Sunday, March 23, 2008

Just a little doom-and-gloom

Before I get into a bit of what will sound like doom-and-gloom talk...please check out My friends Amy and Jen made up a really fun blog (mostly for me, but really for everyone to enjoy ;) ). I'm looking forward to future installments! I'm sure you will too once you see it.

If you don't want to hear any doom-and-gloom, stop reading right here.

I've been holding myself back from talking about the economy on this blog because I'm sure everyone must be hearing enough talk on the news about it? Yes, no? I'm not really sure--being in Japan I've been looking at all sorts of news outlets--which actually is a breath of fresh air getting some "international" (not-all-USA-centric) news. I admit I've been spending a bit more time "reading" online than I probably should, but I've definitely learned much more about the economy than I knew a month ago.

So as most people already know, real estate is tanking...some areas more than others, but it's dropping much faster and harder than most originally thought it would. If your not aware of the damage and housing price drops just look at the Sacramento MLS where a condo someone would have paid 300k a few years ago is now going for between 50-100k. That is a 70-80% drop! Keep in mind certain 'neighborhoods' haven't seen such dramatic drop in value. I imagine the amount of foreclosures in the area has a huge impact on how low house prices drop and will continue to drop. Neighborhoods with bank owned properties are more likely to drop in value much faster than neighborhoods with very few foreclosures or desperate sellers.

Beyond the housing bubble "popping," I believe there are quite a few domino effects from the foreclosure and sub-prime loan defaults already in motion. Honestly, I think we're in for a very interesting year to say the least...If you've been noticing the stock market or the FED's unusual hand-outs to big banks you might be a little questioning too. Normally I am alone in thinking a bad-case-scenario could happen (like with me thinking housing prices would go down), as Chris is always the more rational one. But I am not alone here this time. Chris is almost more fervent about this than I am (believe me, that is very unusual for him)! I won't get into specifics here with possibilities of what could happen (as others would explain it better than I could), but there are a lot of good articles you can google and interesting youtube videos on the economy and the possibilities of what is coming next (hint..recession, depression, deflationary depression, inflationary depression, etc). Also, please check out the video on the banking system I posted in an earlier thread--it really is a good video to watch. As with most things, make sure you get a variety of opinions and then decide for yourself whether you need to prepare in any way or maybe you'll decide everything will be fine and there is nothing to prepare for.

I don't necessarily believe in being worried, but I do believe in being at a least a little prepared. Being knowledgeable (at the very least) is useful even if you don't believe recession or depression will result. Chris and I both feel unusual urgency about "what could come"--otherwise I wouldn't even mention it in on this blog. Just wanted to give a fair warning in case some might want to be prepared if there are hard times around the corner.