I tend to stay away from specific financial predictions about the future, as I lack the expertise for accurate in-depth analysis (even assuming the data is out there). PeakOilDesign is a site more about preparing for crises than predicting them. But, as the saying goes, it doesn't take a rocket scientist to see where the economy is headed in the very near future.
I've mentioned before that there is a whole host of problems we face aside from Peak Oil and global warming, as dire as those issues are. There are dozens of other, more subtle (read: unreported) catastrophes that could yield equally devastating economic effects, depending on your personal situation. Most immediate among those is the ongoing housing collapse; while it is frequently a topic in the news, the media usually try to put a positive spin on it.
In truth, there is no room for positive spin:
The markets seem to be waking up to the fact that the housing market is nowhere near the bottom. Borrowers are being squeezed by the treasury markets' recent sell off, which has increased 30-year mortgage rates the most since 2004. The National Median Home price is poised for its first annual decline since the Great Depression. An executive at the giant bond fund PIMCO said it best: "It's a blood bath. We're talking about a two to three year downturn that will take a whole host of characters with it, from job creation to consumer confidence. Eventually it will take the stock markets and corporate profit." The U.S. housing market has provided the economy with support through the creation of wealth and the seemingly endless ATM of price increases. The recent increase in yields, along with the subprime mortgage meltdown is going to kick this support right out from under the economy, and the dollar is going to be drug down along with it. [emphasis added]
It doesn't take the high energy prices of Peak Oil to wreak havoc in millions of people's lives; that will happen all sorts of ways -- and all within a very short time span. Personally, we're not over our heads in mortgage debt (as long as I have a job), but our home and future buying power is depreciating. If you are in a home that you don't intend as your post-Peak Oil residence, it might not be a bad idea to look to move now, as we are. Pre-Peak conditions could make it all the more difficult to put your careful plans in action.
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James Howard Kunstler published an article along the same lines yesterday:
It's tough to ignore the
It's tough to ignore the many and varied prophecies on this line of thought. Are we going to face another "stone age", will financial collapse force the world back into the dark ages, is the industrial age just a blip on the radar?
As you've said about yourself, I'm no economist, but I'm taking steps to ensure that my family knows how to survive with the basics.
Selling in a Falling Market
We just sold and moved and are ever so glad we did. We've been expecting the bubble to burst for a while now. Meanwhile we were watching the price of land in our area skyrocket. One parcel doubled in price in the span of 2 years (the same time span during which we had been actively looking for land). From what I read, a land bubble often follows a housing bubble, before the cost of land becomes reasonable again for the average Joe's proposed land-use -- say growing food crops, anyone? Right now land is priced for developers and McMansions, so far as I can see.
I felt pretty good about selling on the downcurve of the housing bubble (as opposed to further down the curve), but it meant we had to price to sell. So even though we were sure our house was worth more, we had to present it as a good deal. We sold quite quickly and have noticed houses put on the market contemporarily to ours just lingering.
For those who have the ability, selling and waiting for the market to correct before buying new property, or buying property in a better priced area might be financially wise.