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Global Economy… April 10, 2008

How we get these Future News Predictions

NOTARIZED PROOF

The global economy will be dragged down along with the U.S. economy.  (NEWS proof) Many other countries will be mirrors of the troubles in the U.S. and will follow in time.  The U.K. and other European countries all have the same problems as the U.S. due to the credit crisis.  Cheap money was not the answer to grow a global economy.  The plan should have been to reward people for saving money before they could borrow.  In previous years, you had to have a 10 or 20% down payment to get a mortgage.  You had to save up for your down payment before you qualified for a loan.  When people needed no down payment, nor even had to prove they were making money, the dominoes started to fall.  The greed and need to make easy money became a sickness.  Throughout the entire chain of greed, people could only focus on making quick money.  The home buyer saw that they could pay interest only and flip their home in 12 to 18 months for a huge profit

Then, they did it again, only with a more expensive house that they normally couldn’t have afforded.  This pattern drove people to not only get into houses they couldn’t afford, but to buy more than one. The mortgage brokers saw quick money as soon as they lay off the note.  The person who bought the loan then started looking for another person to lay the loan off to.  This chain of greed compounded itself as mortgage-backed securities flooded the world.  Now, people in the U.S. have no money saved, so the banks are short on lending capital, and the people can’t pay back what they borrowed.  At the same time, the housing price increases stopped.  Now, some home prices have dropped significantly, even though they may have doubled or more.  The day that people thought would never come, the day their mortgage adjusted, is here.  The defaults and write-offs that the lenders will experience is only at about 25 percent right now.  The credit crisis is only 25 percent over, despite what you hear on the news.  You will see that eventually, banks will write off almost a trillion dollars.(NEWS proof) Some banks will become insolvent during this process.  The banks that seemed strong could be gone tomorrow.  As this credit crisis spreads around the world, you will see the middle classes get wiped out.  More and more people will never own a home again, and will rent apartments, and live in mobile homes. 

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QUESTION: How come humanity keeps running from one bubble to the next?

ANSWER: The bubbles are created when the time is right for people needing to win the lottery in some way. Whether the lottery is tech stocks or housing or credit cards or commodities, it is another opportunity to get quick money without working for it. A person is more likely to put their last dollar in a slot machine thinking that they can make $10,000.

QUESTION: What will be the positive outcome for humanity from this ‘get rich quick’ mentality?

ANSWER: Only when people realize that money does not make you rich will they stop chasing false security.

QUESTION: How will the landscape of lending institutions change by the time this recession is over?

ANSWER: (NEWS proof) You will see some of the biggest names in the finance world become insolvent. The days of the member supported credit unions will come back. Smaller institutions and corporations will become the primary lenders. 

QUESTION: What large lending institutions will not survive this recession and what is the timing?

ANSWER:  (NEWS proof Citi-Bank is in peril. Merrill Lynch also. Try to imagine the most leveraged banks going out of business.

QUESTION: Is there going to be a run on the banks that cannot be protected by deposit insurance?

ANSWER: Deposit insurance will only cover a portion of what will be lost. The difference now from previous runs on banks is people had money in the bank to retrieve. Most people now-a-days don’t even have a savings account.

QUESTION: What happens when millions of people need to declare bankruptcy?

ANSWER: People will lose their jobs and then their homes. States will not have enough money to supplement these new homeless. The homeless population will quadruple, especially in cities that are warm most of the year.

QUESTION: Will all of the gains in home prices in the last eight years be erased in this economic recession?

ANSWER: No, the price to build a new home will be larger than the price to sell a home. The cost of building materials has tripled in the last five years.

QUESTION: How will the Mid-west, particularly Ohio and Michigan, fair during this recession?

ANSWER: Just as people flocked to Detroit for jobs when the auto industry took off, people will leave in masses to follow new jobs. Many will go to Canada for new jobs created in oil and mining. Others will move south for weather and other reasons.

QUESTION: What will drive the economy of the remaining people in these areas?

ANSWER: More jobs will be created in agriculture than over the last 20 years. Also, service and technology companies will survive. Manual labor to repair things will be a job in demand, as people will not be able to afford new things. If you have a steady job in a place that will not go out of business, you must keep it.

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