Obama Depression of 2011 Predicted :hold onto your hats.

[MikeNY]

http://www.marketwatch.com/news/story/well-great-depression-2-2011/story.aspx?guid=%7BB28B49B5%2DEFD1%2D4941%2DB57E%2 DA2BA1545BA09%7D&dist=morenews

Looks like the $700 billion Bailout might cost $5 Trillion plus another $1 trillion; for $6 trillion Dollars. Bailing out Freddie Mac and Fannie Mae in Jeremy Siegel's Opinion will cost $5 Trillion alone. The Big one is the unfunded Social Security and Medicare funds, Paul Farrell only puts that at $60 Trillion.

Deflation might be coming too, I'd recommend a diversiified Portfolio, and 10% to 30% in cash. Let's hope this does not hit.

[MikeNY]

We need to do several things, first is end Credit Swaps, they are really naked shorts and unregulated. That type of security is driving down the Market. They were once banned under the old Bucket Shop Laws. Credit swaps are driving Citibank Stock down to zero. http://en.wikipedia.org/wiki/Credit_default_swap

Secondly we need to change the CRA Community Reinvestment Act, mandate prudent business policy on loans. Giving subprime loans to unemployed poor people is insane, especially when they do not need to provide Identification or a Social Security Number, proof of emplyment or income and not just zero down, allowed finance of 110% of costs and allowed them to flip properties and abandon them, no one knows who the buyer's really are. This is where the Credit Crisis started. Once Fannie Mae and Freddie Mack insured (not really insured just used magic to make toxic mortgages look like AAA securities that were then bundled into tranches and sold to investors) and this might include 49% of US Housing. Cheap money to the poor fueled the Housing Bubble. It all came due at once; once bad loans could not be refinanced it is the tip of the iceburg.

Congress won't Investigate the Credit Crisis, because the Democrats caused the Problem, Obama played a Major role and the Republicans either rolled or joined in and helped. It would not be good for the USA if 49% of US Homes are in peril.The US needs Reform and I doubt either Party can do it.

[Andy62]

I really don't believe that the coming recession can be blamed on anyone individual or adminisiration. It is the result of production shifts that are the result of globalization and increased demand for energy on a world wide scale. A major factor has also been the increased use of leveraging or build up in debt globally that is unsustainable over time. As one expert observer said, "The world wide 20 year Ponzi Scheme is over."

http://www.sec.gov/answers/ponzi.htm

[revwally]

from the little that I have seen about Obama's plans on the economy...lower taxes for all (a change from campaign promises) and cuts in Federal spending. Sounds a lot like the economics taht comes from the Republican party.

Now if he would go back on his promises on Iraq (which was planned to be a jumping off point for Afghanistan) he might fulfill at least part of the reason I voted for McCain.

And he hasn't even taken office yet. I am convinced that on January 21st our major news sources will declare that the war is now won, and we are coming out of a recession/depression. The world will all be fixed.

Sorry for the sarcasm.

wally

[MikeNY]

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[MikeNY]

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[Andy62]

I would sound a word of caution. Believe me none of the experts have a clue of what is going on. In a sense I would challenge the theory that money doesn't go away. The financial istitutions create money through leverage. When collateral is deposited with a bank the bank in turn leverages that collateral by lending it out or creating other wealth using that as a back up. In the process the money turns over many times. In the most recent cycle the banks were leveraging as high as 40 times. The people receiving that leverage were in turn re leveraging it. There is also "the float" where money is in motion as it takes time for checks to clear, mail to arrive, or bills to be paid and the cycle goes on and on. Leverage is a great thing,but the whole world got into "the game" and when leverage reverses the results can be just as devastating as the results of positive leverage are beneficai. "Deleveraging" on a worldwide basis is what we are going through now and the whole process could take years. Governments and financial institutions tend to be very opaque and are highly noncommunicative, compartmentalized and bureaucratized-they are structured beauracies. They are very noncommunative internally and the only type of communication is top-down. The players within these organizations control with communication. In todays markets there is a great contraction of capital going on. Government and finanicial institution accounting is kind of a "shell game" because by the time any audit can be completed everything has changed. I am playing the game,but I have had years of experience with it and the risk tolerance of a buffalo. I have had many years of successful experience and currently I am not doing well. I am doing better than many of the big investors, however. The Governments are all trying new stuff and they don't know whether it will work or not . Believe me none of the big guys know what is going on and they will admit it. Unless you are an experienced player with as good risk tolerance this is no time to go back into the water. Sit on the sidelines and observe and learn. The markets will return to profitablity,but nobody knows when or what markets they will be.

[MikeNY]

Gordon we might be in a secular Bear Market, they can last 10 years or longer. Robberbus Gordon is right the rules have changed, markets will not be dependable cash machines. All the credit is deleveraging, and maybe we'll have deflation. Lets hope that they get us back inflation, it is easier to deal with. Gordon in six months I've seen my investments hammered, mostly the last several months.

The next shoe to fall will be the Hedge Funds, First Mortages, then Credit Cards and Auto Loans now the hedge funds are bleeding out money.

The Best estimate was for five trillion dollar loss for Fannie Mae and Freddie Mac, but that now seems outdated and those two will cost much more in the end.