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2010 Will Be Worse

Four Horsemen of the Apocalypse

Despite the rising stock market, virtually everything else continues to deteriorate in the economy. An earlier post dealt with this anomaly.

There literally is not one thing that can be claimed as a positive. And that includes the phony GDP third quarter “improvement” and presumably a better (preliminary) number for the fourth quarter. Here is a quick (not all inclusive) list as to why things will get worse rather than better:

  • Bankruptcies and unemployment continue to increase.
  • Foreclosures are increasing and will get worse.
  • The Housing market will worsen as a result of more foreclosures and more mortgage resets in 2010
  • The Federal Government’s deficits continue to grow
  • Foreigner financing, necessary to support our deficits, is decreasing
  • The private sector continues to decline as evidenced by state income and sales tax collections
  • Private and state pensions continue to fall further behind actuarial soundness putting special pressures on local and state governments
  • States continue to spend beyond sustainable levels
  • Consumers will underspend for several years because of too much debt
  • Health care “reform” adds costs and problems to the out-years
  • Legislation passed and proposed causes small business to hunker down and refrain from expanding or hiring
  • The banking system continues to deteriorate
  • Credit is being increasingly withheld from small business and commercial real estate
  • The FDIC is out of money
  • Bailouts, promised to produce returns for taxpayers, are turning sour
  • Fannie and Freddie are now completely guaranteed by taxpayers
  • The FHA is repeating the same mistakes as Fannie and Freddie
  • There is no private mortgage market left; much of existing mortgage and all new mortgages are underwritten by taxpayers
  • Raising taxes is not feasible because it will kill the economy
  • Rising interest rates will do the same
  • The Fed will not be able to remove excess liquidity from the system
  • The Federal government is unable (unwilling) to cut spending
  • Unless the Fed continues QE, the Federal Government will be unable to pay its bills
  • The Commercial Real Estate problem has just started to be felt

A summary of some of these items was included in a short slide presentation by David Rosenberg.

A perspective on one state’s budget woes (yes, it goes way beyond California, Michigan and New York) can be obtained from this Mish article.

5 thoughts on “2010 Will Be Worse”

  1. 6-7 years ago I started hearing rumors of war, famine and econoimic collapse…Economic collapse? No way look at all these houses and prices and things and and and and…But I kept reading and looking for REAL NEWS…The Ron Pauls, Max Keisers, Peter Schiffes…I sold my house at the peak…I downsized though I still have quite a way to go…In the last few years I’ve been trying to prep like some crazy militiaman up in Idaho…I don’t want to have a “Bunker Mentality” but “Something wicked this way comes.”

    Part of me does want a crash so there is REAL change, people wake up and honestly my ego feels I wasn’t just a “Chicken Little” running around worrying while the rest of the world partied…As many people here know…NO ONE wants to know or prepare…They are just hoping if they ignore it it will disappear…Suddenly the voices of the media are starting to pick up on that “SOMETHING.”

    What now?…Semi-prepared but only for about a year and then what?…Economy on the verge of shambles like a Zombie that doesn’t realize that it’s dead?…Will I rejoice having food, weapons, silver and shelter as the old, very young and real needy suffer?…Bit of a quandry…Part of me says “I need to help.” Part of me honestly says “Sorry have to take care of self and family.” In the end self preservation will be the path…But at what cost?

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