one read about in the 1930s.
Eg. If I have 100 000 us Dollars in a savings account. Will this be withheld, taken away or I will not have access to this?
Eq 2. Say I have a Mortgage bond with an access finance option. That is I have deposited extra cash in the Morgtgae of ver the years. Will I be abale to draw the funds out?
P.S. I am a south African citizen.
Ram
Ram-
Deposits are now insured up to $250,000 so your savings should be fine.
I’m not aware of the mortgage bonds that you speak of. That doesn’t sound like a common financial product in the US. The best idea would be to ask the financial institution that sold you the product.
Here is an article about the fed chairman during the time of the Great Depression and what he thought caused it. The same thing is happening again for the same reasons. Please read:
In Review: America’s Most Egalitarian Banker
Marriner S. Eccles, Beckoning Frontiers: Public and Personal Recollections. New York: Alfred A. Knopf, 1951.
At the start of the Great Depression, Marriner Eccles hardly seemed someone who might lead a charge against the economic orthodoxies that justified grand hoards of private fortune. By the early 1930s, after all, the Utah-born Eccles had become the top banker in the Mountain West, the organizer of the first multibank holding company in the United States.
But Eccles had also come to understand, after watching the great speculative bubbles of the 1920s pop into massive misery, that prosperity — to endure — needs to be shared. Eccles began speaking out on that theme, shortly after the Great Depression began, and soon caught the attention of the early New Dealers.
In 1933, Eccles would become an assistant secretary of the treasury. A year later, Franklin Roosevelt would appoint him to the Federal Reserve Board. He would become Board chair in 1935 and remain in that central position for the next 13 years. No one individual, over those years, had more of an impact on economic policy in the United States.
Looking back on those years, in his 1951 memoir Beckoning Frontiers, Eccles would do his best to explain the impact he set out to make. Mass production, he noted at the outset, demands mass consumption, but people can’t afford to consume if the wealth an economy generates is concentrating at the top.
In the years leading up to the Great Depression, that concentrating was accelerating. A “giant suction pump,” charged Eccles, “had by 1929-30 drawn into a few hands an increasing portion of currently produced wealth.”
“In consequence, as in a poker game where the chips were concentrated in fewer and fewer hands,” Eccles observed, “the other fellows could stay in the game only by borrowing. When their credit ran out, the game stopped.”
Sound familiar? The decade of the 1920s that Eccles describes in his 1951 memoir comes across today as eerily familiar. Then as now, the U.S. economy was floating on a sea of debt.
Then as now, inequality was hollowing out the nation. Eccles put the matter bluntly: “Had there been a better distribution of the current income from the national product — in other words, had there been less savings by business and the higher-income groups and more income in the lower groups — we should have had far greater stability in our economy.”
How would Eccles have reacted to our current debt-ridden, war-torn economy? We can’t, of course, know for sure what Eccles would do. But we do know what he did. In 1942, during World War II, a high-powered team of New Deal officials that included Eccles proposed to President Roosevelt that “a ceiling of fifty thousand dollars after taxes should be placed on individual incomes.”
In our current dollars, this $50,000 ceiling would equal about $700,000. What did FDR do with the Eccles proposal? He turned around and asked Congress to place a 100 percent tax on all individual income over $25,000.
Congress would eventually set the nation’s top tax rate at 94 percent on all income over $200,000, and that top tax rate would hover around 90 percent for the next two decades, years that would see the greatest period of middle class prosperity in U.S. economic history.
In 2005, the latest year with statistics available, America’s leading hedge fund managers and the rest of the nation’s top 400 income-earners faced a top tax rate of 35 percent. They actually paid, after loopholes, just 18.2 percent of their incomes in tax.
Marriner Eccles would not approve.
Stat of the Week
In the two decades between 1986 and 2005, America’s top 1 percent of taxpayers saw their share of the nation’s income jump from 11.3 to 21.2 percent. Over those same years, the federal income taxes the top 1 percent paid dropped by an equally stunning margin, from 33.13 percent of total personal income in 1986 to 23.13 percent in 2005, the most current year with IRS stats available. Taxpayers needed to report at least $364,657 in 2005 to enter the top 1 percent.
About Too Much
Too Much is published by the Council on International and Public Affairs, a nonprofit research and education group founded in 1954. Office: Suite 3C, 777 United Nations Plaza, New York, NY 10017. E-mail: editor@toomuchonline.org