Scenarios please

[coastie]

I hear a lot of "get out of debt before the collapse".

Ok, lets say I clear all my credit card debt (almost there:o).

I still have a mortgage...so what happens with that? Will I lose my house?

I could honsetly give 2 shits about the mini van thats under a loan, my car is paid off so I'll have some transportation until the tank runs dry.

In all honesty, say "they" come for the house...but how? I'm assuming there will be next to no policing due to no money, and if some pencil neck rich boy shows up to "take" the house, well - let's just say he'll regret showing up to my house


I've been slowly stocking up on supplies here and there for the last couple of months, selling random shit in the garage and buying stuff with the proceeds.
I know nobody here was around for the first depression, but some of you money folks care to paint a picture?

 

[Acala]

It Depends

I think it depends. Ron Paul is predicting an inflationary depression. I agree. In that case, assuming you can keep a job, your debts will not be a problem because you will be able to pay them off with the devalued dollars. The same thing that will make your bank deposits worthless will also make your debts insignificant.

On the other hand, if there is a deflationary depression, like the great depression, unemployment will be high, banks will fail by the score, and people will default on their debts. It is possible that in light of massive defaults, the government will just step in and forgive the debt rather than having millions of people tossed out of their homes. But they are going to have to do that with money, which they don't have. That is one of the many reasons I predict inflation. The government is going to continue to throw money at the problem and the only place it will be able to get it is by creating it.

In the Great Depression, home foreclosures were rampant. But most states took matters into their own hands. They didn't outlaw the foreclosures, but they DID enact what are called "anti-deficiency" laws that prevented the banks from going after people for any debt that was left over after the foreclosure sale. In other words, if people were "upside down" in their mortgage - as is now often the case due to falling home prices - the banks had to eat the difference. These anti-deficiency laws are still on the books in many states. As are homestead laws that preserve for the home owner a certain amount of home equity so that if the loan is foreclosed, they don't walk away empty handed. I just bring this up as an example of the kind of thing government might do to ease the impact of massive foreclosures.

 

[expatinireland]

If we have an economic contraction as severe as in the 30's things won't be the same as then. Fewer families are involved in agriculture these days and we are dependent on highly evolved systems to deliver us our goods and food stuffs.

Food will become very expensive. Chinese meat consumption has doubled in the last decade. They are the worlds largest meet producers with 25% of the worlds population but only 7% of the worlds arable land. China will be looking to import increasing amounts of grain to meet the increasing demand for meet. In the mean time the US government has instituted policies encouraging the turn over of land from food production to bio-fuel production.

So there will be continuing and increasing demand for grain and less acreage devoted to it which can only mean one thing.

As you probably know, forecasts are also projecting higher fuel costs as we are now near peak oil.

So we have banks on the ropes with trends indicating higher prices for basic necessities which will leave less money left over for discretionary spending which is responsible for growth in the economy.

One thing everyone can do is plant a vegetable garden. Make sure you plant lots of veg that will store: potatoes, carrots, winter (acorn, butternut) squash etc.
If you haven't started composting, do it now.

 

[PatriotG]

Possible Scenario?

International experts foresee collapse of U.S. economy

 

[rancher89]

If we have an economic contraction as severe as in the 30's things won't be the same as then. Fewer families are involved in agriculture these days and we are dependent on highly evolved systems to deliver us our goods and food stuffs.

Food will become very expensive. Chinese meat consumption has doubled in the last decade. They are the worlds largest meet producers with 25% of the worlds population but only 7% of the worlds arable land. China will be looking to import increasing amounts of grain to meet the increasing demand for meet. In the mean time the US government has instituted policies encouraging the turn over of land from food production to bio-fuel production.

So there will be continuing and increasing demand for grain and less acreage devoted to it which can only mean one thing.

As you probably know, forecasts are also projecting higher fuel costs as we are now near peak oil.

So we have banks on the ropes with trends indicating higher prices for basic necessities which will leave less money left over for discretionary spending which is responsible for growth in the economy.

One thing everyone can do is plant a vegetable garden. Make sure you plant lots of veg that will store: potatoes, carrots, winter (acorn, butternut) squash etc.
If you haven't started composting, do it now.

Did so this last week, turned a goodly portion of the back yard into a garden, using all heirloom seeds, plan to keep seeds year to year....at least we can grow our own veggies. Plan to get a dehydrator also, you can use a screen in the sun but I plan on getting some solar panels to keep the juice running.....

The banks don't want your property, especially if a lot of people are foreclosing, they will work with you to help you keep it if at all possible, if they don't go under also......

 

[Allen72289]

Peak oil is a lie.

Nothing more than an excuse to raise the price of oil.

Even the main stream media (Discovery Channel in this case) has admitted that there is enough methane gas off NC shores to power the whole United States for 70 years in a documentary about the Bermuda triangle.

Methane gas is a by-product of oil.

Here are some great reads for the self-sufficient homesteader.

http://www.backwoodshome.com <Good website explaining homesteading techniques

The Self-sufficient Life and How to Live It: John Seymour this book demonstrates everything practiced on the homestead from crops, milking, black smithing, self-sufficient power solutions and butchering.

Producing Your Own Power by Carol Stoner

^This book explains everything about self-sufficient energy.

Hydroponic Hot House: Low-Cost, High-Yield Greenhouse Gardening by James B. Dekorne

^Explains hydroponics very well. You can grow plants indoors if you have window light or artificial light. I recommend growing plants indoors because I suppose in an inflationary depression people would pillage your garden.


In the first two books they give detailed information on methane digesters. Methane can run your car btw.

http://www.greensteamengine.com < This engine can be built for less than 100 dollars and produce 10 hp running off wood heat.

 

[Banana]

I think it depends. Ron Paul is predicting an inflationary depression. I agree. In that case, assuming you can keep a job, your debts will not be a problem because you will be able to pay them off with the devalued dollars. The same thing that will make your bank deposits worthless will also make your debts insignificant.

Considering that Ben Bernake would rather have inflation over deflation, I guess that makes this more likely.

 

[AceNZ]

I still have a mortgage...so what happens with that? Will I lose my house?

OK, some scenarios. Assume high inflation in all cases:

1. No extreme legal changes.
1a. You have a fixed rate mortgage: you can pay off your loan with inflated dollars, and keep your house
1b. You have a variable rate mortgage: your payments increase to the point where you can't keep up, and end up defaulting on your loan
1c. High inflation and declining dollar puts your employer out of business. You lose you job, can't find another one, and lose your house
1d. The housing market continues to collapse. House prices decline by record amounts. Whatever equity you have now is destroyed and your loan goes underwater. You keep your house, but owe much more than it's worth.

2. The collapsing economy results in political pressure for the government to "take action"
2a. Homes are nationalized. The government takes (effective) ownership of all homes. Selling your house becomes a bureaucratic nightmare. The government decides what it's worth, and attaches your income to make the payments.
2b. To save the banking system, the government forces the terms of all loans to be re-written. Fixed rate mortgages are abolished as being "unfair" and are replaced with variables. All loans have large pre-payment penalties attached to them. Housing prices collapse, and selling or moving becomes very expensive.
2c. If your loan is underwater, the bank allows part of the loan amount to be forgiven if you agree not to refinance for at least the next 5 yrs, and agree to pay a large prepayment penalty otherwise. The forgiven loan results in a large income tax hit.
2d. Banks are nationalized. All loan terms become "soft". Selling your house or refinancing your loan becomes a red-tape nightmare. House appraisals and valuations are based on who you know rather than intrinsic or market value.

 

[coastie]

OK, some scenarios. Assume high inflation in all cases:

1. No extreme legal changes.
1a. You have a fixed rate mortgage: you can pay off your loan with inflated dollars, and keep your house
1b. You have a variable rate mortgage: your payments increase to the point where you can't keep up, and end up defaulting on your loan
1c. High inflation and declining dollar puts your employer out of business. You lose you job, can't find another one, and lose your house
1d. The housing market continues to collapse. House prices decline by record amounts. Whatever equity you have now is destroyed and your loan goes underwater. You keep your house, but owe much more than it's worth.

2. The collapsing economy results in political pressure for the government to "take action"
2a. Homes are nationalized. The government takes (effective) ownership of all homes. Selling your house becomes a bureaucratic nightmare. The government decides what it's worth, and attaches your income to make the payments.
2b. To save the banking system, the government forces the terms of all loans to be re-written. Fixed rate mortgages are abolished as being "unfair" and are replaced with variables. All loans have large pre-payment penalties attached to them. Housing prices collapse, and selling or moving becomes very expensive.
2c. If your loan is underwater, the bank allows part of the loan amount to be forgiven if you agree not to refinance for at least the next 5 yrs, and agree to pay a large prepayment penalty otherwise. The forgiven loan results in a large income tax hit.
2d. Banks are nationalized. All loan terms become "soft". Selling your house or refinancing your loan becomes a red-tape nightmare. House appraisals and valuations are based on who you know rather than intrinsic or market value.

I'm assuming I wouldnt lose my job (military). But who knows at this point, if there's no money or its not worth a fuck anyway, then I dont see how the govt could even keep things together, because NOBODY is going to work for free, they can take there contract and shove it if that will be the case.

Eh, off to the store now to buy more bottle water and can food.

 

[sirellyn]

I hear a lot of "get out of debt before the collapse".

Ok, lets say I clear all my credit card debt (almost there:o).

I still have a mortgage...so what happens with that? Will I lose my house?

I could honsetly give 2 shits about the mini van thats under a loan, my car is paid off so I'll have some transportation until the tank runs dry.

In all honesty, say "they" come for the house...but how? I'm assuming there will be next to no policing due to no money, and if some pencil neck rich boy shows up to "take" the house, well - let's just say he'll regret showing up to my house


I've been slowly stocking up on supplies here and there for the last couple of months, selling random shit in the garage and buying stuff with the proceeds.
I know nobody here was around for the first depression, but some of you money folks care to paint a picture?

Interest will eventually go up, way up, simply because banks won't be able to do business unless they account for inflation in their loans. (plus make some money)

This means you will likely have to foreclose your house. I have no idea the order in which things will happen, but I have a feeling there still will be a significant police force around when you have to make that decision.

None of us have any idea how long or how bad this will be. I'm personally hoping a lot of good will come out of this either way. People will learn again how to live within their means, communities will get together and start helping each other out a lot more. I'm really hoping that people actually start understanding what the true cause of all this is as well.