More Trouble Ahead

Some of us for years have be forecasting everything that has unfolded so far and a few of us have gone even further to say that we would enter what would come to be known as the greater depression. We are officially in the greater depression. The media and politicians may look for many reasons to say that the economy is getting better, they will manipulate the unemployment numbers, the housing and GDP numbers to make things look rosy, however, until manufacturing and R& D full time employment increases the recovery will be nothing but a figment of imagination. Service sector jobs will not make the economy grow over the long term.

There is a wave or ARM and Alt-A resets coming starting in June and lasting till 2012; I expect to see many more foreclosures. Currently the inventory of houses foreclosed and coming up for foreclosures will take banks about 9 yrs to clear up; based on the current numbers of sales vs foreclosures.

The numbers:
• 11 million home owners currently under water on their mortgages
• As of March, banks had 1.1 million foreclosed homes – up 20% from a year earlier
• Additional 4.8 million mortgage owners are 60 days behind in payments or in foreclosure process

The ARM, plus Alt-A resets combined with a possible increase in interest rates will lead to sure disaster. I do not see any real turn around in the economy till around 2015 earliest. As I have stated before it cannot take 1, 2, 3, 4 or 5 yrs to undo 30 yrs of damage. Best case scenario is 8-10 yrs.

The economy will turn around for sure, but there has to be a true reset and the more the government interferes the longer the reset will take when instead the earlier would be the better. However, whatever the scenario, life in the US as we knew it has changed forever and will take many generations to return to that state, if ever.