Roubini on the current economic situation, with predictions

[peterb]

I’ve never seen anything like this in my 50 years on this planet. I hear a lot people talking about buying a house right now because it’s PITI costs are equal to rental costs, or it’s down 40% from it’s peak, etc…. All these ASSUMPTIONs about this market are that it will be static are dangerous at this time, IMO. This aint your 1990 recession. The odds of job loss in the next 2 years should be carefully considered by everyone. And that rents could decrease as well. The odds of a true 0% CPI in the next 6 months are now very good due to the huge commodities price drop in the prior 6 months.

Stay liquid and lower expenses to the bare minimum. I dont even know that debt is such a big deal since one could not pay it off and all that happens is that you lost your credit rating. Oh well, how’s that going to matter when there’s no money available anyway or your unemployed. If I had a HELOC, I’d think about draining out the cash and then wait to see how things go. At least you’d have the money if things really went sour. Credits going away. Might as well get what you can if things look really bad in the near future.

I know this sounds pretty tin-foil-hat in nature. But if you look at the magnitude of the problem, I dont see how payback will not be a beotch for the immense credit abuse of the last 10 years or more.

[LA_Renter]

peterb

What you are saying does not sound too tin-foil-hat to me. Now I would have probably thought so last year. But in light of what we are seeing unfold before us I don’t think so now. It’s this statement that stands out

“But if you look at the magnitude of the problem, I dont see how payback will not be a beotch for the immense credit abuse of the last 10 years or more.”

Now look at this chart that was posted on BigPicture concerning the tally of Federal Rescues.

http://bigpicture.typepad.com/comments/files/marsh-1260×1681.jpg

Lets all sit down and think about this for a minute…………we are witnessing an unprecedented shock to the global financial system….Period. Wo do not yet know the ramifications of this event on the real economy bailout or no bailout. Everyone of us from the posters on this board to halls of congress, to the federal reserve and the treasury dept are sailing in totally uncharted waters. Please do not underestimate the gravity of the situation we face. This is not the time to make rosy assumptions about ones prospects for current or future income. My advice is to let the dust settle.

[LA_Renter]

peterb

What you are saying does not sound too tin-foil-hat to me. Now I would have probably thought so last year. But in light of what we are seeing unfold before us I don’t think so now. It’s this statement that stands out

“But if you look at the magnitude of the problem, I dont see how payback will not be a beotch for the immense credit abuse of the last 10 years or more.”

Now look at this chart that was posted on BigPicture concerning the tally of Federal Rescues.

http://bigpicture.typepad.com/comments/files/marsh-1260×1681.jpg

Lets all sit down and think about this for a minute…………we are witnessing an unprecedented shock to the global financial system….Period. Wo do not yet know the ramifications of this event on the real economy bailout or no bailout. Everyone of us from the posters on this board to halls of congress, to the federal reserve and the treasury dept are sailing in totally uncharted waters. Please do not underestimate the gravity of the situation we face. This is not the time to make rosy assumptions about ones prospects for current or future income. My advice is to let the dust settle.

[LA_Renter]

peterb

What you are saying does not sound too tin-foil-hat to me. Now I would have probably thought so last year. But in light of what we are seeing unfold before us I don’t think so now. It’s this statement that stands out

“But if you look at the magnitude of the problem, I dont see how payback will not be a beotch for the immense credit abuse of the last 10 years or more.”

Now look at this chart that was posted on BigPicture concerning the tally of Federal Rescues.

http://bigpicture.typepad.com/comments/files/marsh-1260×1681.jpg

Lets all sit down and think about this for a minute…………we are witnessing an unprecedented shock to the global financial system….Period. Wo do not yet know the ramifications of this event on the real economy bailout or no bailout. Everyone of us from the posters on this board to halls of congress, to the federal reserve and the treasury dept are sailing in totally uncharted waters. Please do not underestimate the gravity of the situation we face. This is not the time to make rosy assumptions about ones prospects for current or future income. My advice is to let the dust settle.

[LA_Renter]

peterb

What you are saying does not sound too tin-foil-hat to me. Now I would have probably thought so last year. But in light of what we are seeing unfold before us I don’t think so now. It’s this statement that stands out

“But if you look at the magnitude of the problem, I dont see how payback will not be a beotch for the immense credit abuse of the last 10 years or more.”

Now look at this chart that was posted on BigPicture concerning the tally of Federal Rescues.

http://bigpicture.typepad.com/comments/files/marsh-1260×1681.jpg

Lets all sit down and think about this for a minute…………we are witnessing an unprecedented shock to the global financial system….Period. Wo do not yet know the ramifications of this event on the real economy bailout or no bailout. Everyone of us from the posters on this board to halls of congress, to the federal reserve and the treasury dept are sailing in totally uncharted waters. Please do not underestimate the gravity of the situation we face. This is not the time to make rosy assumptions about ones prospects for current or future income. My advice is to let the dust settle.

[LA_Renter]

peterb

What you are saying does not sound too tin-foil-hat to me. Now I would have probably thought so last year. But in light of what we are seeing unfold before us I don’t think so now. It’s this statement that stands out

“But if you look at the magnitude of the problem, I dont see how payback will not be a beotch for the immense credit abuse of the last 10 years or more.”

Now look at this chart that was posted on BigPicture concerning the tally of Federal Rescues.

http://bigpicture.typepad.com/comments/files/marsh-1260×1681.jpg

Lets all sit down and think about this for a minute…………we are witnessing an unprecedented shock to the global financial system….Period. Wo do not yet know the ramifications of this event on the real economy bailout or no bailout. Everyone of us from the posters on this board to halls of congress, to the federal reserve and the treasury dept are sailing in totally uncharted waters. Please do not underestimate the gravity of the situation we face. This is not the time to make rosy assumptions about ones prospects for current or future income. My advice is to let the dust settle.

[urbanrealtor]

Peter:
While you may make sense in the long term, currently, the foreclosure boom (I need to copyright that term) is driving many rental markets north.

Essentially, until economic failure leads to local deflation (like if there is mass unemployment), those prices are not going down. It is the opposite of the purchase market. There are just slightly too few rental units for the renters looking.

[urbanrealtor]

Peter:
While you may make sense in the long term, currently, the foreclosure boom (I need to copyright that term) is driving many rental markets north.

Essentially, until economic failure leads to local deflation (like if there is mass unemployment), those prices are not going down. It is the opposite of the purchase market. There are just slightly too few rental units for the renters looking.

[urbanrealtor]

Peter:
While you may make sense in the long term, currently, the foreclosure boom (I need to copyright that term) is driving many rental markets north.

Essentially, until economic failure leads to local deflation (like if there is mass unemployment), those prices are not going down. It is the opposite of the purchase market. There are just slightly too few rental units for the renters looking.

[urbanrealtor]

Peter:
While you may make sense in the long term, currently, the foreclosure boom (I need to copyright that term) is driving many rental markets north.

Essentially, until economic failure leads to local deflation (like if there is mass unemployment), those prices are not going down. It is the opposite of the purchase market. There are just slightly too few rental units for the renters looking.

[urbanrealtor]

Peter:
While you may make sense in the long term, currently, the foreclosure boom (I need to copyright that term) is driving many rental markets north.

Essentially, until economic failure leads to local deflation (like if there is mass unemployment), those prices are not going down. It is the opposite of the purchase market. There are just slightly too few rental units for the renters looking.

[peterb]

Prices move through the RE market slowly compared to most other markets. Foreclosures will turn into rentals as more investors purchase them and knife-catchers move into the market to own at these new and appealing prices. This should drive down rental prices as historically happens in most recessions and all depressions.

CA real unemployment is probably around 10% and rising. There already is deflation in most every asset class.

The only caveat on rentals I would have is that there may be more pressure on areas that are highly desirable for a while, as renting has more options than purchasing.

Forecasting involves identifying trends that are not reversing and following them to their conclusion or reversal. Just looking at today’s environment for rentals and not following out the progression of all these events is rather foolish and typically how we get into the problems like we are now seeing.

[peterb]

Prices move through the RE market slowly compared to most other markets. Foreclosures will turn into rentals as more investors purchase them and knife-catchers move into the market to own at these new and appealing prices. This should drive down rental prices as historically happens in most recessions and all depressions.

CA real unemployment is probably around 10% and rising. There already is deflation in most every asset class.

The only caveat on rentals I would have is that there may be more pressure on areas that are highly desirable for a while, as renting has more options than purchasing.

Forecasting involves identifying trends that are not reversing and following them to their conclusion or reversal. Just looking at today’s environment for rentals and not following out the progression of all these events is rather foolish and typically how we get into the problems like we are now seeing.

[peterb]

Prices move through the RE market slowly compared to most other markets. Foreclosures will turn into rentals as more investors purchase them and knife-catchers move into the market to own at these new and appealing prices. This should drive down rental prices as historically happens in most recessions and all depressions.

CA real unemployment is probably around 10% and rising. There already is deflation in most every asset class.

The only caveat on rentals I would have is that there may be more pressure on areas that are highly desirable for a while, as renting has more options than purchasing.

Forecasting involves identifying trends that are not reversing and following them to their conclusion or reversal. Just looking at today’s environment for rentals and not following out the progression of all these events is rather foolish and typically how we get into the problems like we are now seeing.

[peterb]

Prices move through the RE market slowly compared to most other markets. Foreclosures will turn into rentals as more investors purchase them and knife-catchers move into the market to own at these new and appealing prices. This should drive down rental prices as historically happens in most recessions and all depressions.

CA real unemployment is probably around 10% and rising. There already is deflation in most every asset class.

The only caveat on rentals I would have is that there may be more pressure on areas that are highly desirable for a while, as renting has more options than purchasing.

Forecasting involves identifying trends that are not reversing and following them to their conclusion or reversal. Just looking at today’s environment for rentals and not following out the progression of all these events is rather foolish and typically how we get into the problems like we are now seeing.

[Author]

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