Don’t panic, but do be aware
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Dana Blankenhorn’s article Dating the Next Recession is a good wake up call. If you have a chance, read the article, but here’s a summary:
- October 17 is the day the new bankruptcy law takes effect. As part of the law, most credit card minimum payments will double. Borrowers will also be forced to repay credit card loans, even if they file bankruptcy.
- Because they are financially overextended, many people will likely lose their homes to foreclosures or have to sell. This will drive the economy down.
Mr. Blankenhorn is predicting a recession. His advice?
Get into cash, into hard assets, into foreign currencies. You have two months. If I’m wrong you can always re-adjust the portfolio next year.
I’m taking this seriously. I’ve already been hearing some scary stuff about the kinds of loans many new homeowners are taking out (ARMs and interest-only). That alone has me worried that as soon as interest rates rise, many people won’t be able to afford their house payments.
What do you think? Is this too pessimistic? What action (if any) will you take?
[ via Gary North's REALITY CHECK]
I’m wondering if I could get a good deal on a foreclosed house next year…hmmmm
Seriously, it is always a good idea to stay alert