A few weeks back, United States Federal Reserve Chairman Ben Bernanke stated that the economy is “unusually uncertain”. This unusually explicit statement from the Chairman is alarming. And reminiscent of the fascinating Secretary Donald Rumsfeld’s statement:
There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we now know we don’t know. But there are also unknown unknowns. These are things we do not know we don’t know.
A few days ago, John Chambers, CEO of Cisco Systems, a bellwether for technology companies, echoed Bernanke and stated that,
“We are seeing a large number of mixed signals in both the market and from our customers’ expectations, and we think the words ‘unusual uncertainty’ are an accurate description of what is occurring.”
Recently, RealtyTrac reported that foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 325,229 properties in July, a nearly 4 percent increase from the previous month. One in every 397 U.S. housing units received a foreclosure filing during the month. For July, Ohio ranked sixth with 13, 500. Ohio is a recourse state unlike California and Arizona which took the top foreclosure filings honors.
How will the double dip recession look:
- Home prices and home mortgage activity are both likely to return back to the rational level in the mid or late 1990′s.
- Mortgage originators might be held accountable for the quality of the mortgage they originate. The Mortgage Church Lady would say, “How inconvenient”?
- For home buyers who are able to put 20% down payment and have steady employment, the best of times is yet to home. Condos in Florida are selling for less than the price of a Toyota Corolla and buying this condo may not be the better buy.
- For home sellers, the worst of times is yet to come. For some, their home will become their ball and chain.
- American companies will continue to outsource jobs overseas and this will increase non-governmental unemployment numbers. Outsourcing will seep down to the mid-size and small companies.
- Christmas 2010 will reflect ground zero conditions in retail. Walmart (WMT) might overtake Amazon (AMZN) as the most popular online store. So sell AMZN before Dow reaches 8500.
- Municipalities will start cutting services. As an example, Colorado Springs is planning to save money by turning off a third of its streetlights.
- Taxes will increase after the November 2010 elections.
- Layoff in schools will occur and this will further contribute to return to normalcy of home prices.
- We might learn to save for the rainy day. The era of America as the consumer engine of the world might thankfully end, for now. We might realize that home ownership as a reflection of the American dream is a translucent sales pitch.
- The Chinese economy might stumble. Or not.
- Nouriel Roubini will be officially prohibited from appearing on television programs.
- Banks will keep their fangs sharp.
- GM will be the only company operating its plants to capacity!
I am a Civil Engineer from Louisiana State University. The compound word, Americaneer, is a combination of the words, American and Engineer.