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Feasible? How will it affect us foreclosure specialists?
Posted by Alfred -- Riv County, CA on April 16, 2003 at 10:46 AM
If anyone has the time to read this and respond, I'd be interested to know what you think about this prophecy and what we might be running into regarding foreclosures and real estate in general. I just came upon this investment newsletter by Martin D. Weiss. Anyone ever heard of this guy? Below is a summary of the issue (I didn't include all of the statistics and documentation he offers to back up his prediction). He's listed 7 reasons why our economy and stock market will crash to very low depths before 2003 is over. He predicts that real estate will totally crash also. It seems to make sense... if his statistics are true. But it could also be a bunch of hooey (doom & gloom) used to sell his newsletter, books, gold or whatever. "The bear market won't end and the next bull can not begin until these 7 situations have come and gone and there are no more hidden shocks to ambush investors. Washington is in an absolute panic to convince you that Wall St. is safe again. Why else would both Democrats and Republicans be hammering out one of the most radical economic stimulus packages in history? What do THEY see that you don't?" Ticking Bomb #1
The Great Real Estate Bubble of 2003 Is About to Explode: A classic bubble inflated by plummeting interest rates. Interest rates (lowest since 1961) created huge housing demand and home prices have gone through the roof. Now the bust comes in 3 phase, 1) a stock market crash and economic slump forces corporations to cancel expansion and commercial real estate collapses (the glut of commercial space hits the market and values crash); 2) ailing companies lay off hundreds of thousands of workers and mortgage defaults skyrocket; 3) the glut of residential property and plummeting consumer confidence collapses the residential market. Ticking Bomb #2
The DOW and S&P 500 Will Collapse: Major U.S. companies owe over 300 billion to their employee pension plans. They are hiding other deficits as well. They will have to pull all this money out of their earnings, if that is even possible, and this will smash stocks. Ticking Bomb #3
The Japanese Economy is the Worst It's Been Since 1946: Retail sales plunging, unemployment soaring, real estate values crashing, etc. The government is in debt and many major banks are on the brink due to lots of bad debt. Only way they will be able to get cash is to dump all of their U.S. stock holdings (500 billion dollars worth). Ticking Bomb #4
Big Bankruptcy Nightmare on the Way: besides the accounting scams of Enron, Worldcom, Global Crossing and other companies you also have the concommitant massive build up of unpayable debt. 253 U.S. companies have more debt than assets. Major trouble brewing here. Ticking Bomb #5
The Fed Will Soon Drop a Bomb on Wall Street: the SEC and Congressional investigators are about to wrap up over 47 probes into gross violations of investor trust at the large investment brokerages. There will be a major drop in confidence when these files are opened to the public. Stocks will crash further. Ticking Bomb #6
America's Largest Banks Are Suffering Major Loan Losses: This will be worse than the 1991 S & L crisis.
JP Morgan lost 2.6 billion in loans to Enron's collapse; is being hit by massive investor lawsuits; has the largest exposure to high risk derivatives. Wells Fargo, Fleet Financial, First Union, Bank One and B of A
are all stuck with billions of dollars of loans to failing dot.coms, telecoms, etc. There is 25 billion dollars worth of junk bonds in these bank's portfolios as well. This industry is headed for trouble. Ticking Bomb #7
The Wars in Afghanistan and Iraq Are Sending Oil and Gas Prices Skyrocketing: Desert Storm pushed oil prices up 166% in three months helping to push the U.S. into a recession with a 21% drop in stock prices. When Islamic militants overthrew the Shah of Iran, oil prices went up 168% (and Iran only controlled 10% of the world's oil reserves at that time). A big increase in oil prices will hammer the U.S. economy and stock market.
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