Who predicted the last one correctly, and what are those people saying now?
I'm under the assumption that the regulations put in place after the last financial crisis are impotent, and that the people in the finance industry have little incentive not to do it again. Is this an accurate statement?
EDIT: and for sources of financial news, I really like nakedcapitalism.com as a contrarian supplement to the regular stuff, check out these three articles then look at the dates.
http://www.nakedcapitalism.com/2007/03/market-correction-is-...
http://www.nakedcapitalism.com/2007/03/unwinding-fraud-for-b...
http://www.nakedcapitalism.com/2007/03/michael-panzer-on-sub...
So then my next thought is, if I can identify this, I should react accordingly. And I want to buy a house soon.
And those links - 100% marginal tax on all income above $500k!? I like the freewheeling nature of ideas there. Seems like a good place to brainstorm from
No. If you're talking specifically about the housing bubble/crisis that crippled the economy ~2008, the rules have stopped what happened then. People forget that during the housing boom, dogs (people's actual pets) were able to get no-doc loans for $500k. Right now, we're probably on the opposite end of that spectrum where a mortgage is extremely hard to get and only getting harder. I bought soon after the crash, and recently refied with the same bank. The documentation I needed and the scrutiny from the underwriters had increased a lot from when I originally purchased.
- transactions between my own accounts to put enough in one place for down payment (this despite sending them transaction records from both sides multiple times)
- the fact that my dad and I co-purchased a condo in the Midwest for 100k in cash. They kept asking for docs on the mortgage for that when there wasn't ever a mortgage. Idk how they wanted me to prove something that never existed. Finally got our insurance agent to call them up on the phone and explain, "yes real estate prices in flyover really are that cheap; no there never was a mortgage; no, that means there's no other bank to talk to"
Really frustrating process when they keep asking for stuff that doesn't exist. The loan officer at the bank that I was working with was similarly frustrated with their own underwriters.
Source: Father and step mother are contract underwriters.
On top of that, real estate agents and sellers have gotten picky too. Most real estate agents we found wouldn't talk to us unless we had a mortgage lined up already.
The housing bubble burned _everyone_, and now I feel the market has spun the other way in its paranoia. That's perhaps a good thing.
Burton Malkiel – author of random walk – says that in general you can't time markets. There's a ton of evidence on this. (Most is related to stocks and bonds, so take it with a grain of salt.) But what you can look for is irrationality.
Irrationality is what was identified by the folks who made a killing on the last crash. See "The Big Short".
The house is for a very specific purpose: it's how I want my life to be. Both to live with SO, but also to have space to get an aquaponics setup running.
So that will be happening when it needs to happen regardless of market timing. But if there's a thing I can take advantage of in that window, totally should!
Is random walk on wall street viable on audio (audible) or are there a lot of charts and stuff?
He's also a gold bug. Other than housing bubble he claims there is a massive bubble in stock market and also that the next crisis will be a currency crisis as people lose confidence in US dollar.
He would probably suggest to invest in gold and in markets outside of US/EU.
Disclaimer: I am not saying I agree with Peter Schiff just describing his view, so please don't down vote me.
Yes US will end up losing some of advantages but it doesn't need to be so dramatic. Even in multi polar world with several super powers US will be one of wealthiest and most prosperous countries. The tremendous wealth accumulated over last century is not going anyway.
Wealth follows the wealthy, and most of the wealth in the US rests in very few hands, much of it offshore and in other ways hidden from taxation. If they leave, the "wealth" leaves with them for the most part.
For another nation to get to the level of US it would need all of these things and it would take decades and massive investment to build up all of this. Few very rich people taking their money and leaving for some other country would not be the end of the world.
All true enough, but I'm not convinced the wealthy would leave the US en masse as it gradually declines in power and we enter a more multi-polar world, with the dollar possibly losing reserve status at some point. Where would they go, China? I think in the scenario where the US is less powerful compared to the rest of the world, it's still a very attractive place to live in many ways (edit: especially for Americans).
You're absolutely correct that he sounds like an inevitable broken clock outcome. However, his premise on why and how the last bubble was going to explode, was extremely well supported by argumentation & data. He didn't just say it, he argued it out and supported the premise, and he was right. It wasn't luck, it made perfect sense, and he wasn't the only person using the same argument details.
He's right this time that they've blown another huge bubble in asset values via cheap money / hyper low interest rates. The Fed has finally gotten to the point where they're openly admitting to that (Yellen just did so recently). This is the third time in 20 years they've generated vast asset bubbles with cheap money. Schiff is wrong on the timing because he has persistently underestimated how long the Fed could keep the bubbles inflated via said cheap money.
Raise interest rates just to the average level of the prior 50 years, and see what happens to the housing market.
1) The Fed was printing nearly a trillion dollars per year for QE in prior years, one print run like that directed at student loans instantly ends the problem.
2) Option one is a bad premise, as it rewards the student loan borrowers and punishes savers (debasing the dollar). Alternatively, you can drop the interest rate on student loans (which would encourage a greater pile of debt long-term but solve the problem short-term). Or come up with any number of other easy solutions to the payments such as lower caps on monthly payments based on income.
3) The Feds can begin bringing down the cost of college education at any time, by slowly reducing their loan backing. Universities will be forced to unwind their spending bubble.
To parent: You too!
But if a crash happens, you'll need to be liquid with lots of cash because banks are less likely to loan then. Putting that cash in the bank means you won't much upside from the current boom...its a tricky balancing act!
It seems like the people who can predict a crisis correctly are the ones who actually do the legwork to verify the ground truth, in detail, when everyone else is just trusting conventional wisdom, the executive summary, and their current profit numbers.
However, the person who predicts the next crisis is probably going to have to be looking under different rocks than the people who predicted the last one.
[blank stares]
This isn't counted in those indicators, but also S&P 500 earnings are predicted to go up a lot by December 2018, according to S&P Global. Credit Suisse's Global Wealth Report predicts a 5% annual increase in wealth among all adults globally in the next 5 years.
Houses in major metropolitan areas have gone about 6% annually on average, counting recessions and popping of bubbles. Timing the market could help but it's very difficult. I predict they will keep rising at a 4-7% rate for the next decade, but I could be wrong. A recession is possible but I wouldn't delay buying a house right now. But I would definitely buy within your means and don't expect prices to rise, because the future is very difficult to predict.
Economists have predicted 12 of the 3 market crashes.
The problem with looking at who correctly predicted the last crash is that so many people make predictions of the form, "there will be a crash in the next x months". Eventually someone will be correct.
How will you be able to tell that person being correct due to random chance versus actually knowing that there would be a crash?
I feel crisis are hard to predict timing wise. However I do also feel the stars are line up for another one for sure.
https://www.youtube.com/watch?v=mzJmTCYmo9g&list=RDmzJmTCYmo...