My Prediction About the Economy

In 2005, I thought a great deal about the economy since I was working as a financial adviser and seriously considering the way I managed my own account. We were looking into refinancing our home to get an interest-only loan where we could save the difference between our minimum payment and what we were paying with the 30-year fixed.

Below is a portion of an email I wrote my mom.

September 26, 2005

I’m concerned about the economy and I think we’re in for it in the next few years. I’ve been gathering some information from economists. There are many reasons why our economy could be in for a serious recession or even a depression:
1. High cost of fuel – cost of fuel increases cost to travel, ship goods, just about everything is dependent on it.
2. Overpriced real estate – – The problem with this bubble is that people are buying the biggest home they can afford with the lowest rate they can get – interest only. When rates go up, they won’t be able to afford their payments and there’s a possibility that many people could foreclose around the same time
3. Weak dollar/increased foreign debt
4. Personal savings is at 0%. People are saving nothing. At a time when rates are low and people are barely able to afford payments, they should be preparing to pay for increased rates – higher mortgages, higher car payments.
5. Baby boomers are retiring. One famous market predictors says that when baby boomers retire, they will pull their money out of stocks and put it in lower-risk investments, such as bonds and money markets. This is predicted to cause the value of the assets in the market to drop. and [The financial services company I work for] believes Harry Dent’s prediction: – a major depression beginning in 2008 or 2009.
6. Natural disasters only make our troubles worse and quicken the pace of trouble in the economy.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s