Major Depression ahead?

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Major Depression ahead?

Alexander Roeschmann
Rental Property Investor · Gilbert, AZ · Member since 2020 · 30 posts · 25 votes

It seems like this crises might be over soon, but that doesn't mean anything will return to normal. In fact there are major changes ahead and the chances of a massive Depression are extremely high. In this post I will explain to you why this is the case. But upfront a basic view of the regular economic cycle:

This total cycle covers 100 years. The linear line is the productivity.

We are currently in the last peak before the massive drop, if you overlook history. (last major depression: 90 years ago)!
All this is in direct connection with the Case-Shiller-House price index, at an all time high, just like in 1929 and 2008. All this together with exponential growth of US credit market debt, at all time highs, with rising Inflation and stagnating wages, will ultimately lead to a depression.

If you want to discuss more about it, I will be glad to discuss it in this forum!

Alexander Roeschmann

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Pat L.
Rental Property Investor · Upstate, NY · Member since 2012 · 3k+ posts · 3k+ votes
6y

@Anthony Wick 

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  • Aigo Pyles
    Flipper/Rehabber · Memphis, TN · Member since 2020 · 758 posts · 285 votes
    6y

    We do not know yet. Still unclear

    0Reply
  • Matthew Peterson
    Developer · Atlanta Ga · Member since 2011 · 47 posts · 37 votes
    6y
    I will give the kid this, at least he is enthusiastic. According to his LinkedIn profile, he graduated high school last year! I sure as heck didn't have a LinkedIn profile at 18 years old. I was too busy partying, drinking and getting fired from every job I had because I was lazy or hungover! I wish I had been on a site like this at his age!
    9Reply
  • Michael King
    Rental Property Investor · Navarre, FL · Member since 2019 · 913 posts · 640 votes
    6y

    I guess the cruisers won't be depressed going on cheap cruises. I used to work on cruise ships; the cheaper cruises spelt misery for the crews as the passengers all consisted of "Joe Dirt" and 300 cousins there to get wasted. Any time a virus hits, like Noro Virus, it can mean disaster for everyone on board. These are 2 times when cruise ships can be not so much fun anymore. 

    0Reply
  • Pat L.
    Rental Property Investor · Upstate, NY · Member since 2012 · 3k+ posts · 3k+ votes
    6y

    This is what I was expecting...NOW that's depressing but inevitable !!!

    https://finance.yahoo.com/news...

    0Reply
  • Pat L.
    Rental Property Investor · Upstate, NY · Member since 2012 · 3k+ posts · 3k+ votes
    6y

    @Matthew Peterson reminds me of my youth, first year of University, enjoy our nude & topless beaches, party til dawn until the cold reality of being conscripted hit @ 18, but we still couldn't drink (legally).

    0Reply
  • Jose M Romera
    Atlanta, GA · Member since 2019 · 4 posts · 2 votes
    6y

     I remember this happened with Japanese corporate investors who bought up commercial real estate in New York City back in the 80-90s period during a market weakness at home. International deep pockets are always looking for opportunities to play in U.S. market.

    0Reply
  • Sam Shueh
    Real Estate Agent · Cupertino, CA · Member since 2016 · 4k+ posts · 1k+ votes
    6y

    We are about to move around and the curfew can be over. No one has addressed the worst night male on the economy, housing and bad loans. Anticipate another 2009 crisis. In the meantime, government is putting homeless inside Hiltons and expect 45% more people to be homeless.

    0Reply
  • Scott Mac
    Austin, TX · Member since 2019 · 5k+ posts · 5k+ votes
    6y
    Originally posted by @Sam Shueh:

    We are about to move around and the curfew can be over. No one has addressed the worst night male on the economy, housing and bad loans. Anticipate another 2009 crisis. In the meantime, government is putting homeless inside Hiltons and expect 45% more people to be homeless.

    A portion of the "To Be Homeless" will probably shelter with friends and family. Double up on their living space.

    For the true long term homeless having access to nice clean (maid service) and hot shower and free soap will probably be a nice luxury.

    0Reply
  • Matt R.
    Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
    6y

    When you compare 1929 chart to 2020 they look like the same so far. Big drop with bounce up, next part yet to come is the possible bigger leg down. Since the fed is actively trying to prevent this while it is happening it is possible the bigger leg is not as radical. The last two times feds lowered rates and it worked, now that is already done we are in a wait and see pattern.

    Understand there may never be a vaccine and or it may only be 45% effective like the flu vaccine. Small business is getting crushed still. Some of the gurus think 2021 Q1 we will be back on growth track. Idk if that is wishful thinking or the realistic probability. As far as getting all the small business back to previous levels this might take years imo. Personally I am still short commercial RE and consumer discretionary spending. Good luck! 

    2Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    6y

    I think this chart is more illustrative of where the economy is going. 

    [email protected]301-893-4635Podcast Guest on Show #192
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    2Reply
  • Jonathan Twombly
    Rental Property Investor · Brooklyn, NY · Member since 2014 · 722 posts · 1k+ votes
    6y
    Originally posted by @Jose M Romera:

     I remember this happened with Japanese corporate investors who bought up commercial real estate in New York City back in the 80-90s period during a market weakness at home. International deep pockets are always looking for opportunities to play in U.S. market.

    They famously overpaid and ended up selling at big losses. It was so bad that it took 20 years for Japanese institutional investors to return to the US markets.  

    0Reply
  • Jose M Romera
    Atlanta, GA · Member since 2019 · 4 posts · 2 votes
    6y

    @Jonathan Twombly You are correct. But values may not have been as inflated as they are today.

    0Reply
  • Justin Thorpe
    Member since 2020 · 437 posts · 675 votes
    6y

    I’d assume that a depression is coming and make sure I can survive and thrive. That’s it.

    If there is no depression, it’s all 100% upside for me.

    Problem is nearly 6 - 7 months in to this crisis, no one has yet come out with any conclusive evidence of even how Covid even started.

    Was it “Wet markets” (which continue to thrive) or a Wuhan lab which was partially funded by American tax payer money. Some reports even say Covid was in America as early as late December last year. Who the hell knows. Forget about even curing the disease. People are clueless about its origins.

    Social distancing, lockdowns etc. are preventive measures but apparently you get knocked out by the virus as soon as you step out of your home!!! You get killed if you are over the age of 60. So what is the confidence that reopening the economy is going to kill the virus!

    The virus is still around. So these are stupid soft measures.

    I don’t think things are coming back anytime soon. Better to prepare for a depression and fight it vs get knocked over by it.

    0Reply
  • Peter Walther
    Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes
    6y

    Anyone considering a cruise should watch this video first.  It demonstrates the spread of a theoretical virus in a restaurant.  I've been on cruises and seen the mob scene around the buffet.

    https://www.bing.com/videos/se...

    0Reply
  • Peter Walther
    Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes
    6y

    In my opinion this is the real danger:

    https://www.usdebtclock.org/

    We'll be fine as long as faith remains in the dollar.  Once that faith goes, so does the economy, worldwide.

    0Reply
  • Joshua Myers
    Rental Property Investor · Columbus, OH · Member since 2014 · 148 posts · 177 votes
    6y
    Originally posted by @Bill F.:

    @Alexander Roeschmann

    Since we only have accurate and reliable housing data going back 130 years and stock market data back to 1926, what have you used to derive your "100 year cycle" hypothesis?

    He used a short video Ray Dalio put up several years ago. Same place that he got that "chart." It's just a screen shot from the same video. It's not an actual chart of anything. 

    1Reply
  • Victor S.
    WorldWide · Member since 2016 · 1k+ posts · 1k+ votes
    6y
    Originally posted by @Sam Shueh:

    We are about to move around and the curfew can be over. No one has addressed the worst night male on the economy, housing and bad loans. Anticipate another 2009 crisis. In the meantime, government is putting homeless inside Hiltons and expect 45% more people to be homeless.

    Sam, who are those "night" males you speak of?

    1Reply
  • Tyler Smith
    Knoxville, TN · Member since 2018 · 50 posts · 17 votes
    6y

    My real estate journey is just beginning but I haven't stopped looking for properties. I just plan on being more selective as well as raising my reserve amount to hopefully weather a larger storm. This is for the long term right? Housing is also a necessity and I personally like cash flow rather than appreciation so I'm not too worried

    2Reply
  • Steven Lowe
    Real Estate Agent · Scottsdale, AZ · Member since 2019 · 448 posts · 320 votes
    6y
    Originally posted by @Pat L.:

    @Anthony Wick 

     LOL!

    0Reply
  • Pat L.
    Rental Property Investor · Upstate, NY · Member since 2012 · 3k+ posts · 3k+ votes
    6y
    Originally posted by @Russell Brazil:

    I think this chart is more illustrative of where the economy is going. 

     It looks like this maybe TRUMP'ed up LOL !!!

    0Reply
  • Steven Lowe
    Real Estate Agent · Scottsdale, AZ · Member since 2019 · 448 posts · 320 votes
    6y
    Originally posted by @Justin Thorpe:

    Some reports even say Covid was in America as early as late December last year. Who the hell knows. Forget about even curing the disease. People are clueless about its origins.

    I just found out that someone I had face to face contact with at a memorial service I attended back in January of this year was later diagnosed with COVID-19.  At the time I saw him he was feeling ill, but he had to attend given that it was his Dad's funeral.  He had symptoms but because they were mild and COVID-19 wasn't well known at that point he just assumed he had a cold.  He is now part of a National Institute of Health study.  

    He had it, his two high school age sons, and his brother in law.  All had very mild symptoms, including the brother in law who is 65, overweight and a type 1 diabetic.  I have not been sick at all nor has anyone close to me so either I had it and was asymptomatic or I never got it from him.  

    Due to lack of widespread testing I believe that this virus has infected way more people than we currently know and I suspect the actual mortality rate to be a lot lower than what is being reported.  At least that's my hope.  I think we aren't doing enough to test a wider cross section of people and get a larger sample size of this thing.  

    As far as us having another Great Depression, I prefer not to dwell on things that haven't happened yet and might never happen because that is kind of pointless, but in my heart I don't feel we are headed there yet.  There's going to be a long recovery ahead of us but once we get our hands around a vaccine and as long as we keep social distancing I think we will come out of this OK.

    3Reply
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