THE Credit Bubble Thread (merged)

by **aldente** » Tue 14 Dec 2004, 17:45:14

Great article. That's exactely what we need on top of Peak Oil... link

The author conludes with: THE BAD NEWS IS THAT THIS WILL BE THE END OF THE BIGGEST CREDIT BUBBLE IN HUMAN HISTORY!

THE GOOD NEWS IS NOBODY KNOWS HOW SOON.

by **Specop_007** » Sat 26 Mar 2005, 10:14:05

So I had this weird thought. Assuming the dollar value drops and interest ges through the roof it would make such things as cars and homes much harder to get.
Do you think companies have already planned for this by tweaking the numbers in your loans and debt?
THink of it, most people really cant visualize a 30 year mortgage. So, to get you in that new house that is suddenly FAR more expensive, why not kick it out to 40 years? The buyer simply sees a lower payment, and the mortgage company sees even MORE money due to the longer term.
They could do that across the board, credit cards and homes and about anything you would make a payment on. It would keep the economy chugging along nicely even while currency values drop and interest rises, and the companies would make even MORE money.

Just a weird thought I had this morning.

by **smiley** » Sat 26 Mar 2005, 11:16:24

The problem is that a 40 year mortgage would not be practical.

Imagine that you buy a house when your 40. That means that you end your payments when you're 80. If you're not dead by then you probably would not be able to make any payments from your retirement plan.

by **RonMN** » Sat 26 Mar 2005, 13:59:04

in the carter era they had interest ONLY payments...therefor you were never lowering the principal. And if we stop getting huge loans for asia then the money just isn't there for financing (even if somebody would make "more money")...it can be quite a viscious downward spiral

by **DriveElectric** » Sat 26 Mar 2005, 15:12:57

Japan has mortgages with a term of 100 years. It is a mult-generation mortgage.

by MD » Sun 15 May 2005, 11:50:18

..and the US Economy is the target.

It appears that one moderate oil shock from the disruption of several hundred million barrels of oil could trigger the implosion of the US economy.

That is my strictly intuitive conclusion based on casual research over the past few months.

Opinions?

by **Tyler_JC** » Sun 15 May 2005, 11:58:26

Pretty much.

The US economy is on the verge of collapse right now. The easy money party is ending and we all drank a little too much. If oil causes the US economy to go under...we are never getting out of it. Just as we start growing again oil production will be in serious decline. When this happens...it's lights out. The suburbs will be depopulated as people move to the cities for work. But there won't be any work because 1/2 of the US population lives in Suburbia and Suburbia's consumption fuels the economy.

So, yeah, we're screwed. I'm not even sure if the Dow will be above 1000 for the rest of the decade. BTW, have you ever read any of Jim Puplava's stuff? http://www.financialsense.com/

by **arretium** » Sun 15 May 2005, 14:11:00

I don't think a mild shock will do it. I think we need something higher, like $100 a barrell to really do something like you're talking. And it needs to stay there for a while, not an interday spike, but a long one to two month consistent price level. Yes, then our economy is most definitely in trouble. If stayed there for 6 months...the suburbs would be over because you'd have massive defaults.

I'd hate to the stupid politician in power then.

by **Agren** » Sun 15 May 2005, 14:57:00

$this->bbcode_second_pass_quote('', 'B')TW, have you ever read any of Jim Puplava's stuff? http://www.financialsense.com/

by **Cojock** » Sun 15 May 2005, 16:21:42

Hi

As a newbie, I wasn't sure where my post "Reversing the Polarity" belonged so it just went in "Current Events".

It certainly seems relevant to this thread however....

Best regards

Chris Cook

by **Tyler_JC** » Sun 15 May 2005, 17:10:26

Welcome to PO (Peak Oil) Cojock!

The Economics forum is relatively new and there are plenty of threads in the other forums that still need to be moved over. If you want to move your thread, just ask MonteQuest or one of the other moderators.

If you have a microphone and the inclination, you may wish to download PeakSpeak. It's like a chat room but with voices and a text box (for those who don't want the Feds to know what they sound like :lol:

). Having read your "Reversing the Polarity" post, I'm interested in finding out your take on all of this.

by **jato** » Sun 15 May 2005, 17:26:45

$this->bbcode_second_pass_quote('', 'I')f you want to move your thread, just ask MonteQuest or one of the other moderators.

by **cube** » Mon 16 May 2005, 01:51:15

I remember some op ed writer making a rather simplified but rather "accurate" explanation of the whole dot com mess.

"The dot com boom was a wild drinking party, the crash was the hangover." :roll:

When the credit bubble bursts it's not going to be a hangover, it's going to be the equivalent of alcohol poisoning.

by **FoxV** » Mon 16 May 2005, 10:19:46

does anybody know/suspect what the flash point for the credit bubble burst will be (ie what are the signs).

will it start with the housing bust (which appears to have started), 2nd quarter inflation numbers, Mid summer gas price spike, etc...

or just the happy coincidence of all three of the above happening at the same time

by **hull3551** » Mon 16 May 2005, 18:49:39

$this->bbcode_second_pass_quote('FoxV', 'd')oes anybody know/suspect what the flash point for the credit bubble burst will be (ie what are the signs)...

by **RdSnt** » Mon 16 May 2005, 21:36:20

$this->bbcode_second_pass_quote('hull3551', '')$this->bbcode_second_pass_quote('FoxV', 'd')oes anybody know/suspect what the flash point for the credit bubble burst will be (ie what are the signs)...

by **jmacdaddio** » Mon 16 May 2005, 21:41:34

I read today that the credit card companies will start increasing their monthly minimums to 4% from 2% of the balance ... should be interesting as all those McMaxed people panic. While the credit card companies are taking all the flak in the press for this, watch and see how the bankruptcy law screws over people who stretched to get McMansions and home equity loans because they just had to have the <furniture, Lexus, vacation, diamonds> right NOW --- and placed themselves in a position where the loss of an income or even a minor interruption can cause a death spiral. When rates go up on ARMs watch as the selling frenzy begins .... that's when I will make my move.

When I can buy something I'll make sure it's within a reasonable walk from a train station and within walking distance of groceries, banks, stores, etc. Get into the habit of living beneath your means and you'll do fine. Stretch yourself to the max and you'll get screwed sooner or later.

How does this tie to oil prices? A family who spent about $250 per month on gas two years ago for their Ford Leviathan and GMC Grendel's Mother could easily now be spending north of $400 ... which could put them over the edge when combined with other factors swirling about.

by **qwanta** » Tue 17 May 2005, 13:13:14

I agree that the two most important factors for the economy right now are peak oil and the credit bubble. It's funny though, each side has its cadre of experts - peak oil has Campbell, Heinberg, Simmons, Kunslter, Darley, Klare etc.., the credit bubble side has Puplava, Doug Noland, Richard Duncan, Richard Daughty, and a whole lot more, especially goldbugs etc - but noone seems to have the expertise to really put both things together.

For example, if the financial bubble bursts and we enter a 1929 like depression, oil demand and prices could dramatically decrease, at least in the short term. It wouldn't disprove the peak oil theorists, but would probably push peak oil back a few years until demand ramps up again.

If peak oil hits first, than I think you're right, it could trigger the credit collapse, but in turn this would be presumably followed by a slowdown in oil demand too, which again pushes back the peak.

It's quite tricky to predict what will happen, but interesting times ahead for sure! It's also interesting to note that both these things are kind of happening in parallel at the same time...

But the coming financial "perfect storm" is one of the reasons I'm more inclined to invest in gold than oil stocks at this point.

by **threadbear** » Tue 17 May 2005, 13:26:53

$this->bbcode_second_pass_quote('RdSnt', '')$this->bbcode_second_pass_quote('hull3551', '')$this->bbcode_second_pass_quote('FoxV', 'd')oes anybody know/suspect what the flash point for the credit bubble burst will be (ie what are the signs)...

by **frankthetank** » Tue 17 May 2005, 13:32:25

This has been my thinking also. Debt is the bomb and a lot of people are going to get burnt.