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Zecco.com » General Investing » Screening & Picking » Economy
Last post 05-22-2008, 2:13 AM by jackg1606. 6 replies.
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  •  05-14-2008, 7:37 AM 29038

    Economy

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    I've been stating it was my belief the economy will not start to improve until housing has hit a bottom.  As shown in today's article,

    http://biz.yahoo.com/

    housing has not reached a bottom yet.  As foreclosure's continue to rise, they will continue to act as bombs going off in the neighborhoods they are in dragging home values down.  When a foreclosed home is sold in auction or fire sale at deep discounts, all other "like" homes it the area will be revalued to the lower most recent sale price.  This increases the number of mortgages upside down in relation to the value of the home compared to balance owed.  Upside down mortgages is the #1 cause of further foreclosures.  People become stuck in their current mortgages with unfavorable rates being unable to refinance or sale their home.  People upside down in their morgage are choosing to walk away from their loan obligations.  The foreclosure process is continued with a rising inventory of unoccuppied homes resulting in homes being sold at more deeply discounted prices.

    These foreclosures will result in more write downs in bank assets and further tightening of lending standards.  When lending is tightened it will affect other areas of the economy by preventing businesses from making capital expenditures and slowing economic growth. 

  •  05-14-2008, 9:12 AM 29041 in reply to 29038

    Re: Economy

    Reply Quote

    I don't think the housing will turn till the energy prices decrease. People can't afford their mortgage because they are spending more on gas for vehicles or heat for their house. The financials / stock market might have hit bottom, but I don't think the economy is anywhere near turning around. It will be a good 12 months, probably more, till we see increased spending.

  •  05-14-2008, 3:11 PM 29077 in reply to 29041

    Re: Economy

    Reply Quote
    I shorted AAPL this morning @ $191.....seems to be working nicely.

  •  05-15-2008, 7:11 AM 29128 in reply to 29038

    Re: Economy

    Reply Quote

    The economy is in a slow down phase... that doesnt mean staZAy out of the market... i for one am buying shares slowly as once the economy gets bullish good stocks will rise again. note: sure once the housingf market hits rock bottom the economy will have less to look dfor that is negative... unfortunately because the fed lowered rates so much we are looking at pretty big inflation (average economist  guess 12% for the year), if we got rid of ethenol the price of food would stop skyrocketing and actually drop some.  those are just my thoughts.

     

    Christopher

  •  05-19-2008, 6:02 PM 29370 in reply to 29077

    Re: Economy

    Reply Quote

    jackg1606:
    I shorted AAPL this morning @ $191.....seems to be working nicely.

     

     

    Where AAPL goes the Nasdaq will surely follow.

  •  05-22-2008, 1:21 AM 29558 in reply to 29370

    Re: Economy

    Reply Quote

    As far as the stock market goes, I think many investors are already aware that write-offs will continue well into 2009. With that said, continued write-downs may likely just be brushed off by the market in the future, as it sort of was in the past month or so.

    What I think worries people now in particular (aside from oil of course) is unemployment numbers. There's a fair number of people employed by financial institutions, and the layoffs happen gradually and relatively under the covers. If unemployment numbers turn out sour we could see a further break in support.

    Keep in mind that the long weekend is coming, and the month of May is coming to an end, so we'll start seeing more of the truth unveiled as we get the numbers in the coming week or 2.
    By the way I often check this out for economic events http://biz.yahoo.com/ although it may not be the best out there

    Just my 2c

  •  05-22-2008, 2:13 AM 29561 in reply to 29558

    Re: Economy

    Reply Quote
    By tracking the amount of federal withholding taxes the government is collecting we can get a good picture of employment.  This information is posted daily by the government.  Here is a link to a blog which calculates the growth rate of these tax collections.  It will give you an idea of what to expect in employment numbers before they are posted.


    http://www.trivisonno.com/
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