Instead of bailing out the banks, we need to bail out the homeowners. And this simple regulation change would not cost nearly as much as the $300B being given out soon as tax credits, and could actually create a huge revenue stream for the government as housing prices improve.

Everyone should be crossing their fingers that this passes in the next 3 or so months.

Unfortunately the last “conservative” present handed a left leaning present6 with an even more liberal congress unprecedented control over the company having spend close to a half trillion dollars taking control in major companies. So if Obama does do a major left turn he had major help from Bush.

One more prediction. The bail out of the Detroit three will prove to be good value for the money. The banks took 350 billion and horded it all (except for a few billion to give departing executives) where as GM took a mere 6 billion and has started lending again.

How about this:

1. the Dow goes to 10,000 and
2. the Obama plan creates jobs, both of which
3. release pent up demand for housing which will
4. stabilize housing prices and add more jobs that are related to the housing industry.

Hey, I can be optimistic, too!

1. the recession will be deeper and much longer lasting than anyone expected

2. Americans will learn to save (much do to demographics

3. Right Wingers will continue to whine and complain about how unfair it all is.

I hope your optimism is justified. On the other hand, experience suggests that pessimists are happier people than optimists because our surprises are always pleasant….

http://articles.moneycentral.msn.com/Investing/JubaksJournal/fake-inflation-numbers-masked-crisis.aspx

It is worse than the Gvt says. Most sceptics know this. I think I can last until 12/21/2012 when the poles shift and most die off. But than, I am retired so we shall see:)

I disagree completely with all of your predictions however.

1) the dow is going to sink around 7400.
2) Gas will hit $6, or more. Opec is going to try to pinch us hard and set the tone for the next 25 years. Watch them proving a point this year just like 2008.
3) Banks and lending less and less every day. That’s going to continue. Japan had a negative rate for awhile. I forsee this happening here.
4) Job losses will not slow down, in fact they may speed up – bringing unemployment to a 12+% level by August.
5) Consumer spending is going to decrease even more, causing widespread store closures, more job loss and less consumer confidence.

2009 is going to be one of the worst years in American history in terms of average financial stability. Prepare, cut back, get frugal and buckle in.

being early and inaccurate doesnt make you wrong. so he called it early, thinking surely things cant continue the way they did. unfortunately things carried on and were out of whack for too long.

it’s like my situation where i refused to buy a house in 2003 thinking prices were way too high and would crash. i thought that in 04, 05, 06, 07. now we’re back at 04 prices and when we hit 02 prices i’ll put my foot in the water.

Anyway, I hope you are right, but i’m not as optomistic as you!

Yes. Foolishly optimistic, in my opinion. My intuition disagrees with every one of your predictions except that the government probably will attempt to address ARMs and that people will save more this year than in any year in recent memory.

As for the rest, I believe 2009 will be the year the other shoe drops.

Here are some facts. A large majority of the reasons for the calamity we are now facing still exist.

The number one reason – housing rate resets, has TEMPORARILY slowed. The second round, which is substantially larger than the subprime round one, is getting ready to happen within the next 6 months. The majority of rate resets are in 2010 and 2011. That means the major problem hasn’t even hit yet. 2008 was an appetizer. It will happen, there is no doubt.

The fallout will be even greater than what we have experienced. We are about 1/3 of the way through, and the remaining 2/3 will make 2008 look like a walk in the park.

Amplify 2008 by 2 or 3 and you have a likely picture of 2009-2011.

Better save up.