Get Out Of $dollars$ Now!

[ray23]

Ok guys if America goes into recession which look likely it isn't the first time and this is not the first time America had a huge debt load. It will recover eventually as it has in the past.

Some one needs to be buying foriegn goods at the moment unless I'm wrong the biggest buyer is America. When it stops buying yes it will be felt worldwide. Dollar goes down the toilet and guess what, it will be the one with cheap goods.

My entire retirement is in dollars and yes it' buyiing power is less then it was one year ago at this time, but not enough to scare me.

I'm not a flag waiver for any country but never underestimate the country or it's people, it came back from the Great Depression. Question left in my mind what did the rest of the world experience during that time. I don't know but something tells me the rest of the world was not living in peaches and cream in those days either.

Civil war in December, I doubt that. The great exodus, sure has already been happeing by the baby boomers retiring to easier living all over the world. The working people are still there pounding out a daily living.

Lets see now I construction laborer in the states earning over $20.00 an hour you bet I'm going to run to Thailand if they would let me work for four dollars a day. What I do see is people getting thier retirements no longer in the work force leaving for better living conditions that thier retirements can give them elsewhere.

I'm not an investor haven't a clue so I won't say what course is best to take, but I doubt that panic is the choice of knowledgeable people.

[Firefan]

I am an investor but will also not speculate in currencies - even harder than speculating in stocks (more politics/emotions/tinkering involved with currencies I think).

Keep your investments well diversified both currency and asset class wise and then hold the course. Cheers!

[Soju]

Civil war in December, I doubt that. The great exodus, sure has already been happeing by the baby boomers retiring to easier living all over the world. The working people are still there pounding out a daily living.

It might be noteworthy that this exodus of retirees isn't just from the US. It's been going on for some time now with Americans, Europeans, and other typical "Farang" countries. But lately the phenomenon has spread to well-off Asian coutnries. Elderly Japanese and Koreans are now flocking to live in cheap SE Asian countries where the climate is warm and the cost of living is very cheap. I think it's still too early to see that much of an effect from this trend, but over the long-term, I'd expect it to have a positiive effect on the economies of SE Asia and a negative effect on the industrialized countries these retirees are leaving. Also many Russians and Eastern Europeans who under communism had no choice, now find they have new-found wealth and spend some or all of their time in SE Asia.

I think there's presently lots of business opportunities for people who want to cater specifically to expat retirees. The trend is bound to only increase in the future.

[Martin]

'ray23' said, in post #31,:

"What I do see is people getting thier retirements no longer in the work force leaving for better living conditions that thier retirements can give them elsewhere."

There is certainly a lot of this.

In a survey last year in the UK, over 70% were hoping to go and live abroad in their retirement.

But that 'migration of the oldies' might be curtailed by recession because of inability to release their equity that is tied up in their residential property.

The last, quite minor, recession in the UK about fifteen years ago, brought the housing market to a standstill. Houses sat "For Sale" for, in some cases , literally, years. And then, when things picked up a bit, changed hands at as little as 60% of what they had been valued at.

So, if people ought to be getting out of dollars now, maybe they should also be getting out of property by selling now and renting for their last few years before their retirement (which may be an early, enforced one, anyway).

As I said, it is scary.

[Martin]

I think that 'Soju' is right to say:

"I think there's presently lots of business opportunities for people who want to cater specifically to expat retirees. The trend is bound to only increase in the future."

There has always been a proportion of couples who decided to enjoy their retirement where they had enjoyed their holidays.

And SE Asia offers sun, and no heating bills.

Somebody on this website recently dismissed us all as "...retirees chasing a bit of tail in the sun", but maybe that will change, too!

[Soju]

Yes, the "retirees chasing a bit of tail in the sun" are probably the most visible, but there's lots of couples now moving or contemplating it upon their retirement. I'm living in Korea and everytime I tell someone I just visited Thailand or that I'm married to a Thai, they all want to know what the cost of living is like there and how feasible it is to retire there. I know of several who are very serious about it, wanting a condo or something like that to spend the winter months in, and keep their house in Korea to return to during the summer.

In the States, there are lots of retirement communities designed specifically for the elderly, with activities and facilities that cater to their needs. I haven't seen such communities yet in Thailand but would think there will be a large market for these in the future if they can offer retirees a turnkey solution to their retirement for a big discount compared to back home.

[TRIPxCORE]

This is quite simple really, just a matter of economics. The U.S. is in for some tough times ahead and the U.S. government is doing nothing to help the situation. They keep burying themselves deeper into debt with the war effort and they are already leveraged up the wazoo. Both the U.S. Trade & Budget deficits have been and continue to grow at unsustainable levels. The everyday, average American continues to spend money they don't have and burying themselves into debt as well & living beyond their means. A day of reckoning is coming for America and when it does, I will laugh.

[Thaiquila]

I'd expect it to have a positiive effect on the economies of SE Asia and a negative effect on the industrialized countries these retirees are leaving.

Actually for each American retiree who leaves the USA, it is one less retiree collecting very expensive Medicare benefits! (Medicare is the nationalized health care system for Americans 65 and older only.) Therefore, I wouldn't be at all surprised if the US government decides to pay for the outbound tickets for any oldies game on leaving. There is more info about these issues at this site for Americans retiring abroad: http://www.retireaway.com/ The sad fact is that the majority of the 78 million US baby boomers have saved only an average of 60,000 dollars for retirement, which with a modest social security income after age 63, basically buys a life of poverty in the US. So yeah, expect more Americans to have wandering eyes to the tropics ... Financial planners typically recommend at least a million US in savings to retire decently in the US.

Edited July 12, 2006 by Thaiquila

[mexxx]

GET INTO GOLD NET EXPORTER & RISING INTEREST RATE CURRENCIES I.E. AUSTRALIAN $.

PHYSICAL GOLD IS TOO MUCH OF A DRAG ON ONES PERSONAL SECURITY REQUIREMENTS.

IF CHINA DUMPS U.S. TREASURIES & THAT IS A STRONG POSSIBILITY DUE TO THEIR OWN CURRENCY BEING SO STRONG, WATCH OUT FOR U.S. CURRENCY BROKERS FALLING FROM THE ABOVE GROUND LEVELS OF BUILDINGS.

YOU HAVE BEEN WARNED.

[kerryk]

The US ex pat retirement problem is Medicare (benefits while the person still has money) and Medicaid (benefits when the person runs out of money). What typically happens is the US old person transfers his cash assets to a relative so they can declare a net worth of less than $2,000. Then they live free (the nursing home receiving the Social Security payments) in a nursing home and all health care is free. Medicaid is paid for by the state in which the person resides. The Nursing home and doctor receive payments from the state.

Nursing home care is substandard with bad food, illiterate and uncaring minimum wage staff and in general the smell of urine permeates the halls and public areas of the nursing homes. Fraud is rampant as is patient abuse.

However most Americans don’t know this. I was in the business for a number of years so I know the evils of the industry.

For my money Thailand is a better alternative even if I don’t have access to free medical care.

But I don’t think a lot of Americans will retire to Thailand. At one time I did but since I have been here and corresponding with people in America the lack of knowledge about the area, fear and negative impressions are far more prevalent than I had thought before I moved here.

I would think the ex colonial powers would be far more likely to retire in Thailand because of the more international mind set.

[Thaiquila]

Yes, I agree Thailand is not on the top of the list for Americans retiring outside the US. Mexico is. And anywhere else closer, like Central and South America. If Thailand was on the border like Mexico, it would be quite popular!

As far as perceived "danger" goes, well Nicaragua is now a trendy spot, and most Americans still have a negative impression of the safety level there.

Edited July 12, 2006 by Thaiquila

[libya 115]

Printed bank notes are bits of paper: don't fall for them 100%. CHF is probably the best to have a 50% holding in.

Gold and Platinum are preferential 'safe havens'.

I believe the U.S. $ is due for a major correction within the next 18 months. I reckon GBP=2.10 and CHF=parity is probable. However if H.R. Clinton comes to the throne in November 2008, things might change.

I would avoid J.YEN because of N.Korea/Tokyo Earthquake panic selling.

EURO: I am undecided; but favour it much more than U.S. $

I think buying a share in a nickel mine might make good sense.

[lannarebirth]

Printed bank notes are bits of paper: don't fall for them 100%. CHF is probably the best to have a 50% holding in.

Gold and Platinum are preferential 'safe havens'.

I believe the U.S. $ is due for a major correction within the next 18 months. I reckon GBP=2.10 and CHF=parity is probable. However if H.R. Clinton comes to the throne in November 2008, things might change.

I would avoid J.YEN because of N.Korea/Tokyo Earthquake panic selling.

EURO: I am undecided; but favour it much more than U.S. $

I think buying a share in a nickel mine might make good sense.

You've restated what by now is the "coventional wisdom" very well. Here's a guy I subscribe to and like to read. I think he makes a rational analysis.

Dear subscribers,

This is update #160, the Thursday, July 13, 2006 morning update.

One often hears in the financial media that "stocks rose (or fell) today because of rising (or falling) oil prices"--regardless of how intelligent such a statement might be. But one almost never hears "the price of oil rose (or fell) today because of rising (or falling) stock prices"!

To me, this is a particularly telling observation. It is one of the great myths of the financial media that commodity prices just "happen to" rise or fall, due to mysterious forces beyond our comprehension, whie the stock market supposedly behaves logically. In other words, events such as earthquakes and commodity price changes are lumped together as unpredictable forces of nature, while the stock market is allegedly always "responding to" the combination of these various unpredictable events.

In other words, according to this popular myth, corporate earnings can be accurately forecast, as long as one gets enough analysts to predict such earnings. However, commodity price fluctuations just somehow happen. Commodity price changes are assumed to be the cause, rather than the effect.

In the real world, the stock market probably has several times more influence on commodity prices, than the other way around. This is true for several reasons, one of them that the stock market is historically one of the most reliable leading indicators of the economy.

If equities are declining, it likely means that economic growth is slowing, which will be bearish for commodities. If equities are rising, it probably indicates that the worldwide economy is expanding, which will lead to increased demand and therefore higher prices for commodities.

Declining equities are also a warning that overall financial market liquidity is decreasing. Central bankers worldwide have certainly contributed to decreasing liquidity, especially in recent months, by raising interest rates and draining monetary reserves.

Since January 11, 2006, worldwide equities have made a consistent, bearish pattern of lower highs, which has led in recent weeks to new one-year and two-year lows for many important equity indices including QQQQ and SMH. Commodity prices, on the other hand, are generally higher than they were on January 11, in some cases considerably higher. Therefore, it is my belief that commodities have a significant amount of catching up to do on the downside.

This belief is confirmed by the charts of virtually all commodity producers and the indices of these commodity producers. Precious metals share indices such as HUI, XAU, and GDM (the basis for GDX) are forming very bearish head-and-shoulder tops that span the entire 2006 calendar year. Oil shares such as OSX are making a consistent pattern of lower highs. Even with base metals at or close to new highs--nickel has risen for eleven consecutive trading days, and is higher again so far this morning--the shares of base metals producers have also been making a pattern of lower highs.

Additional quantitative evidence of this behavior can be seen in the fact that the spread between the price of gold, which can be measured as GLD times 10, and HUI, the Amex Index of Unhedged Gold Mining Shares, has been rising sharply in recent weeks, and is now just above 304. It had been 266 less than a month ago.

Since the share prices historically are a reliable leading indicator of the commodities themselves, this means that it is increasingly likely that there will be a sharp, "sudden" drop in the prices of both metals and energies over the next few months. The steepest declines will probably occur for base metals such as copper, zinc, and nickel. More popularly traded commodities such as gold and crude oil are likely to fall much more than the vast majority of participants are currently anticipating.

Corroborating evidence can also be seen in the extended bullish bottoming pattern of long-dated U.S. Treasuries and the U.S. dollar. Treasuries have been wildly unpopular in recent months, with most people who don't own them thinking that interest rates are still rising--even though the long bond and TLT bottomed way back on May 12, more than two months ago.

The U.S. dollar is so universally assumed to be in a downtrend, that even the average person in the street takes for granted that it will lose value every year. However, the greenback gained substantially in 2005, and after a retracement earlier this year, is making a bullish pattern of higher lows which will likely lead to significantly higher prices over the next several months. The euro, as measured last week, had the most bearish traders' commitments in its relatively brief history, with the Canadian and Australian dollar commitments also close to bearish extremes.

There's no question that the U.S. dollar has been in a general downtrend for half a century, and this is likely to continue on a long-term basis for the next half century or more. There's also no question that U.S. equities have been in a long-term bull market for more than two centuries, and as long as the U.S. continues to exist, this bull market will last for another millennium or two (or three).

However, for various periods of months or years, there will be sharp countertrends in opposition to these long-term trends. The fact that everyone thinks that the U.S. dollar is falling makes it that much easier for it to rise. As a rule, the financial markets behave in the way which benefits the fewest possible number of its participants.

Something to look for very soon will be a "shocking" collapse in equity prices worldwide. Most investors are barely aware that many equity indices are at one- or two-year lows. They may occasionally hear a report on the Dow, which seems to hover right around eleven thousand, but have no idea what is happening in the real world until they actually receive their own

brokerage statements. Virtually all key equity support levels have now been broken to the downside, and the fact that this has happened so quietly, with barely a peep from the media, makes it that much more potentially devastating. When everyone talks about some kind of disaster possibly occurring, it is much less likely to actually happen.

This summer is likely to have some huge down days for equities, which will finally grab the average investor's attention and will finally cause VXO to make an upside breakout, which it has not done since 2002.

The financial media will be saying this: "With the economy apparently so strong, no one could possibly have predicted that such a sudden collapse in the stock market would happen."

Oh, yeah? Well, I'm predicting it. So there. Take that, CNBC!

Take care.

--Steve

[Martin]

"Something to look for very soon will be a "shocking" collapse in equity prices worldwide. "

If equity prices drop a bit, the 'man in the street' isn't bothered. He just feels that some speculators have got their fingers burnt.

But if equity prices collapse, he is likely to realise that his pension fund has taken a blow. And he will be bothered about that.

So what effect will this 'shock' have?

I fear that, coupled with indebtedness, it will induce a deep sense of forboding in Western populaces, who will follow that up with being careful with their spending.

That is, an economic depression will follow the onset of psychological depression.

!997 'shook, but didn't shock' Thailand, because Thailand had the great shock-absorber of "Return to your rural villages, and eat with your relatives", but Western nations are not in that fortunate situation.

I feel a lot more secure, looking at the rice coming on well and knowing that we have some physical gold locked away, than I would do if I were just looking at some credit figures on a bank statement.

[rainman]

okay, now you got me worried so i went and just flushed all my US dollars down the toilet. am i safe now?

[OldAsiaHand]

Not unless you saved enough to buy some guns to protect yourself when the revolution starts......

[Gary A]

Many years ago I had a long term running feud with a guy who gave me the best advice I had ever received. I didn't know it was good advice until much later in my life. That advice was; "Don't concern your self with things you have no control over". Obviously I have no control over the stock market or currency exchange rates so I don't worry about them. I keep my retirement funds in what I view as a safe investment that is not affected much by the stock market. I take my small returns monthly and enjoy my life. I have about 60% in US dollars and the rest in foreign currencies.

[TRIPxCORE]

The US is in for tough times ahead. Constant rising oil prices just adds to US consumer problems.

[Soju]

The US is in for tough times ahead. Constant rising oil prices just adds to US consumer problems.

Constant rising oil prices add to all oil-importing nations' problems., not just the US. However, the US has lots of it's own oil reserves, so it is not as dependent on other countries oil as some countries. The US produces a third of the oil it consumes. So roughly a third of the dollars spent on oil are pumped back into it's own economy. Some countries are sending 100% of the money they spend on oil to other countries.

[LivinLOS]

But the US consumers far more oil per head of population than any other and is used to very cheap energy prices so rising prices hit the consumer harder.

Its the competition for resources that are going to dramitcally effect future economic desicions..

Asia 's 3 billion people now consume about 20 million barrels of oil daily, while 300 million Americans consume 22 million barrels per day. The difference is that Asia has been growing at 6 percent per year, twice the U.S. rate. Since 2000, there have not been enough new discoveries of oil, gas and precious metals to meet Asia 's demand as they have built infrastructure. This is the most important reason why we are living with ever-higher energy prices.

Earth's population reached 6 billion people in October 1999, more than double what it was in 1960. Here's another way of looking at the rapid pace of human population growth - it took from the dawn of time until 1927 to get to 2 billion people, and less than 75 years for that number to triple. And in the past six years or so, we've grown halfway to the 7 billion mark. Six billion is more than just another round number. It also represents a "tipping point" for commodities demand accelerated by advances in technology and economic globalization.

[Soju]

True, Americans do use more oil per capita than other countries. I don't have any details on how the oil is consumed, but would be willing to bet that a large amount of it is due to unnecessary travel. People out joyriding, buying gas-guzzling SUVs, taking vacations at every opportunity, etc. As the prices rise, people will cut out some of this waste. It will affect consumers in that they can't travel as much as they did in the past, but I wouldn't call that a problem for them so much as a lifestyle adjustment. If it costs too much to travel on their leisure time, they will find something else to do closer to home. Rather than buying big SUVs, they'll buy smaller, more economical cars. Rather than commuting long distances to work alone, they'll take the train, carpool, or move closer to their work. Many of these adjustments will not only save oil, but also make them more productive. Americans are now by far the most wasteful with their oil consumption, so they have the most room to adjust their consumption habits without so drastically affecting their economy. Countries where consumers have already learned how not to be so wasteful don't have many ways to further decrease their consumption, so their economies have to bear the entire burden of oil price increases. And countries with emerging economies and booming populations will find that rising energy prices will put a huge damper on their economic growth because their rapidly increasing energy consumption is fueling the price increases.

For years there have been campaigns to try to get Americans to be more energy conscience, but it seems to have had little effect because energy was so cheap and plentiful. As the competition for energy increases as does it's price, it will force Americans to finally do what all the campaigns couldn't do. It will also expedite the development and conversion to alternate energy sources, which will likely cause the development of a new industry and new opportunities for Americans and other countries involved in these projects.

High oil prices will certainly hurt some individuals who have no options, at least in the short-term, but overall I think it's a good thing for not only America, but also the world to reduce their reliance on oil and to develop cleaner sources of energy.

[NovaBlue05]

For years there have been campaigns to try to get Americans to be more energy conscience, but it seems to have had little effect because energy was so cheap and plentiful. As the competition for energy increases as does it's price, it will force Americans to finally do what all the campaigns couldn't do. It will also expedite the development and conversion to alternate energy sources, which will likely cause the development of a new industry and new opportunities for Americans and other countries involved in these projects.

High oil prices will certainly hurt some individuals who have no options, at least in the short-term, but overall I think it's a good thing for not only America, but also the world to reduce their reliance on oil and to develop cleaner sources of energy.

We should have got serious about alternative energy sources after the gas lines in the late '70's. We might be in a far better position here 30 years later had we done so. I remember those gas lines did result for a while in an increase of fuel efficient japanese car sales but, after about 20 years of stable gas prices, people went back to gas guzzlers.

Then again.....oil companies probably fund a lot of political campaigns so I dont know that we will see Congress or whoever is in the White House do anything effective toward this end.

[Martin]

I think you are right, 'soju' that, in the long term, Americans will adjust their lifestyles to the circumstances. Even to the extent of more than halving their need for imported oil.

But it won't be easy for them, and in the meantime the dollar will take a hammering.

The worst aspect, to me, is the loss of jobs. For instance, you say that the Americans will reduce their vacation trips. That will put a lot of people in America and in various other countries out of work.

I just cannot see where any economic growth will come from, in any country.

Worse still, I fear that what growth we have seen in the past couple of years is largely down to consumers spending borrowed money that many of them won't be able tp pay back. Which means the US Treasury will have to print money for the banks and inflation will reduce the purchasing power of the dollar.

I hope that I am wrong.

[TRIPxCORE]

The US is in for tough times ahead. Constant rising oil prices just adds to US consumer problems.

Constant rising oil prices add to all oil-importing nations' problems., not just the US. However, the US has lots of it's own oil reserves, so it is not as dependent on other countries oil as some countries. The US produces a third of the oil it consumes. So roughly a third of the dollars spent on oil are pumped back into it's own economy. Some countries are sending 100% of the money they spend on oil to other countries.

Yes, it does affect every nations people but with the US consumer in such big trouble already because of the huge debt pile most of them have dug themselves into, it will hit much harder on Americans.

[Mr_Dave]

the yen carry trade,america's historic debtload,iran oil bourse in euros,russia oil for rubles,central banks switching reserves out of dollars,america's real estate and stock market bubbles,etc. ...[snip]... convert your assets into gold and swiss francs and euros now and preserve your wealth or even profit from the collapse.

Thanks, thaistick for opening this topic, even if your writing style is a discombobulated ramble.

You've issued a crucial warning, crucial to our financial survival.

Everything I've studied on this topic confirms the situation you presented.

And I'll add to the magnitude of your warning, because there is yet another factor, already vibrating the financial ground like a distant avalanche, still far above, but aimed in our direction.

An excerpt to explain is quoted below.

(My interest in the following is limited to the fact that I am an ardent reader/subscriber to the newsletter from which this quote is taken.

I have no connection to the author or his newsletter business.

To further evaluate the author's thinking, additional essays appear here: http://financialsense.com/fsu/editorials/laird/archive.html )

--------------------- QUOTE -----------------------------

* Liquidation overhangs financial markets

I have written several times about two major forces overhanging world

markets. They are,

1. The unwinding of the Yen Carry trade, where trillions of dollar value

of Yen have been borrowed from Japan at zero interest rates for about

ten years and invested into financial markets.

2. The devaluing of the USD due to massive trade and fiscal deficits,

this will cause liquidation out of USD denominated markets because of

the loss in value of the USD.

We can now add a third major overhanging force on world markets, that is

the liquidation of trillions of dollars of US retirement accounts of the

baby boomers now entering retirement. The baby boom generation is the

people born right after WW2 in the US. Their millions of growing

retirement accounts were one major reason why the US stock markets

boomed in the 1990's. That was the period where they were at their

highest earning level, and just prior to their retirements. Now, in

2006, we are witnessing the first waves of these millions of retirees.

What is happening is that about 8000 new retirees a day will be pulling

money now out of their 401ks and other retirement funds starting this

year. This will create an overhang of liquidation on financial markets

as these retirees take mandatory tax deferred withdrawals yearly from

now on. This process will continue for 17 years! The much discussed

explosion in social security payments for the US government from this is

only part of the picture. The other shoe is the impending liquidation of

trillions of dollars of retirement investments as these are drawn down

for the next 17 years in increasing waves as each new year of baby

boomers retires in succession. At first the effect will be limited, but

each year 3 million new baby boomers will retire and the whole will

accumulate into a massive overweight on US financial markets. This

bearish force will continue to build year after year from now on.

We already know about the world stock markets teetering this year. Now

add to this the combined unwinding of the Yen carry trade, the decline

in value of the USD and the subsequent liquidation of USD assets as

investors get out of USD investments. And then add trillions of USD

retirement investment liquidation due to retiring baby boomers.

Just add up 8000 baby boomers a day retiring for 17 years in a row! That

is just a monstrous net outflow of retirement funds!

Copyright 2006

Christopher Laird

I grant subscribers the right to post up to 10% of any newsletter to

their friends, as long as a link to http://www.PrudentSquirrel.com is

included and credit is given to me.

.

[Soju]

The US is in for tough times ahead. Constant rising oil prices just adds to US consumer problems.

Constant rising oil prices add to all oil-importing nations' problems., not just the US. However, the US has lots of it's own oil reserves, so it is not as dependent on other countries oil as some countries. The US produces a third of the oil it consumes. So roughly a third of the dollars spent on oil are pumped back into it's own economy. Some countries are sending 100% of the money they spend on oil to other countries.

Yes, it does affect every nations people but with the US consumer in such big trouble already because of the huge debt pile most of them have dug themselves into, it will hit much harder on Americans.

Just wondering if you have any statistics to back up that statement. I found this report on consumer debt in the UK...

http://www.grant-thornton.co.uk/pages/pres...bt+research.pdf

which states, "Consumer debt is at an historical high. After breaking the trillion pounds barrier for the first time, consumers in the UK now have the dubious honour of being among the biggest borrowers in the world. To put things into perspective, the UK’s consumer borrowing is now more than the whole external debt of Africa and South America combined."

It goes on to show a table fo % of debt to income as of 2003:

UK - 138%

Japan - 121%

USA - 142%

Germany - 102%

Netherlands - 185%

Australia - 141%

It doesn't seem to me that Americans are really significantly more in debt than other developed countries. If you can provide some concrete evidence of your claim, then I'll accept it.

Edit: I found another report, which is two years old, which also shows similar data...

http://www.marubeni.co.jp/research/eindex/.../index.html#ch6

Edited July 16, 2006 by Soju

[Martin]

The indebtedness figures include, I believe, mortgage debt on residences.

People tend not to worry about that, on the basis that the rise in the 'value' of their house will cover it.

But recession in the past has brought 'valuations' of houses down with a bump. And then people who need to move can't get a buyer for their house and the property market grinds almost to a halt for some years.

In the UK there are people who got caught by their jobs becoming redundant in the recession fifteen years ago and couldn't keep up their mortgage payments. So they handed the house over to the mortgage holder. But they still owe a big sum, which that mortgage-issuer will never recover.

And there is an ominous feeling in the air, that the coming recession is going to be a much bigger one than that one was.

It does look as if a lot of baby-boomers won't be able to make their planned move away to a better climate on retirement because they won't be able to find a buyer for their house. (Especially if it is in exurbia.)

Edited July 16, 2006 by Martin

[Soju]

I personally find the real estate market bubble to be the most worrisome factor in our present economic formula. Not just in the US or UK, but many other countries as well. The extremely low interest rates of recent years have driven up housing prices to artificially high levels that cannot be maintained if interest rates rise or if a recession hits.

[DrFisher]

I think as far as Canada goes you have to look back at the “great depression” and see what the affect was. I somehow think Canada would remain a bit more stable than the US mostly because the crime rate is lower and the current agricultural community is stronger. This is not a fact it is my opinion from living in this region of the world for a very long time and having family in both countries, just a personal observation.

[ray23]

Baby Boomers, not having a clue as to how things really work, but if 8,000 people a day are leaving jobs, doesn't that at least open a perentage of new jobs to be filled in the work place?

Now here is the real question if your retirement is tied to dollars and you are paid in dollars and can't change that, what approach do you take?

Once you have the dollars, is it wise to convert remember we are talking about monthly monies not lump sums?

Right now my monies are in US Dollars and Thai Baht. They are being used to build a life here, I'm pleased to say the major expenditures are finished after three years. So I can actually save 50% of my retirement now without changing my life style. Not a bad place to be in my mind.