Are We Headed for a Depression? This Guy Thinks So
How bad is our economic crisis? One real estate agent from Florida, Mike Morgan, thinks it’s pretty bad. Why should you care what an agent has to say? Because in addition to being an agent, Morgan is a lawyer and financial consultant who provides research analysis to hedge funds and banks.
Morgan wrote a blog post entitled ”Florida at the Precipice of Depression” that he says has been reposted on blogs throughout the world. His piece is chilling, and difficult to dispute.
I was going to call this “Banks March Us Into Depression,” or maybe more fitting is . . . “Complete Collapse of US Banking System.” Folks, that is what we are looking at. I don’t see any way around it. What we’re seeing here in Florida, is your crystal ball. And what happens here, is coming to a town near you . . . soon.
Why:
Banks cannot afford to take 50-75% hits on mortgages, and that is exactly what is happening. The precipice is here, and we are on it. Recent reports about home sales rebounding are insignificant, because no one is accurately describing the growing inventory build-up. Banks simply don’t have the margins to deal with this crisis. And for that reason, we will see massive bank failures and this will snowball into a complete economic meltdown.
A few weeks back, I wrote about how banks are holding on to foreclosed properties instead of putting them onto the MLS. They’re hoping the market will rebound in time for them to avoid taking a huge financial hit. Since the market is showing no signs of rebounding, these foreclosures are like an overfilled dam, putting more and more pressure on the banks. At some point, the dam will burst. What happens then?
Scary stuff. If you have time, please read Morgan’s blog and tell us what you think of what he’s saying.
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Krystal Solomon said:
This is a hard article to read, but you have to realize this guy spends his days in the trenches of our economy. He sees people at their lowest. He is so deep in the despair of others that it is all he sees.
Not everyone is despairing.
A lot of us are just waiting.
And there are people who had started saving before this mess and are content to purchase now that prices are dropping.
The most realistic and helpful article on this blog EVER was this one:
http://losangeles.redfin.com/blog/2008/05/how_youll_know_when_its_ok_to_buy.html
which describes when you’ll know if it’s agood time to buy based on plain old math.
It isn’t all doom and gloom.
June 11, 2008 9:17 AM
Marcy said:
I found that article fascinating, and a link within leading to “EconomicRot” to be chock full of pertinent information having to do with the economy and housing bubble.
http://economicrot.blogspot.com/
I already knew some of it, as I have a thing for facts as opposed to truth (truth is whatever a person decides to believe), and love to do my own research. Some of it is definitely verging upon over the top in EconomicRot, but most of it (when Randy isn’t giving his personal opinions on what people should do) is indeed sound. I’ve been watching the economy tanking in the past 10 years, and mapping the causes and effects. Most don’t bother, and I understand perfectly why. However, since I have investments in domestic and overseas holdings and stocks, what happens and appears to be happening matters very much to me in ways beyond simply purchasing a house and when.
Great links. I ended up spending the past 2.5 hours exploring and reading on Randy’s blogsite, and have come away with some excellent info.
June 11, 2008 12:22 PM
Pokey said:
I’m a RE bear and don’t see the collapse as spreading beyond the usual suspects of FL, CA, NV, etc.
The demand is there but the pricing is too high.
Banks are required by accounting rules to write off the entire loan but when the home sells they can “write on” the ‘gain’. So many of these losses will regain as gains.
But gloom and doom brings eyeballs to your website.
June 11, 2008 10:20 PM
One Scary Collapse After Another | Redfin Los Angeles Sweet Digs said:
[...] few months back, I posted about a guy in Florida who was predicting a virtual collapse of the U.S. financial system. At least one reader thought it [...]
September 17, 2008 8:11 AM