The discussion has been whirling about for two years concerning our economy and the effect of housing bubble. The evidence is mounting daily and playing out the in US stock market the past several weeks. The high yields with out risk mentality has all but vanished. A lot of players and hedge fund guys got a major whooping these past weeks. The denial of spread sub prime disease has permeated into the financial markets and banks with disasterous results.
I hope the average middle class Joe realises that it is not a good thing when the fed has to infuse billions into our banking system and the prez has to go on television twice in one month to assure the economy is stable. We are in trouble folks. Those who have leveraged their home equity and carry high debt are the first victims the rest of us who didn't live above our means will also suffer indirectly. The coming credit crunch and banking weakness will affect consumer spending or 2/3 of the economy. If that is severe and we have a dismal holiday season then unemployment will follow. With a low saving rate as a country and high debt americans are going to feel severe financial pains.
Even the global economy is feeling our sickness as they bought a lot of the securatized bad mortgage debt. Eventually these emerging economic powers will not want to support our debt and they will support their own currency and not our dollar. Personally I'd avoid making any major purchases until there is clearer evidence where the US is heading. The spending binge california has been on is coming to a major slowdown. A great number bought homes larger than they could afford and new vehicles two of the largest liabilities for an individual.
We have have foreclosures looming on the horizon so vast nobody will believe it. The game going forward should be keeping a job that pays decent and paying off debt and living spartan.
If you are fortunate enough to have some cash reserves or saving keep it in safe investments such as CD"s, MM accounts, ect. Or invest in the euro or gold coin or bullion. Keeping ones head above water during the coming years will be crucial to economic survival. Most of us born post WWII have never experienced a true depression scenario like our grandparents. I will say that that generation even when they prospered later in life never spent like they could. It changed them forever and I fear I will witness the same in my lifetime.
