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Comparing today's recession/depression to the 1980 recession

"Much like today, Americans were concerned not only with high unemployment but increasing budget deficits in the early 1980s. A September 1983 Gallup poll found that three-fourths of the public agreed that the federal government's budget deficit was a great threat (42%) or some

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Why savers are getting screwed

Why savers are getting screwed

"Without the intervention of economic policymakers, interest rates would be naturally higher. That would increase the cost of borrowing for businesses and consumers, but there would be some offsetting economic benefits. Savers are getting screwed by the current monetary policy

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Geithner admits USA bankrupt to US Senate

Geithner admits USA bankrupt to US Senate

"Never in our history has Congress failed to increase the debt limit when necessary. Failure to raise the limit would precipitate a default by the United States. Default would effectively impose a significant and long-lasting tax on all Americans and all American businesses

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Real reason for electricity blackouts hitting southern US

Real reason for electricity blackouts hitting southern US

“Large oil companies have for a decade artificially shorted the gasoline market to drive up prices,” said FTCR president Jamie Court. “Oil companies know they can make more money by making less gasoline.” The following article was written by Paul Joseph Watson. He is t

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World economies on verge of currency revaluations to deal with debt

World economies on verge of currency revaluations to deal with debt

"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." -- Henry Ford Basically what the world central banks are doing is increasing their money by devaluin

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Is Obama the next Mugabe of Zimbabwe?

Is Obama the next Mugabe of Zimbabwe?

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US raiding foreign countries with dollars, not soldiers

US raiding foreign countries with dollars, not soldiers

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FDIC wants your retirement cash to save banks: Bloomberg

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Canadian government admits recovery never happened

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How Western society is brainwashed and crumbling

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Will we see double digit interest rates from the 1980s?

Will we see double digit interest rates from the 1980s?

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Greenspan: credit crunch “by far the greatest financial crisis”

Greenspan: credit crunch by far the greatest financial crisis

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fat american confused

“Already, U.S. housing prices have fallen further during this economic downturn (26 percent), then they did during the Great Depression (25.9 percent).”

Approximately 11 percent of all homes in the United States are currently standing empty. In fact, there are many new housing developments across the U.S. that resemble little more than ghost towns because foreclosures have wiped them out.

Mortgage delinquencies and foreclosures reached new highs in 2010, and it is being projected that banks and financial institutions will repossess at least a million more U.S. homes during 2011. Meanwhile, unemployment is absolutely rampant and wage levels are going down at a time when mortgage lending standards have been significantly tightened. Source: Business Insider: 12 Signs That The Worst Housing Collapse In U.S. History Is Getting Worse (1)

Average Citizens taking the hit

With an even larger amount of market resets coming over the next 2 years, this does not bode well for the average US citizen; whether you are in foreclosure, notice of default or underwater and made all the right moves.

Americans truly deserve better then this but their political process is fatally flawed, (as most are) when big money interests control the agenda and put their interests above those of the people.

us property values myth

Depression or “second dip” a real possibility

Yes, a double-dip in American housing is a real possibility. As far as we are concerned, there are two main reasons.

Firstly, the US mortgage lending rules were rotten to the core and promoted excesses and bank instability. Non-recourse mortgages are idiotic and do nothing but fuel speculation. It is insane to allow a homeowner, and even more so, an investor, to simply hand the keys back to the bank and not put his other assets at risk. It was obvious from the constant re-mortgage ads on American TV that some giant scam was afoot, but no regulators noticed. Now, the American government seems to be doing absolutely nothing to change lending rules to protect the country from the next housing bubble.

Secondly, both the Obama and George W. Bush administrations clearly believed that the stock market recovery was the best way to end the recession. They were right as far as the rich Americans were concerned, but ignoring housing has and will continue to decimate the prospects for any ordinary American.

This is a big economic problem in the US because the system encourages home owners to over mortgage their properties and relies on that over-mortgaging to be used to buy things. In addition to the tax break for the interest payments, most states can take a home for non-payment of taxes so why would a homeowner ever have equity (a lower mortgage than the home value).

The real problem is the way a lot of the US economy was fueled by the spending of people who remortgaged their properties to more than the appraised value. Some lenders were agreeing to remortgage for significantly more than the appraised value. So now with home prices dropping there is no more remortgage space for homeowners to get new spending money.

A similar thing has happened in Canada, though to a lesser degree, because of the zero-down payment 40 year mortgage policy the Cons introduced in their first budget in 2006. A lot of people are house poor. Their early mortgage payments will pay almost none of the principle. Even after 10 years they will still owe almost the same amount…and they will face higher interest which means they will have less money to spend on other things.

References:

(1) Business Insider

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  3. Canadian housing market collapse certainty: TurnerGarth Turner, financial journalist, and Rob Carrick discuss a collapsing Canadian real estate market. * What are the indicators that there will be a housing market crash? * How bad...
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  5. Economy worse than great depression: KrugmanPaul Robin Krugman (born February 28, 1953) is an American economist, liberal columnist and author. He is Professor of Economics and International Affairs at the Woodrow Wilson School of Public...
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