As I've said before FLB, thanks for the post. I'm sure I'm not alone in getting my finances in order. I close on my old home in a week, so I never once made two mortgage payments!

Excellent point, LB!

There were those who thought the idea of falling real estate values was absurd--so they bought a bigger house with a bigger mortgage. There were those who thought the derivatives market only affected Wall Street tycoons and that a few failed hedge funds wouldn't matter much. I EVEN have a smart young acquaintance busily acquiring real estate in central California because the prices have gotten so gosh-darn low!

Indy makes the point beautifully. There is a time to prepare oneself for a coming storm. Whether you do or not is entirely up to you. But nobody who reads THIS board will be able to say there wasn't ample indication of deteriorating conditions, accompanied by sober, reasoned analysis.

YMMV.

Well, If you don't like taking "warnings/predictions" from Academia, how about the bank itself? Remember...this is one bank...talking about one quarter.

I don't think anyone suggested it would be prudent to go and buy a million dollar home right now - clearly times are not great and anyone with a little common sense should realize it's going to be this way for awhile. But there's also very little any one individual can do about it, so some of us choose not to spend all of our waking hours worrying about it. In many of these posts I detect a hint of panic and doom. I apologize if I'm misreading that.

Here in tornado alley, we know all about the sirens .

Nobody said to worry. Being prepared and being worried is two totally different things.

In other words....now's a good time to build that storm shelter...and hope you never have to use it!

So I do need to prepare a "bug-out bag!" You know, a gym bag with about $3,000 cash, 4 weeks worth of MRE's, a first aid kit, and a .357 magnum.

My point is that despite the fact that a lot of people are going to be hurt, most from their own acts, it is not all gloom and doom. One of my favorite sayings is; in chaos, there is opportunity. The slow down of home building will probably make it easier for me to get good prices on materials for some work I need to do on my home. I am hoping that the higher gas prices will create alternate sources to reduce our reliance on foreign oil. My worse case scenario is that my market retirement fund will take a hit for a few years, but I would hope that it will recover by the time I need it. Even so, my other retirement plans will carry me through.

It is like the fact that the decrease in the value of the dollar is making our manufacturing worth more overseas. It is also hurting the growth of China as a manufacturing goliath. Indonesia is the new China. The reality is that we, as a nation, does its best under adversity.

Material prices have not relaxed.. stagflation?

... And I am not just on the bandwagon on that one. If you check on here, I've been predicting the return of inflation for at least a year now.

What goes down must come up.

Definitely a misread in this case, Mike. You'll generally get no real panic from those who are prepared for every eventuality. And contrary to the 'gloom and doom' label that some would apply to Roubini's informative posts, his is much more a simple declarative 'if/then' construction.

A single example for illumination: Roubini estimates the current capital losses among lending institutions to be $250-$300 million. (Goldman uses $400M and this morning UBS floated $600M--but you get the point). What he does NOT do, is go into the impact of such capital destruction. For that, we can turn to the U.S. Monetary Policy Forum conference draft paper, released at 11:00AM this morning.

It's 47 pages of thick material, and I'll send you a copy if you have interest in it, but the salient point is the impact on credit extension (lending) that the above-referenced capital evaporation creates. "Our baseline estimates imply just under a $2Trillion contraction in intermediary balance sheets, of which roughly $900 billion would represent a decline in lending to households, businesses and other non-levered entities."

And that's just from the capital losses already acknowledged---not going into the extent of the potential damage as other retail credit areas begin to 'under-perform'.

A real 'gloom and doomer' would begin spinning out the impact of $2 trillion of lending being curtailed. Or the impact of the likely $4-8 trillion in lending being curtailed before this is all done.

They then would do some simple math for you on GDP and available lending during the 'boom' time, and let you imagine the impact of that many dollars disappearing from the world's financial gears.

Because THAT's the kind of prognostication one is tempted to go into when you understand that these numbers are real---and not just digits in cyberspace.

But, as I'm not, in fact, a 'doom and gloomer', merely a reporter on the scene as it unfolds, I'll leave some of the figuring to you. But I do invite you to come back to some of these threads from time to time and see if I was wildly out of phase with developments. I know I do!

Thanks, FLB. I fear my previous post was poorly worded, and I certainly didn't mean to suggest that I think you (or anyone else here) is wrong about what's happening or the severity of the impact. I don't. I just know that at these times, there are people who literally are going to go take a leap off the ledge over all of this. And since I don't have it in me to even imagine buying a $500K house on a $50K income using an interest-only loan, my view of things tends to run along the lines of, "I can't do anything about it but continue to teach my kids right from wrong and why things are going the way they're going."

I also don't disagree that the coming times will effect everyone in some way - I get up every day wondering if this will be my day to be laid off, and if it is, I frankly don't know what else I would do - but I also believe the people hit the hardest will be the ones who deserve it the most. For the rest of us, cool heads, long term views, and continuing to do our best to do what's right, seems like the order of the day.

I couldn't agree more with that, Mike!

Get out of debt, live within your means, be as generous as your heart and circumstances allow. We'll be fine in the long run. The short run is gonna be a bit rough...

wow, that would cause total chaos in the banking, automobile, and housing industries.

Not to worry though, that is only about 1 out of every 3 jobs in the country.

Your expectation of where the chaos will be centered is spot on, imo. Might quibble with the causation, but that won't matter much in the long run...