Trying to Keep the Economy in Perspective
Whats Wrong With the US Economy?
-Housing Bubble is Deflating
-The US economy is shrinking at an enormous rate due to downward spiral created and the uncertainty in the market
Whats Right With the US Economy?
-Energy costs are falling
-Interest rates have plummeted
What Do I Think Will Happen?
-The economy will shrink for some time. It needs time to get excess borrowing out of the system. Government stimulus may reduce the depth and duration of this slowdown, but I think it will still be long and deep.
-Long term income taxes may go up to pay for our current deficit & spending.
-Inflation may rise to reduce the significance of the housing bubble debt incurred by households and government spending.
What Are We Doing?
-We have a large percentage of our assets in leveraged positions. 4 properties all with 30 fixed rate mortgages that are ~70-80% leveraged. Remaining assets are heavily invested in equities that should hedge well against increased inflation.
-Not accelerating our debt repayment. Even though now seems like a good time to reduce debt, especially with the uncertainty of what lies ahead, borrowing costs are cheap.
-Not much else other than trying our best to stay away from media sensationalism.
I think this sums up my thoughts on whats going on in today's world.
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