Predictions for the Financial Crisis

Predictions for the Financial Crisis

2008 has been fraught with financial difficulties for many and it is just going to get worse, long before it gets better. The bailout has been hammered together, and nothing seems to stop the exuberance of another bullet dodged, except reality. These firms and corporations that are recipients of the largest bailout in government history simply are not going to take on the risk that they did before. This only sticks Joe and Jane taxpayer with a huge bill and nothing else. Therefore, prices continue to skyrocket, all goods and services, as everything and everyone tightens up the purse strings more and more. And it will be out of complete necessity.

There is a ray of sunshine when America is essentially reduced to third world status among its peers. The American family will have a chance to heal and grow. And that will also be of necessity. We will need to see the return of the extended family because of the economy and the shape it will be in shortly. Parents that love their pets and hate their children will have to find a way to reconcile, because there will be no living in households with fewer than two or three or possibly four incomes, no matter how average or minute these incomes may be. Apartment complexes will do well, because a good number will not want to remain in their homes for fear of losing their largest investment if forced to sell quickly. So there will be a further glut on the market, and housing will become very cheap, but possibly still an ill-advised venture, and only some lucky few will be able to obtain mortgages anyway. Realtors’ woes are not over yet.

Here are some predictions at large, and these are certainly not places to put your money, if you have any left. Your 401K or 403B is probably down to nothing by now, and as Stephen Colbert said, diversification is now burying your money in your backyard and shoving it under the mattress. Cab companies will do well. It will be tough for some households to keep a car running. Waste management companies will hit hard times, as consumers spend less, they will create fewer recyclables. Veterinarians will not fare so well and will have to stop charging such ridiculous prices. Individuals and head of households will simply have to pay more attention to their boomeranging kids than their pets. Big oil will do fine as always, whether it lobbies Congress very much more or not. Its profits are so baked into the system, it will be fine with oil at any price, and Big Oil will diversify into wind, hydroelectric, etc., etc.

The retail companies will be hard hit, worse than what has been coming their way the last couple of years. Except this effect will not be as severe with liquor and tobacco stocks. Movies, publishing, video games, Internet companies may do all right, believe it or not. Everyone will soon be in such dire need of escapism that companies that provide products like these are likely to fare well. Wall Street will do well with the government bailout, and Main Street will fare miserably. Everyone knows this in his heart of hearts, just so few will speak about it. The homeless population could explode into new numbers. If you’re a small investor cash is the place to be, and deposits fully insured by the FDIC.

I have gazed deep into the crystal ball on this one. It’s not pretty.

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