a depression ?? am i going to lose my job ?

what does a normal person do in this event ? how do i keep my job and pay my bills ?i have some saving but what if something last longer than i can sustain ?

i have thought of buying some land in the mountains with a small cabin. i can grow a garden and hunt for food.

stock canned goods i guess.

a microcosm of what is wrong.

NYC Police officers start at $25,000 salary. And are now given easy credit cards to go further into debt.
http://tinyurl.com/2q4gua

Someone turn on the Bat Signal!

ALOHA !!

Top rate research Bill. I informed people back in 2006 the top of the bubble was in when I turned on the TV one night at a hotel in Waikiki and saw a reality show called ... FLIP THIS HOUSE !!

The red flags abound in a sea of complacency the likes of which I have never seen before! Anyone who watched what happened to New Orleans knew the US government no longer had financial legs ... then the Iraq War confirmed it. Both events are totally and completely linked. This is what happens in Third World countries when socialist governments are "tapped out" you start to see "band-aid" solutions and repairs to infrastructure and everything. How long before we start rationing electricity and water in major US cities?

What about the BIG BANKS? Here are two BIG RED FLAGS ...

READ ON:
RED FLAG #1
Goldman, Merrill Almost `Junk,' Their Own Traders Say

Goldman Sachs Group Inc., Merrill Lynch & Co. and Morgan Stanley, which earned a record $24.5 billion in 2006, suddenly have become so speculative that their own traders are valuing the three biggest securities firms as barely more creditworthy than junk bonds.

Prices for credit-default swaps linked to the bonds of the New York investment banks this week traded at levels that equate to debt ratings of Baa2, according to Moody's Investors Service. For Goldman, Morgan Stanley and Merrill that's five levels below the actual Aa3 rating on their senior unsecured notes and two steps above non-investment grade, or junk.

Traders of credit derivatives are more alarmed than stock and bond investors that a slowdown in housing and the global equity market rout have hurt the firms. Merrill since 2005 has financed two mortgage lenders that subsequently failed and bought a third, First Franklin Financial Corp., for $1.3 billion.

``These guys have made a lot of money securitizing mortgages over the years in a mortgage boom time,'' said Richard Hofmann, an analyst at bond research firm CreditSights Inc. in New York. ``The question now is what is the exposure to credit risk and what are the potential revenue headwinds if they're not able to keep that securitization machine humming along.''

Credit-default swaps on the debt of Goldman, the world's biggest securities firm, have risen to $32,775 per $10 million in bonds, up from $21,500 at the start of the year, according to prices compiled by London-based CMA Datavision. The price touched $35,000 on Feb. 28, the highest since June 2005.

Spokesmen and spokeswomen for Goldman, Lehman, Merrill and Morgan Stanley declined to comment. A spokeswoman for Bear Stearns didn't immediately return calls for comment.

FROM JUNK TO MORE JUNK:
In case nobody has noticed three of the largest US banks were just "nationalized" this week. What else do you call it when you can't function without the aid of welfare? Welcome to the USSA ... Your tax dollars at work!!!

READ ON:
RED FLAG #2
JPMorgan Chase, Large U.S. Banks Have Ratings Raised by Moody's

By Joseph N. DiStefano and Steven Bodzin

March 3 (Bloomberg) -- JPMorgan Chase & Co., Bank of New York Co. and State Street Bank & Trust Co. gained higher credit ratings from Moody's Investors Service Inc., which said the U.S. government would back the banks if they faced default.

Moody's left New York-based Citigroup Inc. and San Francisco-based Wells Fargo & Co. unchanged because their financial strength ratings -- an element of their overall ratings -- already were at the top of the scale, the New York- based service said in a statement yesterday. Moody's raised Bank of America Corp.'s rating for reasons unrelated to federal aid.

Moody's announced new guidelines for bank credit ratings last month that consider financial strength along with any support companies may get from government and financial institutions if they get into serious trouble. Such backing might be offered if regulators conclude the effects of a failure would be catastrophic for the nation's economy, a concept rooted in banks' financial woes in the 1980s.

The changes affected ``only a few banks'' in the U.S. because the nation is a ``low'' support country, Moody's said. Each of Canada's six biggest banks, including Toronto-based Royal Bank of Canada, gained higher ratings earlier yesterday because of the new criteria.

`Too Big to Fail'

``People already feel like they're too big to fail,'' said Jonathan Hatcher, senior research analyst for corporate bonds at Delaware Investments, which holds $98 billion in corporate bonds.

Last Updated: March 3, 2007 00:59 EST
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=abohn9cD2fIw

About 8-10 days ago in New Orleans, I discussed NEW and others like Novastar, HSBC, etc. with an experienced mortgage broker friend. He called it a “perfect storm brewing” in the financial markets and mentioned the repurchase agreements Leisa posted in the previous “Cara’s Bull Board” on the NEW filing. He knew his figures and he sure wasn’t optimistic. At the time it made me think this subprime hit may be much more than the radar blimp the experts are predicting. And now we’re starting to see the large cracks turning into crevices in the financial foundation. I’m guessing Bernake will turn up the spigots and continue to print more money into the system.

“Perfect Storm Brewing” --- Long: GLD

Liquor and beer usually does well in a Recession. Although banned in a Depression, yet still consumed aggressively.

Gold and Brewers anyone?

Hi, Bill
I have this question for a while. I understand generally you are bearish on US economy and stock market, but in the meantime you think the commodities will remain strong. My question is if US economy is moving into a recession, will it impact the commodities prices significantly?
I have some long positions on the miners. Thank you very much.

Hi Bill,

Regarding your FDIC comment, if we consider worst case (financial collapse and depression) I see no simple way to protect wealth for 99.9% of us. Physical gold will most likely be expropriated (like it has been done before). Any puts you may have to hedge against market crash will become worthless as option writers will default en-masse. Offshore accounts will become illegal. And remaining 0.1% at the very top of the social food chain will certainly take advantage of the situation since that 0.1% does not live in the same legal domain as us mortals. This happened before, this will likely happen again and I have rather pessimistic view for such outcome.

Nevertheless I'd like to hear your view on best strategy in a doom scenario like this.

wow!!!

thanks from germany!

here are some more infos from the report

Tanta: Credit Suisse "Not drinking the Kool Aid"

also very very good

http://calculatedrisk.blogspot.com/2007/03/tanta-credit-suisse-not-drinking-kool.html

Hi Bill,

"I believe those ugly TV images may even look mild compared to the scenario that would follow angry mobs across America if market interest rates rise beyond the tipping point that would collapse the entire US mortgage market."

America as in USA only or the hole continent? How about the rest of the world?
This must be the ultimate doom scenario(if you leave out war), but impossible? I do not think so.

Terrific posting, Bill. Just terrific. Thanks for giving us this information.

Re: gold. I have GLD, but now I'm wondering whether I should begin buying Canadian Maple Leafs.

Thoughts, anyone?

ALOHA !!

Look, anyone who invests in any country has to get over this BIG hurdle first! SEE LINK BELOW ... Let me just say that when the economies slow and fade so will tax revenues. Fewer and fewer "wealth producers" or workers will be held responsible for the rapidly growing dependants of the nanny state. With a US economy that relies mostly on service sector jobs the outlook is bleak for the Federal, State and Local governments. The "forced" export of US manufacturing, tech and agriculture jobs leaves the US economy very vulnerable financially since not only are those lost jobs income for workers but they were also tax revenues. Add in that the US government will start losing some 25% of workers(tax revenues)starting in 2008 when baby-boomers start retiring. These retiring baby-boomers were once "tax revenue assets" that will become "debt liabilities". To me the "perfect storm" for the US economy and hence the US Dollar is "lost manufacturing ... baby-boomers ... real estate collapse ... war ... total debt"

Link: http://www.nowandfutures.com/taxes.html

I am not sure what the average is in Canada or the UK, but I am sure it is not much less and may be even more since you guys have socialized health care.

Gemmastar: I am no advocate for owning gold and silver ETFs since you are trusting the wrong people with your "inflation insurance". The first government confiscation of gold and silver will be the ETFs. Can you even prove today that all the gold and silver these ETFs claim to have is actually there and not "leased" or "loaned" out? Exactly which "custodial bank" posses your "gold" and "silver". Some of the custodial banks holding the physical metals are overseas in foreign countries. Whats to stop that country from seizing your gold? Then there is the issues of whats known as "general assets". When a bank fails deposits and other assets like gold are considered "general assets" which are sold off to satisfy creditors. How do you know that these "custodial banks" are credit worthy and won't fail? If they do fail then how do you know your gold won't be sold as "general assets" of the bank? In essence an ETF can go bankrupt like an Enron, but real gold in your hands can NEVER file bankruptcy! If the stock markets collapse and trading is halted in GLD and SLV how will you sell? If the internet goes down how will you sell? Then there is the tax consequences once you do sell. Gold and silver in your hands is just like "money" ... its the only "real money" ... it can be sold any where in any country without a bank or without an internet connection. I would never own an ETF for gold or silver.

Thanks Kaimu.

I have no real trust in the banks. I've had a nice run with GLD (initial buys were in the $500 range) but your points -- ALL your points -- are well-taken.

Thank you.

I work for one of the large subprime lenders and I think a recession/maybe a depression is coming.
I was given to buy my companys stock for a 5% discount and chose not to because I do not want to own any stock with exposure to this. Heres a good example of why I didnt buy any company stock. Lets say a borrower had a 620 credit score(which isnt very high). They could "state" their income, lets say 15k a month. Then they could go buy a 600k house with 0 down. All they need is a verification of rent and 3 letters of reference, which are very easy to make up or fraud. Thats 600k that was lent and is lost!

Im trying to prepare for the upcoming recession. I have paid off everything. Im not sure if I should liquidate all of my stock and place the money in a local lock box for the time being. Im willing to give up some returns for the security of having some cash when it gets bad.

I would like to see what Bill proposes to help us keep our wealth. Thats the main thing I worry about right now. If you have any of your retirement with one of the big financial firms(ie: morgan stanley, GS, etc..), I suggest you get your money out of them now. They have all bought way to many of these bad loans.

The subprime market has propped the economy up for the last 3-5 years. The massive amts of monthly fundings have been like a gush of liquidity and spending into the economy. ALL subprime lenders have just removed the 100% loan, which means the faucet has been turned off. Give it 6-9 months and the financials of most other stocks(short retail for now) will start to stress and the recession will become much more apparent for everyone.

I have also thought about getting into a job that is somewhat recession proof. Maybe teaching?

Good luck to everyone and start preparing now.

It's interesting that the previously unmentioned-as-part-of-the-subprime-drama-players, WFC, shows up rather prominently in the CS report.

If disinflation is in the cards...if I understand potential consequences, would not short rates go down and it would be favorable to have short term bonds beforehand? If so, what would be a good vehicle for bonds?

New Century director sold stock; states he was "unaware".

http://www.reuters.com/article/governmentFilingsNews/idUSN1235528320070313

Why am I not surprised?